Last year’s launch of the Asian Infrastructure Investment Bank (AIIB)—a new multilateral development bank with fifty-seven sovereign members, among them some of the United States’ closest allies—is appropriately viewed as a diplomatic and strategic victory for the Chinese government. In the face of growing U.S. indifference to multilateral development institutions, China is stepping up. As the Chinese were opening the AIIB’s doors in early 2015, the U.S. Congress still had failed to act on a 2010 IMF governance reform package that other major countries considered essential, and across the MDBs, U.S. officials were viewed more as obstacles to than as champions for an ambitious development agenda.
A year later, this dramatic narrative may seem less starkly defined. But the circumstances around the creation of the AIIB have usefully brought to light a longer trend that will ultimately lead to a diminution of U.S. leadership in the multilateral development system, brought about as much by the United States itself as by external challengers. China was successful in attracting so many countries to join the AIIB by offering more infrastructure financing (and all that implies in terms of procurement and commercial opportunities) at a time when the prospect for additional financing appeared limited within the core MDBs, in large part due to U.S. resistance.
The task for U.S. officials in the years ahead will be to accommodate a larger role for emerging countries, particularly China, in the multilateral development bank system, but to do so from a position of strength and with ambition for the MDBs in U.S. policy. The alternative, in which the United States neither makes space for new voices nor promotes the MDBs themselves, will inevitably lead to a weaker system that will harm the United States and the global good.
Selected Figures From This Report