Passed the first in the history of the meeting of shareholders, the Asian infrastructure investment Bank — the Chinese alternative to the American International Bank
<sup>the opening ceremony of the Asian infrastructure investment Bank in Beijing. On stage — XI Jinping. Photo: TASS</sup>
In parallel, inconclusive visit of the Russian President in Beijing from 24 to 26 June in the capital of China was an event with far-reaching international consequences — the first ever annual stockholders ‘ meeting of Asian infrastructure investment Bank (ABII). What is this organization, which is Russia, and what are its ambitious plans — sorted semen Laskin.
Russia is the third largest Deposit holder of the Bank shares, but due to unknown circumstances, the Russian President did not come to the opening and congratulated the 57 member countries, and finally accomplished the first international multilateral development Bank established “without the US”. Almost unnoticeable was a member of the governing Board — the Minister of economic development of Russia Ulyukayev, who wore on the lapel of the plate with a mysterious inscription “Roses” instead of the name of their country. On the first day of the meeting, the Minister told the media that the President ABII promised to appoint Russian and Vice-President that will give the opportunity to influence the choice of projects and their quality development.
the <sup>Tag, issued by the Russian Minister, leads to sad thoughts about whether Russia is perceived in the AIIB seriously…</sup>
The spirit of the event was clearly defined by the ceremonial opening. A leading British aristocrat and corporate Secretary ABII sir Danny Alexander asked the audience to stand at attention not only in the beginning to meet the honourable Vice-Premier of China Zhang gaoli, but also in the end to say goodbye to the departing comrade Zhang. I vaguely remember from history that
the first sovereign Embassy, filled in Beijing at the time, was a fiasco because his head sheepishly said Chinese officials from the Chamber of ceremonies, to bow down to anyone except God and their own sovereign, he was not told.
To difficulties the stranger treated with understanding, not beheaded, but the audience he is not rewarded and the mission failed. Further instructions have changed and the ambassadors somehow solved this thorny issue.
So, what is Asian infrastructure investment Bank? This is an attempt of China to provide service to Asian countries and to create an international financial mechanism under Chinese protectorate. Most of the financial resources of the Bank provided by the Ministry of Finance of China, the headquarter located in Beijing, and it is no secret that the Bank aims to disseminate the “best in Asia Chinese experience of development.” While minority co-founders of the 100-billion-dollar monster of steel 56 countries, excluding Japan and the United States, and 24 countries have already applied for membership.
The Bank formally launched only six months ago and still has only 40 employees, 15 wandering around the deserted floors of the Beijing office. Already approved to Finance projects on 509 million dollars, including roads in Pakistan, and Tajikistan, slum upgrading in Indonesia and reconstruction of transmission lines in Bangladesh. Three of the four projects co-financed by other international banks, which took over risk management. The AIIB itself to a full risk analysis is not yet capable of, and therefore, compared with the stored resources, already painted in spending is a drop in the ocean.
The establishment of this Bank and several of its analogues were based on the fact that “in Asia, the need for infrastructure projects is estimated at $ 8 trillion”. I do not presume to argue with that, although I cherish doubt that anyone critical needs in this sea of concrete, the more that this demand is not market-based. The myth of the great need in the infrastructure is not backed by ability to pay and compounded by high environmental, social and political risks. 90% of the infrastructure built on public money, which are de facto often not subject to return. Private business and any independent investors go into these projects reluctantly, often under political coercion.
ABII was created as a tool of international integration with “Chinese characteristics” is intended to become a key mechanism for funding the ambitious programme of the China silk belt and road”, which aims to link together all the countries of Eurasia in the “community of common destiny”.
On the sidelines about the “common destiny” in the frames of the 46-billion dollar project “China-Pakistan corridor cried the head of the Pakistani investment company Anwar. This corridor with access to the Indian ocean port of Gwadar consists of several roads, power plants and various auxiliary facilities and assures China of a alternative of the Malacca Strait transport route from the Middle East and Africa. According to Pakistanis, there is no Agency that his country does not have a full schematic of the “corridor” politicians and bureaucrats compete for a share in the Chinese projects and the master plan (if any) is located in Beijing. The construction is carried out mainly by Chinese companies and Chinese manpower to the projects. At the same time people of Pakistan have forgotten to clearly explain what actually is this loan and how to give it. Not one penny of private investment in the corridor is not invested. “We have no choice if we want this investment”. ABII sanctifies this infrastructure mess, sufinancira with the Asian development Bank just one small section of the road. All the rest is credited from the Fund of the silk road and the “political” banks of China (Eximbank, China development Bank, etc.), and information about the projects of “corridor” and their environmental and social impacts are practically unavailable.
Two-day annual meeting of the abii were in discussions about that, whence undertake creditworthy infrastructure projects, pursuant to which the Bank can issue loans and attract private co-investors. Ready projects in which to invest without fear, in Asia practically is not observed. According to extravagant Bank President Jin Licona made on 26 June morning, the workshop “Infrastructure and global economic growth,” there are three reasons:
— the region of complexity with quality development/submission of project documentation;
— co-financing is often missing, because the expected return is very low, the risks are high;
— socio-political problems make forever change the terms of projects, discouraging investors.
