With India in loop, critics question whether New Delhi is handing the reins of global finance to neighbouring China.
It’s usual these days that every policy statement coming out of Beijing is minutely scrutinised and commented on by the English language media, so the absence of any alarm bells on and after February 3 came as something of a surprise.
The 13th Meeting of Russia, India and China’s foreign ministers should have merited at least passing mention – but not a single major western newspaper covered it.
There was no reporting of the final communique; no editorial comment was made and no reaction sought, from Washington or London.
Only Hong Kong’s South China Morning Post thought it newsworthy that China’s foreign minister, along with his Russian and Indian counterparts, was emphasizing a vision that many in the West have long feared – a vision of a new world order.
The relevant comment was short, and buried within 30 other paragraphs of much more conciliatory language; nonetheless it was punchy:
“Russia, India and China are determined to build a more just, fair and stable international political and economic order.”
Now ordinarily, a statement like that would have raised the hackles of the China-baiters if no-one else, but not this time.
Had they simply failed to notice it amid the rest of the diplo-speak? Maybe they had seen it, but chose to dismiss it as overblown rhetoric from minor powers. Or maybe it was just a willful refusal to consider the possibility that something fundamentally transformative is under way.
And mayhem it has been, at least in political terms.
From the moment that Britain, on March 12, decided that it wanted to be part of the China-led AIIB, a raft of Washington’s traditional allies have followed suit, turning eastwards with unseemly haste.
What's happening here is just business, they say, and those western powers who have applied to join have done so to ensure that 'international standards' are maintained, and Beijing's baser impulses are kept in check.
France, Italy and Germany jumped aboard the betrayal bandwagon almost immediately after the UK, then Luxembourg, New Zealand and South Korea.
Now that Australia’s cabinet has agreed, despite the prime minister’s protestations, to join up too, the only significant ally sticking by Washington is Japan, and even it is wavering.
So what’s behind this mass-defection from the Washington consensus, and what will the consequences be for the international financial order?
The answer to the first part is straightforward – money. Asia needs $800 billion a year in investment to develop its infrastructure, and numerous countries are keen to help them get it.
US credibility and leadership in the multilateral system, said Jack Lew, has been lacking, and that’s allowed Beijing to seize the initiative and offer a viable solution.
As for the long term consequences, well that’s been an even trickier political question.
Despite conceding the need for some re-alignments, Washington and its allies draw the line at the suggestion of any long-term change to the status quo.
What’s happening here is just business, they say, and those western powers who have applied to join have done so to ensure that “international standards” are maintained, and Beijing’s baser impulses are kept in check.
Even China’s finance minister prefers a low-key public stance, presenting the AIIB as complementary to rather than competing with existing institutions.
But behind these official statements there’s a nagging doubt. Many financial analysts are speculating that the new bank may well prove to be genuinely transformative, its adoption an irreversible step towards the multi-polar world envisioned in Beijing.
Because the fact is this bank is not just a standalone initiative, an independent body among many others, it’s a core component of a much broader template, a long-term plan that China began putting in place some time ago.
Already, some of the more than $3 trillion Beijing holds in foreign reserves has been deployed in international markets; its economic reach now spreads beyond Asia to the Middle East, Africa and as far away as Latin America.
Along the way, the Renminbi has, in a limited way, gained a small foothold as a trading currency, with economic partners happy to settle bilateral deals directly with Beijing without having to go through the dollar. As these relationships mature, the vision is that the RMB will eventually be accepted alongside the dollar and the euro as a fully convertible reserve currency.
By that stage, Shanghai will have established itself as a centre for global finance as powerful as London or New York, and the net result will be that global financial flows, and therefore power, will have shifted some way east.
In the current political environment such speculation is not wholly welcomed; but even those who fear the prospect of a powerful China should at least accept that change of some kind is necessary.
The existing global financial architecture, devised 50 years ago when no alternatives existed and all were happy to concede leadership (and benefits) to Washington, is no longer fit for purpose.
Not only are its institutions – the World Bank, the IMF, the ADB et al – thoroughly dominated by the US (helped, in the case of the Asian Development Bank, by Japan), they impose a coercive and ideologically driven agenda on developing countries that can do more harm than good. Not to mention the fact they simply don’t have the capacity to handle emerging Asia’s development needs.
What Washington has chosen to ignore, in fear of losing political power, is that a change to global financial structures is a very necessary evolution.
The US would do well to join the rest of the international community in acknowledging this fact, and working to ensure its success.
Everything depends, of course, on whether Beijing chooses to accept these applications for membership by Britain et al, after the March 31 deadline has passed.
Teymoor Nabili is a Singapore-based journalist and commentator, and CEO of TheSignal.Asia.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.