Insights to Great Powers' Desire to Establish Institutions: Comparison of ADB, AMF, AMRO and AIIB
| Author | Shintaro Hamanaka |
| Date | 01 May 2016 |
| Published date | 01 May 2016 |
| DOI | http://doi.org/10.1111/1758-5899.12304 |
Insights to Great Powers’Desire to Establish
Institutions: Comparison of ADB, AMF, AMRO
and AIIB
Shintaro Hamanaka
Asian Development Bank
1. Establishing regional institutions: subtle
politics and prestige
There have been a large number of regional financial cooper-
ation projects in Asia, both before and after the financial crisis
in 1997/98. Recently, added to the list is the Asia Infrastruc-
ture Investment Bank (AIIB) initiated by China. While there
have been hot debates on AIIB, especially regarding China’s
motivation, it is important for us to compare AIIB with organi-
zations established in the past because AIIB shares several
commonalities with them.
As a close observer to the rise and fall of Asian financial
cooperation, in this paper, I will propose a logic that sheds
light on the great powers’desire to establish institutions. I
will analyze Asian financial institutions from two angles. The
first angle is the establishment phase or negotiation process.
In the economic field, politics relating to institution building
is subtle and cunning. How to exclude parties unfavorable
to the proposed institution is the fundamental politics of
institution building. For parties excluded from the establish-
ment process, blocking the unfavorable institution is a major
concern. Again, tactics are subtle. Excluded parties try to get
‘involved’to influence institutional configurations or even to
‘kill’the original proposal from inside.
The second angle is the institutional configuration. Apart
from decision-making procedures that have attracted much
attention from scholars, several institutional features that
relate to ‘prestige’(Morgenthau, 1960, p. 77) are critical. The
location of the organization and the position of the organiza-
tional head are of particular importance. In addition, in the
case of regional organization, nuanced differentiation of
membership (such as regional or nonregional) is also impor-
tant because a member country’sinfluence within the organi-
zation is reduced just because it is labeled as nonregional.
While some may think that the location and membership label
have nothing to do with the substance of the organization, in
reality, they are primary concerns that negotiators look into.
2. Brief comparison of four regional financial
institutions
Asian Development Bank (ADB)
Ohashi Kaoru, the head of an economic research institute in
Tokyo had an idea of establishing a regional development
bank in Asia. In 1962, ‘Ohashi study group’was formed with
support from the Ministry of Finance of Japan (JMOF). One
year later, the group prepared a paper that proposed the
establishment of a development bank in Asia and argued
that the organization should be located in Tokyo and
headed by the Japanese. Interestingly, liberal minded Oha-
shi’s original idea was to establish a bank in Hong Kong
(Hamanaka, 2009, p. 86). A study group member had an
informal consultation about the establishment of a new
bank with US officials in September 1963, but they were
unenthusiastic (Huang, 1975, p. 23). Meanwhile, another idea
of establishing a regional development bank came from the
United Nations Economic Commission for Asia and the Far
East (ECAFE) in late 1963, and Japan decided to support it.
As several high-ranking US ex-officials admit, the US was
reluctant to support ECAFE’s ADB proposal (Black, 1969, p. 97;
Rostow, 1986, p. 8). It was, however, difficult for Washington
DC to block the proposal for two reasons. First, the US felt
obliged to support the plan to avoid the fuel of anti-US senti-
ment in the region (White, 1970, p. 44). Second, the US was
unable to directly get involved in the meeting held among
Asian countries because of the ‘Lahore Convention’adopted
in 1952, which recommended that nonregional members
should refrain from voting against economic proposal sup-
ported by regional members (Newman, 1979, p. 362). The
continuation of the study on a regional development bank
was agreed at the Asia-only ministerial meeting in Manila in
December 1963. The consultative committee organized in
Bangkok in June 1965 involved only Asian countries; what the
US was able to do, at most, was to send Mr Black (the former
World Bank President) to Bangkok during the committee per-
iod to influence the discussion on the ADB by meeting with
each Asian official individually (Hamanaka, 2009, p. 92).
The ADB established in 1966 involved the US as a major
financial contributor. However, the US is treated as a nonre-
gional member in the ADB (ADB president should be from a
regional member). At the same time, the headquarters of the
ADB was decided to be in Manila. Concerned parties involved
in the establishment process shared the view that the US
unofficially supported Manila, not Tokyo, as the headquarters,
thinking that the Japanese influence would become too dom-
inant if it was placed in Tokyo (Wesley, 2003, p. 27). Interest-
ingly, Japan’s priority was the location of headquarters
(Tokyo) over placing a Japanese president (Hamanaka, 2009,
p. 91).
©2016 University of Durham and John Wiley & Sons, Ltd. Global Policy (2016) 7:2 doi: 10.1111/1758-5899.12304
Global Policy Volume 7 . Issue 2 . May 2016
288
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