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AIIB U NLIKE the Asian Infra- structure Investment Bank (AIIB), which has been successful lately in attracting new mem- bers, another pet idea from Presi- dent Xi Jinping that involves revi- ving two ancient Silk Road trade routes has elicited mixed reviews, both in and outside China. There has been a sense of scepti- cism and wariness over the viabili- ty and purpose of the Silk Road Economic Belt and the 21st Centu- ry Maritime Silk Road – known as the Belt and Road Initiative – since they were launched in 2013. Such sentiments persist even af- ter China gave its clearest exposi- tion of the initiative in a vision document and action plan re- leased last Saturday on the side- lines of the Boao Forum for Asia in Hainan province. This response is a headache for China, which sees the initiative as key to opening up overseas mar- kets, improving economic and cul- tural links with neighbours, and forging a new economic order with itself at the centre. “While foreign countries are keen to reap opportunities arising from the initiative, most are now watching the developments with doubts and questions,” said Jinan University foreign policy analyst Zhang Mingliang. The initiative consists of a “belt” of railroads, highways, pipe- lines and cyber communications from China to Europe via Central Asia, and a “road” connected by ports from China to Europe via South-east Asia and Africa. In fact, the AIIB is seen as just a tool for making the initiative a re- ality. The US$100 billion (S$136 billion) bank and the US$40 bil- lion Silk Road Investment Fund will help finance infrastructure projects, a key plank of the plan. So what explains the lacklustre response to Mr Xi’s vision of a Chi- na-centric regional landscape in- terconnected through transport, trade and people-to-people links? One persistent complaint is that China is trying to do too much and involve too many par- ties without giving clear enough details, say analysts. For instance, China says more than 60 countries and internation- al organisations are keen to be part of the two routes, but there are no publicly available lists of these countries and organisations. Peking University international relations expert Jia Qingguo, in a commentary posted on the People’s Daily website on Mon- day, said the government needs to dispel misperceptions by setting clearer goals and providing a clear- er idea of its focus. “For the initiative to succeed in bringing practical benefits to Chi- na and participating countries, there is a need to be more specific in its implementation,” he added. Moreover, plans for the two routes continue to evolve and change, so foreign states find it hard to make a firm commitment. For instance, in December 2013, the National Development Reform Commission, China’s top economic planning agency, invi- ted representatives from 14 pro- vinces to a seminar on the initia- tive, giving hints that they were the only ones out of 31 regional governments to be involved. But the promise of funds from the central government for infra- structure projects and the need to be seen as publicly supporting Mr Xi’s idea prompted other local go- vernments to lobby to be included in the scheme. The action plan listed 18 pro- vinces, including north-eastern Heilongjiang, Jilin and Liaoning, which were not part of the original plans but inducted to link up with Russia’s Far East region. In addition, some of the 13 pro- vinces and regions left out of the plans had their key cities included in the initiatives, which raised questions about whether China could coordinate such a large number of local governments. Also, the action plan intro- duced a new route to the Maritime Silk Road, which starts in China and wends its way to the South Pa- cific via the South China Sea. The ambitious coverage of over 4.4 billion people, or 63 per cent of the global population, poses dif- ficulties for China as well – it will have to deal with countries at vary- ing developmental stages and with different political systems. Foreign states worry that China is using the initiative as a tool to gain geopolitical influence. They are also sceptical of its pledge to discuss projects on an equal foot- ing with participating countries. Domestically, there could be re- sistance because of concerns that the Silk Road infrastructure projects could see China falling back on the investment-fuelled economic model that it has public- ly sought to shed. What can China do to improve the response to the initiative? Chinese foreign policy expert Yun Sun said “China will need to carefully strategise regional priori- ty projects” and manage competi- tion between Chinese local govern- ments and business players”, to minimise redundancy and waste. China must also take into con- sideration demands by recipient countries for job creation and pro- curement contracts, added the ana- lyst from the Washington-based Stimson Centre, a foreign policy think-tank. “Last but not least, China should make economically sound decisions about projects, and avoid investment failures to be paid for by the central govern- ment in the end,” she said. [email protected] N O FEWER than 46 countries have signed up to be founding members of the Chi- na-led Asian Infra- structure Investment Bank (AIIB), seen as one of Beijing’s biggest diplomatic coups. But hard work lies ahead for the Asian power, which, experts say, must prove its naysayers wrong and show it can be a re- sponsible global player. Though the United States lob- bied against the AIIB, some of its staunch allies, such as Britain and South Korea, have in recent weeks applied to join. Experts say that while Britain’s surprise decision, in particular, turned the tide, it was also the lack of a hard-nosed approach from China about how the AIIB would be run that led to the shift. “We know China would have a dominant role, but the fact that it did not officially demand veto power gave incentive for more states to sign up. It showed that the AIIB’s structure can still be ne- gotiated,” analyst Li Mingjiang of the S. Rajaratnam School of Inter- national Studies said. In fact, a Wall Street Journal ar- ticle last week said China agreed to forgo its veto power to win the support of key European nations. Beijing, however, has maintained that it does not seek it. China’s emphasis on the bank’s inclusive nature and its willing- ness to work with similar institu- tions like the Asian Development Bank (ADB) helped allay concerns, according to experts. Moreover, its focus on infrastructure-build- ing in a region sorely lacking it and the opportunity this gives to Western firms to be involved in new projects whittled away at US arguments against the bank. As of Tuesday – the deadline to apply to become an AIIB found- ing member – 46 countries across five continents had signed up. The founding members, includ- ing Singapore, will help create the bank’s governance and operation- al rules. States that join after the deadline will have voting rights, but less say in making the rules. As China has no previous experi- ence managing a multilateral lend- er, the future of AIIB, which has an initial capital of US$50 billion (S$68 billion), remains uncertain. Concerns remain over how democratic and transparent its governance structure will be and if it will uphold high lending stand- ards. This includes issues such as how the bank’s voting shares will be split and how its board of direc- tors will be structured. University of Macau’s Profes- sor Chen Dingding said Beijing must make a serious effort to show that the AIIB is not just an- other weapon for China to domi- nate South-east Asia. Failing to do so would jeopardise not only the AIIB’s goals but also China’s aim of a peaceful rise.