A NEW ECONOMIC SYSTEM

RE POSTED FROM                      LAROUCHE IRISH BRIGADE

AIIB Chairman Explains the Bank’s New Approach to Lending

Jin Liqun, the chairman of the Asian Infrastructure Investment Bank, visited Brookings Institution in Washington on Oct. 21 to explain the importance of the AIIB’s new approach to development financing. Jin tried to put aside any misconceptions about the AIIB viewing itself as a alternative to the World Bank or to the Asian Development Bank. “Both World Bank and the ADB have contributed to Asian poverty reduction over the decades,” Jin said. “But poverty reduction is hard to achieve, not so much because of a lack of funding, but because of the approach. I don’t think poverty reduction in and of itself will go far in affecting the lives of people. In most of the cases, the approach needs to be refined and needs to be improved.” He then went on to describe the situation of a community in a remote area cut off from the outside world. Whatever efforts may be made to relieve their situation will not be of much use, he said, but instead “will make them completely dependent on alms and charity from the government and from international doaners, even though the areas may be very rich in their natural resources,” Jin said. “But the locals have no way of tapping the resources for their own benefit. The only solution in my opinion is connectivity. This will bridge the gap between the local community and the outside world.” And this he explained was what the AIIB wished to accomplish, creating that connectivity.

He praised the ADB and the World Bank, saying that they had contributed greatly to the development of China through the years with its investment in infrastructure, but now that China was becoming a major economic power, it felt it also had a responsibility to begin offering the same assistance to other countries.  He said that the AIIB was formulated as a bank for Asia, an alternative to non-regional financial institutions which also imposed certain conditionalities. But when all these other non-Asian countries wanted to be a part of it, they felt they couldn’t restrict membership to Asian countries alone. The Asian countries will retain the majority holdings in the bank regardless of how many countries end up joining.

While the World Bank originally began with the title International Bank for Reconstruction and Development, with the task of helping in the reconstruction of Europe after the Second World War and then assisting in the development of the Third World countries, by the 1970s, under the combined influence of the growing financial crisis and the paradigm shift towards the zero-growth perspective, the World Bank shifted toward what was euphemistically called “poverty reduction,” income distribution and, under the guidance of Robert McNamara, population control. The “new approach” indicated by Jin Liqun is the type of paradigm shift the world needs to move forward on the road to development.

When someone asked if AIIB would finance China’s One Belt, One Road project, Jin responded that the Belt and Road project were being supported by domestic Chinese funds, including the Chinese Ex-Im Bank, with far greater resources than the AIIB. But if there were to be projects which are a part of the Belt and Road strategy, which were in line with the AIIB’s lending guideline, the AIIB would, of course, be willing to participate.