Speech Jin Lacuna
<sup>Jin Liqun as the Miserly knight. Photo ABII</sup>
And fixated on the last point, Mr. President has performed in a new way monologue Miserly knight from “Little tragedies” by Pushkin, citing part of the present in surprise: “what is China’s success in infrastructure development? That in China we put public above personal! The creation of an infrastructure necessarily requires the relocation of some people, but if they are correctly compensated, they are obliged to leave the territory. And if there are two or three families that refuse to move, demanding irrationally large compensation, they put their own interests above the public, and that’s the problem. Often it is also the corruption in collusion with local officials, organizing the relocation, to receive from us more money than expected! — here Mr. President literally shook and clenched his fists with anger. — There is no forgiveness for those who refuse to give in the face of public needs, with the understanding that, of course, if they move somewhere in the neighborhood, this will cause them a little inconvenience. But everyone must make certain sacrifices in order that all together has received favor We ask of the government, hoping to obtain loans to think hard on this important issue”.
And then I clearly remembered the shots with the burn crews of prisoners Angara houses of the peasants, gone forever under the water of cultural formation. Gone, to make way for the Boguchanskaya HPP — a beautiful creation of generations of guardians of the public good: from engineers from the sharashka system of the NKVD of the USSR until now sitting in jail the former head of “RusHydro” of DoD. The same hydroelectric power station that feeds the creation of aluminum ingots for export to China, the one for filling the reservoir which in low-water 2014 dropped the level of the lake… With the President of the AIIB Bank, as a mother would fit into this system of relations….
President Jin swears that his Bank will be “inexpensive, and green incorruptible”, but these vows are not yet backed by any credible plan of action. So, at the workshop on 26 June, the President lied to the audience about the “unprecedented broad and effective public discussion of the project’s Environmental and social policy framework of the AIIB. In fact in 2015 AIIB tried real quick to hold a three-week sham “public consultation”, and dozens of public organizations have had to intervene to force the Bank a little to increase the number of participants and duration of discussion. Discussion of this happened only in Internet and only in English — alien to the absolute majority of the population of Eurasia.
For comparison: discussion of the draft of a similar document “bloody and undemocratic world Bank occur in various forms, including meetings with associations of indigenous peoples and NGOs, conducted in the languages of the member countries of the Bank in three rounds, stretched for 18 months.
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At the annual meeting, the Ministry of Finance of the PRC with pomp ABII has allocated $ 50 million to assist in the development of creditworthy projects. The assistance Fund will be used to conduct legal, environmental, social and technical assessments to reduce the risks of investment, and improvement of procurement procedures. In principle, it is a necessary expense, but there is great concern: to Refine what projects will this money go? Incredibly tenacious in Eurasia was unrealized megaprojects of the past, suspended 10-30-50 years ago because of too big ecological, social and economic risks. Their lovingly nurtured many national governments, and attempt once again, “as it should” develop, for example, the transfer of the Siberian rivers to Central Asia or the cascade of HPPs in the basin of lake Baikal does not Bode well.
The new Bank is going to be “green,” but the strategy of supporting the “green economy” ABII also not developed. As a result, even invited ABII seminar on the ideology of “green Finance” China — chief economist of the people’s Bank of China MA Jun in the end of his brilliant ten-minute lecture about the tools of “green economy” softly said the bankers, “But all these loans, bonds, incentives and guarantees — an empty phrase, while you clearly have not defined what is meant by “green infrastructure” that you want to Finance. To inspire confidence in investors, the projects must conform to some recognized a clear “green” criteria…” Bankers swallowed that remark, choking, and continued until the end of the seminar to talk about “green infrastructure” and not explaining what it is in their understanding.
In General the actions of the Chinese comrades and mingled their hired management were very instructive and categorical in nature. Not low on money, they are going sure hand to push Asia to the integrated bright future.
After sharing a number of guests came to the conclusion that, along with all the already boring “Washington consensus”, an allergic reaction which, in part, and become the new Asian banks, obviously, is brewing a new “Beijing consensus”. And, given the low culture of dialogue at its initiators, it can be even tougher and fainter to the needs of individual States and groups than his Anglo-Saxon precursor.
In the end abii meeting elected a new Board of governors: chair, South Korea has become, and its Vice — Georgia and the United Kingdom. The next annual meeting will be in June 2017 in Korea. Russia seriously expects during the year to obtain financing for several projects, but the economy is not in a hurry to disclose their list. It is known that on may 18 in Sochi at the meeting with President of the Asian infrastructure investment Bank, Russian President Vladimir Putin proposed to consider the extension of the Siberian railway, development of the Northern sea route and special economic zones in the far East. The long-suffering high-speed highway Moscow — Kazan, which never reached the Russian-Chinese agreement on safeguards on the loans too often called the most likely project. The Russian direct investment Fund, through its Director Dmitriev announced (but never showed) a road map for interaction with AIIB”, and promised that at the Eastern economic forum in September will be announced the first joint projects. In the last two months half a dozen more Russian officials leaned on that theme and promised a quick distribution of gingerbread.
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As it is doubtful that the AIIB this year seriously invest in Russia, where financial, environmental, social and geopolitical risks, as is commonly believed, is higher than the regional average. And the Bank is just not ready, I repeat: is not employed is able to calculate the risks professionals, no specific standards for socio-ecological security of the main types of projects not under discussion meets the international standards of the rules of transparency and public consultation. Control by the participating countries for management is purely nominal: the Board of Directors of AIIB delegates the right of decision-making on projects sizes up to $ 500 million (!!!) his eccentric President.
So, while the Bank has no serious measures to reduce the risks, it will invest in small-scale, ten times meted out to others, and by definition, absolutely “risk-free” projects like replacement of transformers in Bangladesh. The way out is to sail along the Northern sea route will require the creation of fundamentally different mechanisms and regulations. If Russia is really able to assign the AIIB his Vice President, he will have to seriously address all these issues.
