Complex Made Simple

UAE becomes founding member of China’s AIIB

UAE joins 57 nations to found Asian Infrastructure Investment Bank

The UAE has become a founding member of the Asian Infrastructure Investment Bank (AIIB), China’s alternative to the US-dominated International Monetary Fund (IMF).

The country signed the Articles of Agreement (AOA) that established the bank in Beijing under the directives of His Excellency Dr Sultan Ahmed Al Jaber, UAE Minister of State

ADFD (Abu Dhabi Fund for Development) was mandated to represent the country as a founding member of AIIB, which now joins 57 other nations in the Beijing-based institution. AIIB has been established as a new platform to promote regional and international cooperation in infrastructure development and address financial challenges facing projects across Asia.

The bank will invest specifically in productive sectors and cater to the needs of its least economically developed members using the concessionary loans offered by member countries.

“The signing of this agreement with AIIB is aligned with the vision of the UAE leadership to promote international collaboration toward fulfilling the development goals of developing countries,” said His Excellency Mohammed Saif Al Suwaidi, Director General of Abu Dhabi Fund for Development (ADFD).  “The UAE has been playing a prominent role in aiding emerging countries in their efforts to achieve sustainable development through extending developmental and humanitarian assistance. AIIB’s objectives are well aligned with the social, humanitarian and development aid program carried out by the UAE in more than 145 countries across the world”.

A press statement from the ADFD said that the UAE was ranked as the largest donor of official development aid according to a report issued by the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD) in 2013 and 2014. The country’s development aid in 2014 totalled AED18 billion ($4.9bn), or 1.17 percent of the nation’s GDP.

Several European nations including Germany, France, Italy and the UK have also joined the AIIB despite the United States and Japan, two of the world’s biggest economies opposing China’s bid to compete with Bretton Woods institutions like the World Bank and International Monetary Fund. According to Bloomberg, Obama administration officials have complained about “constant accommodation” of China by the US’s European allies, while the president’s National Security Council has “issued a statement expressing concern over the AIIB’s environmental and governance standards”.

Equally, pro-AIIB factions argue that this kind of criticism rings hollow, as it disregards the new world order, which existing multilateral organizations are yet to fully come to terms with. Calls for a reform of these institutions to better reflect the new shape of the global economy have grown in the past years. These are calls, critics say, America will eventually need to pay heed to.

This article first appeared on AMEinfo’s sister publication TRENDS