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14 Apr, 2015 11:24

Russia officially joins $50bn China-led infrastructure bank

Russia officially joins $50bn China-led infrastructure bank

On Tuesday Russia officially becomes a founder of the China-led Asian Infrastructure Investment Bank (AIIB). It means Russian companies can take part in infrastructure projects in the Asia-Pacific region, and could attract foreign investment into Russia.

Russia applied for membership as a founding member of the AIIB 2 weeks ago, along with another 52 countries. The founding members have the right to establish the rules guiding the bank’s activities. China reportedly had rejected requests from North Korea and Taiwan to join the AIIB. The final list of the bank’s founding members will be announced on April 15.

"Russia as a country belonging to the target region of the bank's operations, and is meant to play an important role in investment decisions and also attract investment funds from the bank in the interest of improving the infrastructure of Siberia and the Russian Far East. We expect that the bank will become an effective tool for strengthening transcontinental links and will contribute to Eurasian integration,” Russian Foreign Ministry spokesman Aleksandr Lukashevich said, according to RIA Novosti.

READ MORE: Russia to join Asian Infrastructure Investment Bank in two weeks

Allies & rivals

Meanwhile, the United States and Japan have decided not to join the AIIB. Japan which is China’s main regional rival has been hesitating due to its relations with Washington and the AIIB's potential rivalry with the Asian Development Bank. Earlier this month, Washington reportedly questioned Japan following the rumors of its possible participation but Tokyo has denied everything.

The AIIB is seen by many experts as an alternative to Western-led financial institutions such as the World Bank and the International Monetary Fund. Washington has been pressuring its allies against joining the bank and raising concerns whether the China-led bank will “meet international standards of governance and transparency.” However, leading European economies, including the United Kingdom, France, Germany, Italy, Luxembourg and Switzerland applied to join earlier last month. The application deadline for membership was March 31.

Financial securities expert Francis Lun suggests that even though America is very close to its European allies, “the major European countries are really showing their independence.”

“The response to the Asian Infrastructure Investment Bank was overwhelming. It really showed the dissatisfaction of various countries to a dominating America,” Lun told RT.

The IMF chief Christine Lagarde said in March that the IMF and the World Bank would be "delighted" to cooperate with the AIIB. Beijing has repeatedly said that AIIB will be a complement to the existing international financial institutions.

READ MORE: China launches new World Bank rival

The Asian Bank for infrastructure investment (AIIB) was established in 2014 by China. The bank will finance infrastructure projects in the Asia-Pacific Region; its headquarters will be in Beijing. The initial subscribed capital of AIIB will be $50 billion and is planned to be increased to $100 billion.