Decision time for Korea on membership in AIIB

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Decision time for Korea on membership in AIIB

Whether or not Korea will participate in the creation of the China-led Asian Infrastructure Investment Bank (AIIB) will be made clear this week.

According to news reports, the government is likely to make an announcement about its official stance on the diplomatically sensitive issue of joining the organization, which Washington doesn’t like.

Although the Ministry of Foreign Affairs said last week’s visit to Seoul by Liu Jianchao, Chinese assistant minister of foreign affairs, had nothing to do with the AIIB, media reports say the two countries have discussed details of Korea joining the organization.

The AIIB is envisioned as a new institution to support infrastructure projects in Asia that would rival the World Bank and particularly the Asian Development Bank, which are dominated by Western countries and Japan, with the aim of creating a new financial order centered on China.

China has offered to put up $50 billion for a stake of as much as 50 percent in the AIIB.

Korea has been hesitant to join the bank despite Beijing’s urging for fear of straining ties with the United States. Washington has expressed concern that China will use the bank for political purposes. Britain, France and Germany announced their intention to become founding members of the bank this month, and Switzerland submitted its application to join last week.

Australia, a key U.S. ally in the Asia Pacific region, also is expected to decide this week whether it will join the AIIB.

“The deadline for joining the AIIB is the end of March, so the government will announce its decision before then,” Korean Finance Minister Choi Kyung-hwan said Friday.

China will meet with countries that announce their intention to join the bank on March 31 in Pakistan. Twenty-one nations - including India, Singapore and Thailand - signed a memorandum of understanding in Beijing in October.

China reportedly has been asking Korea to be the second-largest stakeholder in the new institution by investing 500 billion won ($449 million) to 700 billion won.

Experts say Korea should not hesitate to participate.

“Korea is going for it anyway, so it is desirable that the government makes the announcement as early as possible,” said Ji Man-soo, a researcher at Korea Institute of Finance. “There will be greater demand for roads, railways and energy projects, as well as financial services.”

“Korea needs to be aggressive in infrastructure projects taking place in Asia by utilizing its overseas construction experience if it hopes to enjoy a second Middle East boom,” said Kim Heung-kyu, a political science professor at Ajou University.

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