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Australia and the AIIB: A lost opportunity

The debate about whether Australia should join the Asian Infrastructure Investment Bank (AIIB) has gone beyond the realm of economic development and investment to hit at the core of Australia’s apparent security dilemma.

The initial concern revolved around the governance arrangements and whether Australia should be part of a new China-led regional development bank. As I argued last month, in this regard Australia would have more influence by being involved than by not.

But Paul Kelly’s piece in The Australian today reveals some interesting insights into how the Australian Government views China, and how it sees Australia’s position vis-à-vis its allies. It seems to me that the Government has attributed more meaning to the AIIB than need be. Two statements in particular in Kelly’s article struck me:

The issue has triggered a core split within cabinet over the classic dilemma for Australia’s future — how to decide between China and our US-led alliance partners. Japanese Prime Minister Shinzo Abe was keen for Australia to remain tied to the existing institutions, the World Bank and Asian Development Bank, now dominated by the US and Japan.

Why frame it as a choice? There is nothing in the AIIB proposal that suggests by being involved Australia would loosen its ties to the Asian Development Bank or World Bank. This is not a zero-sum decision. Indeed, this consideration evidently hasn’t affected Singapore’s decision to join.

Here’s the second quote from Kelly, who says the cabinet debated this issue twice, but that the second discussion occurred only among members of cabinet’s National Security Committee:

It is revealing that the second debate was conducted in cabinet’s NSC, where strategic rather than financial arguments became paramount. Ms Bishop provided scenarios of how China could convert financial power via investment loans into direct military advantage …read more

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