When China proposed the Asian Infrastructure Investment Bank (AIIB) in late 2013, it hoped to offer a regional alternative to the multilateral institutions of the Bretton Woods system that left Asia underrepresented. When 58 member nations bucked Washington’s warnings and joined the bank this year, including allies of the United States and G–7 stalwarts such as France, Germany, South Korea, and the United Kingdom, China realized that it had a potential vanguard for an alternative economic world order.
The creation of the AIIB means that the International Monetary Fund (IMF) and the World Bank—the two dominant players in development lending and international financial regulation—now have an Asian counterpart. Although all three banks seek to ensure global financial stability and foster economic growth in the developing world, they also actively promote the national interests and political worldviews of their most powerful members.
The similarities between the AIIB, the IMF, and the World Bank are apparent. But there are a few key differences. Western aid and development efforts are geared toward spreading liberal democracy and their own institutional frameworks. China, on the other hand, has stuck to its policy of distancing itself from the domestic affairs of other nations. In fact, the AIIB’s Articles of Agreement have remarkably similar (and broad) operating guidelines to banks within the Bretton Woods framework, but bar members from influencing political affairs.
Has the world reached a point at which political persuasion by dominant countries no longer has a place in development lending? If the AIIB provides any indication, major economies and less developed countries are open to the idea. In this new era, the Bretton Woods system cannot continue its promulgation of liberal democracy, free markets, and Western governance institutions if it wants to effectively head the economic world order. And, for that matter the United States’ leadership of the global economy would have to stop being partial to Western neoliberal orthodoxy.
FRUSTRATION WITH BRETTON WOODS
The AIIB was born out of two main grievances
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