AIIB at Three: A Comparative and Institutional Perspective
| Date | 01 November 2019 |
| DOI | http://doi.org/10.1111/1758-5899.12703 |
| Published date | 01 November 2019 |
| Author | Natalie Lichtenstein |
AIIB at Three: A Comparative and Institutional
Perspective
Natalie Lichtenstein
Visiting Scholar, Johns Hopkins School of Advanced International Studies, Washington
Abstract
The Asian Infrastructure Investment Bank (AIIB) joined the field of multilateral development banks (MDBs) in 2016 as a US$100
billion international financial institution, providing finance for public and private infrastructure projects in Asia. AIIB has been
created with the experience of existing MDBs with an aim of innovating for the future. AIIB’s establishment is compared here
with the origin stories of major MDBs—all born in a mix of geopolitics and development needs. AIIB’s policy and strategy
framework has continued to be filled out in its first three years, supporting its approved portfolio of over US$8 billion in 45
investment operations. Innovative features in its otherwise classic MDB governance structure are also in operation, such as
AIIB’s non-resident board, streamlined decision-making and uniquely detailed oversight arrangements. For the future, factors
that have affected other MDBs may also affect AIIB. Cycles in the global economic and financial environment and shifts in
international relations and geopolitics will have an impact on AIIB’s members. Institutional governance and leadership have
been another source of uncertainty for some others. Time will tell how well AIIB’s unique blend of old and new will enable it
to serve its mandate and its clients around the world.
January 2016 marked the official launch of the Asian Infras-
tructure Investment Bank (AIIB) under the AIIB Charter
signed by 57 countries. By July 2019, AIIB had 100 approved
members, some 50 regional members from Asia (combining
East Asia, South Asia, Western Asia and Oceania) and 50
non-regional members from Europe, Africa and North and
South America. Together, AIIB’s founding members created
a US$100 billion international financial institution to provide
financing for public and private infrastructure projects for
Asia, building on the experience of existing multilateral
development banks (MDBs) with an aim of innovating for
the future.
Three years after AIIB’s formal launch, this essay traces
AIIB’s establishment process, summarizes AIIB’s early devel-
opment, and highlights some of the innovations that AIIB
offers, with comparisons to its MDB progenitors throughout.
AIIB’s establishment in comparative perspective
1
The specific proposal to set up AIIB was announced by Chi-
nese President Xi Jinping in October 2013. The concept of
an Asian investment bank goes back even further, to the
early 2000s, though it did not gain sufficient attention and
traction in the intervening years. By 2013, developments in
several areas gave renewed impetus to the proposal. The
need for considerable increase in the availability of infras-
tructure financing was being identified globally, and in Asia
in particular. Infrastructure development was seen as a key
driver for China’s own economic development, and the suc-
cess of the Chinese economy enabled China to promote
infrastructure development in other countries, especially
among its Asian neighbors and along its periphery. At the
same time, the increasing economic clout of China and
other developing countries was not easily translated into
greater voice in the governance and operations of existing
international financial institutions, such as MDBs and the
International Monetary Fund (IMF). Criticisms of both the
governance and the operations of existing institutions were
thus another factor.
By October 2014, a Memorandum of Understanding on
Establishing the AIIB had been signed by 22 Asian develop-
ing countries. Within the next few months, the number of
Asian countries, both developed and developing, came to
37 along with a surprising 20 non-Asian countries. All in all,
57 countries agreed on the AIIB Charter, opened for signa-
ture in June 2015. At the Inaugural Meetings of AIIB’s Board
of Governors and Board of Directors in January 2016, AIIB
opened for business with a full set of basic documents and
policies for operations, finance and administration –the out-
put of 2 years of multilateral discussions.
The origin stories of AIIB’s predecessors suggest parallels
and contrasts. The July 1944 negotiations for the Interna-
tional Bank for Reconstruction and Development (IBRD) at
Bretton Woods, New Hampshire are well known. There, the
United States was the chief promoter and largest share-
holder (initially 30 per cent), joined in leadership by the Uni-
ted Kingdom. Less well known is IBRD’s prequel, the Inter-
American Bank (IAB), an international financial institution
formally proposed by Mexico and agreed among the United
States and several Latin American countries, but never
established. The United States Treasury drafters brought for-
ward a number of key IAB concepts into IBRD, such as
weighted voting, basic votes and callable capital. Contrary
to conventional accounts, lending for economic
©2019 University of Durham and John Wiley & Sons, Ltd. Global Policy (2019) 10:4 doi: 10.1111/1758-5899.12703
Global Policy Volume 10 . Issue 4 . November 2019
582
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