AIIB

UNLIKE the Asian Infra-structure InvestmentBank (AIIB), which hasbeen successful latelyin attracting new mem-

bers, another pet idea from Presi-dent Xi Jinping that involves revi-ving two ancient Silk Road traderoutes 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 RoadEconomic Belt and the 21st Centu-ry Maritime Silk Road – known asthe 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 visiondocument and action plan re-leased last Saturday on the side-lines of the Boao Forum for Asia inHainan province.

This response is a headache forChina, which sees the initiative askey to opening up overseas mar-kets, improving economic and cul-tural links with neighbours, andforging a new economic orderwith itself at the centre.

“While foreign countries arekeen to reap opportunities arisingfrom the initiative, most are nowwatching the developments withdoubts and questions,” said JinanUniversity foreign policy analystZhang Mingliang.

The initiative consists of a“belt” of railroads, highways, pipe-lines and cyber communicationsfrom China to Europe via CentralAsia, and a “road” connected byports from China to Europe viaSouth-east Asia and Africa.

In fact, the AIIB is seen as justa tool for making the initiative a re-ality. The US$100 billion (S$136billion) bank and the US$40 bil-lion Silk Road Investment Fundwill help finance infrastructureprojects, a key plank of the plan.

So what explains the lacklustreresponse 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 isthat China is trying to do toomuch and involve too many par-ties without giving clear enoughdetails, say analysts.

For instance, China says morethan 60 countries and internation-al organisations are keen to bepart of the two routes, but thereare no publicly available lists ofthese countries and organisations.

Peking University internationalrelations expert Jia Qingguo, in acommentary posted on thePeople’s Daily website on Mon-day, said the government needs todispel misperceptions by settingclearer goals and providing a clear-er idea of its focus.

“For the initiative to succeed inbringing practical benefits to Chi-na and participating countries,there is a need to be more specificin its implementation,” he added.

Moreover, plans for the tworoutes continue to evolve andchange, so foreign states find ithard to make a firm commitment.

For instance, in December2013, the National DevelopmentReform Commission, China’s topeconomic planning agency, invi-ted representatives from 14 pro-vinces to a seminar on the initia-tive, giving hints that they werethe only ones out of 31 regionalgovernments to be involved.

But the promise of funds fromthe central government for infra-structure projects and the need tobe seen as publicly supporting MrXi’s idea prompted other local go-vernments to lobby to be includedin the scheme.

The action plan listed 18 pro-vinces, including north-easternHeilongjiang, Jilin and Liaoning,which were not part of the originalplans but inducted to link up withRussia’s Far East region.

In addition, some of the 13 pro-vinces and regions left out of theplans had their key cities includedin the initiatives, which raisedquestions about whether Chinacould coordinate such a largenumber of local governments.

Also, the action plan intro-duced a new route to the MaritimeSilk Road, which starts in Chinaand wends its way to the South Pa-cific via the South China Sea.

The ambitious coverage of over4.4 billion people, or 63 per centof the global population, poses dif-ficulties for China as well – it willhave to deal with countries at vary-ing developmental stages and withdifferent political systems.

Foreign states worry that Chinais using the initiative as a tool togain geopolitical influence. Theyare also sceptical of its pledge todiscuss projects on an equal foot-ing with participating countries.

Domestically, there could be re-sistance because of concerns thatthe Silk Road infrastructureprojects could see China fallingback on the investment-fuelledeconomic model that it has public-ly sought to shed.

What can China do to improvethe response to the initiative?

Chinese foreign policy expertYun Sun said “China will need tocarefully strategise regional priori-ty projects” and manage competi-tion between Chinese local govern-ments and business players”, tominimise redundancy and waste.

China must also take into con-sideration demands by recipientcountries for job creation and pro-curement contracts, added the ana-lyst from the Washington-basedStimson Centre, a foreign policythink-tank.

“Last but not least, Chinashould make economically sounddecisions about projects, andavoid investment failures to bepaid for by the central govern-ment in the end,” she said.

kianbeng@sph.com.sg

NO FEWER than 46countries have signedup to be foundingmembers of the Chi-na-led Asian Infra-

structure Investment Bank (AIIB),seen as one of Beijing’s biggestdiplomatic coups.

But hard work lies ahead forthe Asian power, which, expertssay, must prove its naysayerswrong and show it can be a re-sponsible global player.

Though the United States lob-bied against the AIIB, some of itsstaunch allies, such as Britain andSouth Korea, have in recent weeksapplied to join.

Experts say that while Britain’ssurprise decision, in particular,turned the tide, it was also thelack of a hard-nosed approachfrom China about how the AIIBwould be run that led to the shift.

“We know China would have adominant role, but the fact that itdid not officially demand vetopower gave incentive for morestates to sign up. It showed thatthe AIIB’s structure can still be ne-gotiated,” analyst Li Mingjiang ofthe S. Rajaratnam School of Inter-national Studies said.

In fact, a Wall Street Journal ar-ticle last week said China agreedto forgo its veto power to win thesupport of key European nations.Beijing, however, has maintainedthat it does not seek it.

China’s emphasis on the bank’sinclusive nature and its willing-ness to work with similar institu-tions like the Asian DevelopmentBank (ADB) helped allay concerns,according to experts. Moreover,its focus on infrastructure-build-ing in a region sorely lacking itand the opportunity this gives toWestern firms to be involved innew projects whittled away at USarguments against the bank.

As of Tuesday – the deadlineto apply to become an AIIB found-ing member – 46 countries acrossfive continents had signed up.

The founding members, includ-ing Singapore, will help create thebank’s governance and operation-al rules. States that join after thedeadline 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 hasan initial capital of US$50 billion(S$68 billion), remains uncertain.

