Friday, April 3, 2015

AIIB is a message to the world

As the US and Japan, mainly, sit back to lick their wounds from what can only be called a complete diplomatic disaster, there are many lessons to be learned about what the world could look like in a few decades. The Asian Infrastructure Investment Bank (AIIB), led by China, on the face of it, is meant to complement existing global financial architectures, the WB, the IMF and the ADB, all of which are controlled by the US and its allies. However, it does not take much logic to see that it is meant to supplant those institutions.

What the US is missing is that, with its economic heft in decline because of massive debts run up by unbridled global war, China is becoming the new economic superpower of the world. While the US may have a larger economy, it simply does not have liquid money of the kind China does. That is why all of the US' allies except Japan have signed up - for the sheer need to be a part of that economy and the global trade that it brings. The next step is obvious: the AIIB will allow the usage of the Chinese Yuan and pave the path for it to become a global currency, initially complementing the dollar but eventually pushing it out.

And no one is to blame for this but the US itself. For years, it has paid lip service to increasing IMF quotas for emerging economies in a fair and substantial way. Despite a strong demand across the world for an Asian IMF chief, the US ensured that another French chief came to the top, once again ignoring the fact that Europe is essentially finished. Decades have gone by on UNSC reform with nothing coming out of it. This is the reality today: if the US is not going to lead in ensuring a fair global order, it will lose its leadership to someone else, most probably China. Unless the US upholds rules of fairness that it itself established after World War II, it will lose this game.

Now is not the time to cut losses and leave. Existing allies - including Taiwan - broke ranks, that does not mean that the US should simply ignore it. The right thing to do is to promote the new allies the US has in Asia - the arc from Japan to India - to their rightful place in the global architecture and put Europe where it belongs i.e., far away. This is the age of multipolarism and the winner will be the first among equals. That will take leadership, which the US sorely lacks at this time. 

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