Fertile ground for AIIB

The U.S.’s face-losing attempt to position
Korea against the China-led Asian Infrastructure
Investment Bank has exacted
American soul-searching. Despite Washington’s
opposition and warnings, all its
allies and industrial powers from both the
west and east — except for Japan — have
signed on as founding members. Those
who have advised against shunning the
new bank predicted the AIIB would materialize
whether Washington likes it or
not. Instead, they urged Washington to
join the AIIB to have a voice in the framework
and governance rules.
How did the Obama administration
fall flat on its face? One reason can be
found in the dynamics of politics in Washington.
There is little chance the Republican-
dominated Congress would give the
go-ahead, and the Obama administration
had limited policy options to start with.
Critics decried the absence of transparent
governance standards and Republicans
were ready for knee-jerk opposition to
any new policy decisions by the Obama
administration.
Thomas Mann, a senior fellow at the
Brookings Institution and longtime expert
on U.S. politics, said party polarization
and congressional dysfunction is the
worst since the Civil War. Studies and
polls show animosity and distrust among
Americans runs deeper toward those who
are of different political views, religions
or races. Amid such a widening gulf, the
United States has lost the ability to compromise
and the flexibility to ensure social
stability and harmony.
As the divide deepens in the United
States, China enjoys opportunities to
broaden its sphere of influence. The U.S.
Congress turned down the Obama administration’s
request to reform the International
Monetary Fund’s quota structure
to better reflect today’s global realities.
Washington’s overbearing attitude disappointed
China, which only has a 4.2 percent
voice in the World Bank although it
is the world’s second-largest, if not the
largest, economy. Other emerging economies
also were put off by the actions of
U.S. lawmakers.
At the same time, it justified China’s
campaign for a new international order to
move away from the traditional Western
industrial powers. Over the past decade,
China has been quietly working to redesign
the post-war Bretton Woods financial
system dominated by American, European
and Japanese interests by offering alternatives.
While demanding reform of existing
international institutions, Beijing worked
toward better ties with other G7 advanced
nations, while at the same time experimenting
with various regional programs.
It strengthened regional commitments
through the Chiang Mai Initiative and
Asian Bond Fund. Chinese capital expanded
beyond Asia to Africa, the Middle
East and Latin America. Since the Beijing
summit of the Forum on China-Africa Cooperation
in 2006, China has created a
development fund entirely for African investment.
It launched a new bank with its
fellow Brics emerging market nations —
Brazil, India, Russia and South Africa.
Newfound cash riches have allowed
China to leverage the imbalance in global
financial power by shifting the weight
away from the traditional organizations
dominated by G7 nations, such as the
World Bank, Asian Development Bank
and IMF, in case reform progress in these
institutions remains on a stubbornly slow
course.
If the political stalemate continues to
constrain U.S. leadership, China will go
on stretching its influence on the international
stage. If the Obama administration’s
push for the Trans-Pacific Partnership
as a part of the president’s pivot-to-
Asia policy receives a setback in Congress,
overall U.S. initiative to rebalance foreign
and trade policy would likely stumble.
U.S Defense Secretary Ashton Carter
joined the pitch for the TPP, saying, “You
may not expect to hear this from a secretary
of defense, but in terms of our rebalance
in the broadest sense, passing the
TPP is as important to me as another aircraft
carrier.”
If the United States cannot form a pan-
Asian network through the TPP, it could
cede more strategic power to China, which
is on the path to creating maritime and
land trade routes dubbed the New Silk
Road to connect Asia with Europe and
Africa.
China still lacks the ability and sway
to replace the U.S.-led international economic
and financial order. Internally, Beijing
faces numerous challenges politically,
economically, socially and environmentally.
It ascended to G2 rank, but nevertheless
must fix side effects from rapid growth
and escape the middle-income trap. It
lacks the soft power to initiate a new international
order and vision. What we
will discover is a multi-polar system of
coexistence, competition and supplementation
of new and traditional orders. It is
a reality and an environmental challenge
for all allies of the United States, not just
Korea stuck between longstanding and
rising global powers.
A diversified international order demands
the capacity to coordinate among
various international bodies with overlapping
functions. They must be watched so
they do not represent or side with a certain
group. We must strengthen our diplomatic
prowess. We need to have experts who can
accurately see through not only advanced,
but emerging countries as well as those
who are familiar with the work of international
organizations. Talent should be fostered
regardless of ideological preference.
Only a broad selection of intelligence can
cope with and capitalize on the complicated
web of a diversified order.
We also need political leaders who can
oversee experts and policies. We must not
lose this opportunity to ride on the new
wave with a bigger role because of inner
divisions. The ship must be stable and
full-trusting in order for the captain and
bridge to navigate the global sea.
Translation by the Korea JoonAng Daily staff.

The author is a professor at the University of
Hong Kong and CEAP visiting fellow at Brookings
Institution.

by Sohn Injoo