Concerns remain over howdemocratic and transparent itsgovernance structure will be andif it will uphold high lending stand-ards. This includes issues such ashow the bank’s voting shares willbe split and how its board of direc-tors will be structured.

University of Macau’s Profes-

sor Chen Dingding said Beijingmust make a serious effort toshow that the AIIB is not just an-other weapon for China to domi-nate South-east Asia. Failing todo so would jeopardise not onlythe AIIB’s goals but alsoChina’s aim of a peacefulrise.“By delegating more pow-er to others, Beijing can send astrong and reassuring signal tocountries like Vietnam and thePhilippines, moderating tensionsstemming from maritime disputesbetween these states,” he added.

Professor Kevin Gallagher ofBoston University said relinquish-ing veto power is better for Bei-jing in the long run. “Now theycan say they formed a global finan-cial institution with a more soundstructure than the Bretton Woodsinstitutions that grant the US vetopower,” he added.

Other issues such as where thebank’s headquarters will be andthe people it hires are also beingclosely watched amid fears thatBeijing will use the AIIB as a geo-political tool.

Dr Robert Wihtol, former ADBcountry director for China, saidthe AIIB’s initial years will be cru-cial in laying the foundation forits operations. “To ensure it getsoff to a strong start, with a focuson the quality of its lending, theAIIB will need to attract well-qual-ified and experienced staff. Itshould recruit from a broad inter-national talent pool,” he said.

Already, Mr Jin Liqun, the Chi-nese official appointed to head theAIIB, has reportedly been liningup retired World Bank officials inWashington.

While Chinese officials havesaid the bank’s headquarters willbe in Beijing, Jakarta has recentlythrown its hat into the ring as In-donesia seeks a major AIIB role.

Mr Gavin Bowring from re-search firm Asean Confidentialnoted that China may seek to alle-viate fears of sinocentrism andopt for a neutral location.

“A similar calculation resultedin the decision by the ADB – inwhich Japan is the largest share-holder – to pitch its regional head-quarters in Manila,” he pointedout in a Financial Times blog post.

But apart from the way thebank is managed, the quality ofthe projects the AIIB invests inwill also be a litmus test. Thereare concerns the bank mightfail to keep global standards inenvironmental, labour and an-ti-corruption protection, giv-en that China’s bilateral lend-ing programmes across Africa,Asia and Latin America have beentainted with controversialprojects.

The biggest question, howev-er, is what happens if the US andJapan decide to join the AIIB later.

Dr Wihtol does not foresee anydifficulties in such a working rela-tionship as “China, Japan andthe US have for many decadesworked together closely in theWorld Bank, the ADB andother multilateral banks”.

esthert@sph.com.sg

AIIB gains frominclusive stance

Chinese President Xi Jinping’s two pet ideas to raise China’s economicinfluence 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 Roadtrading routes is regarded with scepticism. What is China doing right withthe bank and wrong with the Silk Road strategies?

A33 Islamic conservatism in Malaysia

By KOR KIAN BENGCHINA BUREAU CHIEF

Silk route planslack clarity, focus

THE orgy of violence in Yemen warrantsthe attention of not just Middle Easternnations but also the rest of the world forcompelling reasons. Alongside the gravehumanitarian crisis in the poorest coun-try of the Arab world lurk other worry-ing dangers.

For one thing, energy security is atstake, given Yemen’s location at thechoke point of the Gulf of Aden throughwhich much oil is shipped. Its implo-sion, following in the footsteps of Syria,Iraq and Libya, raises fears that the ArabSpring four years ago will turn into along, hard winter for the region. It isbad enough when Yemen is a proxy bat-tlefield for Sunni power Saudi Arabiaand Shi’ite rival Iran, but a deepening

risk is that Al-Qaeda will exploit its ha-ven in Yemen to expand in the regionwhile the Islamic State in Iraq and Syriawill also spread its tentacles. It is a dead-ly combination.

In the absence of the United States –whose withdrawal of its Special Forcesfrom Yemen is said to represent a failedcampaign – could one take some com-fort from the efforts of the Saudis todemonstrate regional leadership, and ofArab League nations to create a joint Ar-ab military force? If the analysts are cor-rect, air strikes can only do so much andany land intervention “could quickly spi-ral out of control”, according to TheEconomist.

Ultimately, Arabs will have to take a

long, hard look at the primary causes ofthe troubles in their backyard and seekdurable solutions. A case in point is theroot cause of the insurgency in Yemen.

The Iran-backed Houthi rebels, whohad long been active in the country’snorth, overran the capital Sanaa last Sep-tember on the back of general discon-tent over the government of PresidentAbedrabbo Mansour Hadi. It unravelledbadly because of Mr Hadi’s profoundfailure to accommodate the interests ofthe Houthis. The context is that Mr Ha-di was installed in 2011 in a deal backedby the United Nations and mediated bythe Gulf Cooperation Council to end anuprising. That deal, however, excludednon-establishment factions such as the

Houthis. The lack of an inclusive govern-ment contributed to the current civilstrife.

Looking ahead, concern should not bejust focused on preventing Yemen fromfalling under the thrall of Iran, given thelatter’s rising geopolitical influencewhich now includes Baghdad, Damascusand Beirut. A glimmer of hope lies inTeheran’s call for “dialogue and reconcil-iation”. This is what major Arab playersshould also push for. Yemenis cannot af-ford to delude themselves for much long-er, with or without the aid of theirmuch-touted addiction to a mild narcot-ic. For a political solution to last, theymust embrace one that is demonstrablyinclusive.

Inequality and home prices in ‘superstar cities’ A35

By ESTHER TEOCHINA CORRESPONDENTIN BEIJING

No quick fixes for Yemen

F R I D A Y , A P R I L 3 , 2 0 1 5

A32