Korea still mulling AIIB

As more allies of the United States announced their plans to join China’s initiative to create a new Asian development bank, a top economic official said on Wednesday that Korea is still exploring the possibility, rejecting a media report that Seoul already informed Washington about its intention to participate.

“There was no discussion on the AIIB issue by an official consultative body,” said Ahn Chong-bum, the senior presidential secretary for economic affairs, referring to the Asian Infrastructure Investment Bank. “The government has never made public its position, and we are still in the stages of studying the proposal. A decision will be made in the future, but nothing is decided yet.”

The comment came as the Munhwa Ilbo reported on Wednesday, quoting a government source, that Seoul had decided to participate in the program, largely funded by China, and informed Washington about it.

Another official from the Korean Foreign Ministry added that the government is still reviewing the issue. “The government has not made a decision, so we could not have informed the United States about it,” he said. “It’s true that we are talking with Washington, but the report has gone too far.”

As Korea remains undecided, more key European allies of the United States - France, Germany and Italy - issued a joint statement on Tuesday announcing their intent to become prospective founding members of the AIIB.

While Washington sees China’s plan to create a regional bank to fund infrastructure projects as a challenge to the U.S.-led global financial order, more and more of its allies have joined the program. The British government announced last week that it would participate.

The United States has lobbied against the AIIB, which it sees as a rival to the World Bank and the Asian Development Bank, pressuring its allies including Korea to stay away from China’s plan. So far, almost all developing countries in Asia have joined the bank, but not Australia, Japan and Korea.

The deadline to become a founding member is the end of this month, and China has since stepped up the pressure. Beijing sent Chinese Assistant Minister of Foreign Affairs Liu Jianchao to Korea this week to urge Seoul’s participation.

Asked about Beijing’s intensifying pressure on Seoul, Washington said it was Korea’s decision to make.

“It’s a decision of any sovereign country, including South Korea, to make on AIIB,” Jen Psaki, spokesperson of the U.S. State Department, said during a press briefing in Washington. “We have obviously expressed the same views I expressed publicly through private channels, but I don’t have any further comment beyond that.”

After France, Germany and Italy announced their decision to participate in the AIIB, White House spokesman Josh Earnest stated that participating nations must push the bank to adopt the same high standards, oversight and safeguards that the World Bank and other global financial institutions have adopted.

He also said the United States has no plan to join the bank.

Washington’s frustration with the China-led financial institution was also expressed on Tuesday by Treasury Secretary Jacob J. Lew.

In his testimony before the House Financial Services Committee, Lew said, “It is urgent that we address prior unmet commitments, which have grown to levels that raise significant questions about U.S. credibility and leadership in the multilateral system.”

He said failure to do so can “result in a loss of U.S. shareholding at a time when new players are challenging U.S. leadership in the multilateral system.”

BY SER MYO-JA [ser.myoja@joongang.co.kr]