No infrastructure, no Asian Century

In Asia, the AIIB debate is mainly about compelling economic needs. Elsewhere, it is about the opportunity of other nations to participate in Asia’s growth momentum. In Washington, the debate is about threats.

In the U.S., the AIIB has been criticized as a deliberate attempt to rival the World Bank and the ADB, even though neither of the two has the funds to support the desperately needed real infrastructure progress in Asia. Yet, the ADB has less than $80 billion in capital, while the World Bank’s member states have subscribed to $223 billion of subscribed capital. In practice, the latter can loan some $50 billion per year.

According to ADB, what Asia needs is about $8 trillion in 2010 — 2020.

Second, the AIIB has been portrayed as Beijing’s geopolitical instrument to attract Asia closer to China’s “sphere of influence.” Certainly, economic power goes hand in hand with strategic power, as evidenced by the role of the U.S. in the postwar world, especially the Marshall Plan and the North Atlantic Treaty Organization (NATO).

But participating in the AIIB is not predicated on joining the Shanghai Cooperation Organization (SCO). Rather, China is offering to share the benefits of its development with the rest of Asia as Japan once did with Singapore, Hong Kong, South Korea and Taiwan.

Finally, the AIIB critics have argued that the bank would not meet environmental standards, procurement requirements and other safeguards embraced by the World Bank and the ADB. That is a rosy view of these organizations, which emerging nations have criticized for years for lending, policy and staffing bias; and their advanced host economies which cause 4-5 times more pollution than the emerging Asian nations on a per capita basis.

The promise of the Asian century is critically dependent on the need for infrastructure. And yet, while President Obama has spoken for more investment in Asia, his administration has opposed increasing ADB’s capital base. Nor has the administration sought to persuade Congress to adopt legislation that would provide enhanced roles for China and other emerging economies in the IMF – as agreed by other countries.

Unipolar exceptionalism

While each country may have its own sense of manifest destiny, American exceptionalism holds that the U.S. has an obligation to spread its values to every part of the world. In this sense, it is “missionary,” as Dr. Henry Kissinger likes to put it. But it also rests on bygone foundations.

In 1945, as Europe lay devastated and Japan in ruins, the U.S. emerged as the engine of the world economy. So the idea of American exceptionalism was still congruent with everyday realities. Today, the U.S. accounts for barely 20 percent of the world economy. It is no longer either the largest trader or the biggest producer but reliant on foreign investment and the world’s largest debtor.

In military expenditures, however, America remains the world’s absolute hegemon. As a result, American exceptionalism continues to be affected by security interests. But that’s a very narrow view of American exceptionalism.

In one way or another, Washington may well join the AIIB in the future. But the idea that lobbying forcefully against it was a mere miscalculation is na?ve. American exceptionalism will not easily adjust to the multipolar world.

The aspiration for global primacy may be irreconcilable with American values of democracy, egalitarianism and freedom, which are better reflected by multipolarity. But old habits die hard.

Transformative times require executive leadership.

Dr Dan Steinbock is a columnist with China.org.cn. For more information please visit: http://www.ccgp-fushun.com/opinion/DanSteinbock.htm

This post was first published at Chinausfocus.com. To see the original version please visit: http://www.chinausfocus.com/finance-economy/american-exceptionalism-and-the-aiib-debacle/