Real Reason for the Asian Investment Bank – and Western Participation

Dominant Social Theme: Asia will show the West how to run an investment bank. 

Free-Market Analysis: High finance and international politics are subtle affairs. 

On its surface, the effort to create an Asian-oriented "world bank" is straightforward. But beneath the surface, currents swirl. The putative reason for such a bank is that the current World Bank is often exploitative and takes advantage of countries in trouble. A second reason is that the advantages of a World Bank will now accrue to Asian members. Their influence and monetary power will expand accordingly. 

But the third reason is the most interesting of all. A little more from the article, first: 

The concerted move to participate in Beijing's flagship economic outreach project was a diplomatic blow to the United States, reflecting European eagerness to partner with China's fast-growing economy, the world's second largest. 

It comes amid prickly trade negotiations between Brussels and Washington, and at a time when EU and Asian governments are frustrated that the U.S. Congress has held up a reform of voting rights in the International Monetary Fund due to give China and other emerging powers more say in global economic governance. 

German Finance Minister Wolfgang Schaeuble made the announcement at a joint news conference with visiting Chinese Vice Premier Ma Kai, at which no questions were allowed. He said Germany, Europe's biggest economy and a major trade partner of Beijing, would be a founding member of the Asian Infrastructure Investment Bank. 

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