“By delegating more pow- er to others, Beijing can send a strong and reassuring signal to countries like Vietnam and the Philippines, moderating tensions stemming from maritime disputes between these states,” he added. Professor Kevin Gallagher of Boston University said relinquish- ing veto power is better for Bei- jing in the long run. “Now they can say they formed a global finan- cial institution with a more sound structure than the Bretton Woods institutions that grant the US veto power,” he added. Other issues such as where the bank’s headquarters will be and the people it hires are also being closely watched amid fears that Beijing will use the AIIB as a geo- political tool. Dr Robert Wihtol, former ADB country director for China, said the AIIB’s initial years will be cru- cial in laying the foundation for its operations. “To ensure it gets off to a strong start, with a focus on the quality of its lending, the AIIB will need to attract well-qual- ified and experienced staff. It should recruit from a broad inter- national talent pool,” he said. Already, Mr Jin Liqun, the Chi- nese official appointed to head the AIIB, has reportedly been lining up retired World Bank officials in Washington. While Chinese officials have said the bank’s headquarters will be in Beijing, Jakarta has recently thrown its hat into the ring as In- donesia seeks a major AIIB role. Mr Gavin Bowring from re- search firm Asean Confidential noted that China may seek to alle- viate fears of sinocentrism and opt for a neutral location. “A similar calculation resulted in the decision by the ADB – in which Japan is the largest share- holder – to pitch its regional head- quarters in Manila,” he pointed out in a Financial Times blog post. But apart from the way the bank is managed, the quality of the projects the AIIB invests in will also be a litmus test. There are concerns the bank might fail to keep global standards in environmental, labour and an- ti-corruption protection, giv- en that China’s bilateral lend- ing programmes across Africa, Asia and Latin America have been tainted with controversial projects. The biggest question, howev- er, is what happens if the US and Japan decide to join the AIIB later. Dr Wihtol does not foresee any difficulties in such a working rela- tionship as “China, Japan and the US have for many decades worked together closely in the World Bank, the ADB and other multilateral banks”. [email protected] AIIB gains from inclusive stance Chinese President Xi Jinping’s two pet ideas to raise China’s economic influence are seeing contrasting fortunes. The Asian Infrastructure Investment Bank (AIIB) has scored with new members, including American allies, but his attempt to revive two ancient Silk Road trading routes is regarded with scepticism. What is China doing right with the bank and wrong with the Silk Road strategies? A33 Islamic conservatism in Malaysia By KOR KIAN BENG CHINA BUREAU CHIEF Silk route plans lack clarity, focus T HE orgy of violence in Yemen warrants the attention of not just Middle Eastern nations but also the rest of the world for compelling reasons. Alongside the grave humanitarian crisis in the poorest coun- try of the Arab world lurk other worry- ing dangers. For one thing, energy security is at stake, given Yemen’s location at the choke point of the Gulf of Aden through which much oil is shipped. Its implo- sion, following in the footsteps of Syria, Iraq and Libya, raises fears that the Arab Spring four years ago will turn into a long, hard winter for the region. It is bad enough when Yemen is a proxy bat- tlefield for Sunni power Saudi Arabia and Shi’ite rival Iran, but a deepening risk is that Al-Qaeda will exploit its ha- ven in Yemen to expand in the region while the Islamic State in Iraq and Syria will also spread its tentacles. It is a dead- ly combination. In the absence of the United States – whose withdrawal of its Special Forces from Yemen is said to represent a failed campaign – could one take some com- fort from the efforts of the Saudis to demonstrate regional leadership, and of Arab League nations to create a joint Ar- ab military force? If the analysts are cor- rect, air strikes can only do so much and any land intervention “could quickly spi- ral out of control”, according to The Economist. Ultimately, Arabs will have to take a long, hard look at the primary causes of the troubles in their backyard and seek durable solutions. A case in point is the root cause of the insurgency in Yemen. The Iran-backed Houthi rebels, who had long been active in the country’s north, overran the capital Sanaa last Sep- tember on the back of general discon- tent over the government of President Abedrabbo Mansour Hadi. It unravelled badly because of Mr Hadi’s profound failure to accommodate the interests of the Houthis. The context is that Mr Ha- di was installed in 2011 in a deal backed by the United Nations and mediated by the Gulf Cooperation Council to end an uprising. That deal, however, excluded non-establishment factions such as the Houthis. The lack of an inclusive govern- ment contributed to the current civil strife. Looking ahead, concern should not be just focused on preventing Yemen from falling under the thrall of Iran, given the latter’s rising geopolitical influence which now includes Baghdad, Damascus and Beirut. A glimmer of hope lies in Teheran’s call for “dialogue and reconcil- iation”. This is what major Arab players should also push for. Yemenis cannot af- ford to delude themselves for much long- er, with or without the aid of their much-touted addiction to a mild narcot- ic. For a political solution to last, they must embrace one that is demonstrably inclusive. Inequality and home prices in ‘superstar cities’ A35 By ESTHER TEO CHINA CORRESPONDENT IN BEIJING No quick fixes for Yemen FRIDAY, APRIL 3, 2015 A32
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