UAE joins $100 billion AIIB

Final number of founding member countries to be confirmed on April 15.

Dubai — The UAE has become a prospective founding member of the $100 billion Asian Infrastructure Investment Bank, or AIIB, an initiative by China in an effort to challenge the World Bank and the Asian Development Bank dominated by the US and Japan.

The UAE joins 34 other prospective founding members of the bank as the US has come out against the AIIB, citing labour and environmental issues as the main reason. However, analysts see it as Washington’s efforts to thwart China’s quest to become a reserve currency in the near future.

The bank, established at the Asia-Pacific Economic Cooperation Forum held in Indonesia in October 2013, will prioritise funding for infrastructure projects in Asia, while creating a new platform for regional and international cooperation to support developing Asian countries.

The bank will focus on energy and power, transportation, telecommunications, rural infrastructure, agriculture development, water supply and sanitation, environmental protection, urban development, logistics and other productive sectors.

The prospective members include Saudi Arabia, Kuwait, Oman, Qatar, Egypt and Jordan from the Middle East. Asian members include China, India, Indonesia, Malaysia, South Korea and Singapore. Russia, the UK, Germany, France, Italy, Austria and Luxemburg are also members. Nominations for countries to join as founding members of AIIB closed on March 31.

The final number of founding members will be confirmed on April 15, after the opinions of all founding members are considered. Founding members have the right to create governance and operating rules for the bank. Countries that join after the deadline will have voting rights only, with less say in the rule-making process.

Analysts believe that the last-minute surge to join the bank will be a major victory for China vis-a-vis the United States as the two economic super-powers try to outsmart each other for influence in Asia.

Dr Sultan bin Ahmed Sultan Al Jaber, UAE Minister of State, led discussions on behalf of the UAE with his Chinese counterpart, Shi Yaobin, Vice-Minister at the Ministry of Finance, and was instrumental in arranging the UAE’s membership of the AIIB.

“This milestone has been possible due to the wise directives and unlimited support of the UAE’s leadership. In the light of joint strategic ties between the UAE and China, and their mutual interests in fuelling growth and infrastructure development in developing countries, both countries have partnered to set up a strong international platform to actively drive development efforts,” said Dr Al Jaber.

“With the AIIB’s objectives being closely associated with the capabilities of Abu Dhabi Fund for Development, the UAE’s leadership has mandated the fund to represent the UAE on AIIB’s board of governors.

“Being a founding member of the AIIB will boost the prime economic role played by the UAE regionally and internationally, by focusing efforts on development projects with great socio-economic benefits. With its unrivalled experience in implementing development and support projects, the UAE will add huge value to the AIIB,” said Dr Al Jaber.

“Asia has significant infrastructure needs. The AIIB will play a pivotal role in driving Asia’s development, which is all the more urgent given the region’s rapidly growing economies and population,” he said.

The Abu Dhabi Fund for Development was established to help developing countries to achieve growth and development through assistance in the form of concessionary loans, development grants and equity participation.

The aim of the institution is to finance development projects in order to support efforts to achieve economic and social development in developing countries. It also makes investments in order to encourage the private sector in the recipient countries to play an essential role in accelerating the economic development process.

Mohammed Saif Al Suwaidi, director-general of the Abu Dhabi Fund for Development, said the UAE’s membership of the AIIB, with a permanent place on the Governors’ Council, “translates into action the UAE leadership’s vision and aspirations to strengthen coordination and cooperation among international countries, with the aim of providing funding and support to development projects in Asia, while at the same time boosting regional economic cooperation”.