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The Great AIIB D'Oh: An Economic Espionage Goof For The Ages

Homer imitates Obama, after realizing the scale of his error. (IMG copyright FOX/Matt Groening)

by Preston Clive

President Obama has finally relented and at last faced the fact that reality is Reality and not subject to bending by sheer will alone, especially when it comes to the socio-economic maneuvering of his adversaries and his allies in sum. 

I am talking of course about the fact that that Mr. Obama has at last come around and has at very least chiseled a hole for him to backtrack through: he has proposed that the Asian Infrastructure Investment Bank work in a partnership with Washington-backed development institutions, such as the World Bank--a cooperative connecting of the two financial entities that he has steadfastly resisted since the idea for the Asian bank was a mere kernel of an idea in the East .  .  .   and one he continued to resist as he pressured Western European and Pacific Rim allies to go along with him by refusing to come on board as signatories .  .  .  who all resisted his importuning and followed the demands of their own economic agendas.

This is a rather large blink for Mr. Obama, particularly given the hardness of will illustrated in his behavior lately. His lame duck status, the majority enjoyed by the Republicans in Congress seem to have liberated him from a sense of political lock-down to any one agenda; he seems to follow his own political inclination, this whether it comes to immigration, confronting ISIS in the manner he prefers, ratcheting up the tension and seeking war powers with Vladimir Putin, and now the Asian Infrastructure Investment Bank. By seeking to wipe all Western European founding signatories from the signup sheet, he essentially tried to force his agenda across the hemispheres and cause the AIIB to disintegrate into a regional fledgling an investment bank... whereas thenew Chinese funding project has already turned into a potential global competitor for the Washington DC-based World Bank. 

Therein lies the rub, really: the administration wants the US-centric World Bank to function as Big Daddy within this newly proposed 'cooperation agreement,' with the US-based bank overseeing transparency, along with quality and ethics controls in real-time .  .  .  as deals pass through the very threat to the World Bank's own projects. The WSJ explains:

The collaborative approach is designed to steer the new bank toward economic aims of the world’s leading economies and away from becoming an instrument of Beijing’s foreign policy. The bank’s potential to promote new alliances and sidestep existing institutions has been one of the Obama administration’s chief concerns as key allies including the U.K., Germany and France lined up in recent days to become founding members of the new Asian Infrastructure Investment Bank.

The Obama administration wants to use existing development banks to co-finance projects with Beijing’s new organization. Indirect support would help the U.S. address another long-standing goal: ensuring the new institution’s standards are designed to prevent unhealthy debt buildups, human-rights abuses and environmental risks. U.S. support could also pave the way for American companies to bid on the new bank’s projects.

“The U.S. would welcome new multilateral institutions that strengthen the international financial architecture,” said Nathan Sheets, U.S. Treasury Under Secretary for International Affairs. “Co-financing projects with existing institutions like the World Bank or the Asian Development Bank will help ensure that high quality, time-tested standards are maintained.” 

China for its part has been extremely well mannered and not rubbed any of the vinegar of success over their American antagonist-cum-new partner's defeat into Obama's eyes. Their reply to Mr. Sheet's statement came thusly (via WSJ):

Zhu Haiquan, a spokesman at China’s embassy in Washington, said Beijing is open to collaboration with the existing institutions and that the new bank “is built in the spirit of openness and inclusiveness and will follow high standards.”

“It will effectively cooperate with and complement the existing multilateral development banks such as the World Bank and the Asian Development Bank to provide investment and financing for the infrastructure building in Asia,” he said.

World Bank President Jim Yong Kim said through a spokesman that he and his lieutenants are already in “deep discussions” with the new Asian Infrastructure Investment Bank “on how we can closely work together.

Obviously, the sincerity of the Obama administration is regarded with a high degree of suspicion by the Asian bloc--led by China of course-- while the overture is met with a flower-embroidered response of false hugs and kisses. 

The problem and the failure in our American posture is thus: a lack of diplomatic foresight. By not having the ability to sense the direction that the wind was blowing, the President failed to do what he is doing now under the cover of innocuous general participation. Had he established his connection with the new bank under a guise of general Diplomatic Smile and Handshake, he could have kept an eye on the competitive bank with a cautious eye that would have aroused far less suspicion that it certainly will now. Barriers to internal works and planning would have been kept at the usual degree of US-China antagonism. But by antagonizing his allies as well as the Asian signatories, US participation will always be regarded with far deeper suspicion, with as much kept from its prying eyes as is humanly possible. China now likely sees zero sincerity in the US participation, with 100% antagonistic spying presumed. There is no doubt about it. This was a failure on the Economic Espionage front of the highest degree.


Preston Clive