On Wednesday October 11, the Georgetown Anti-Poverty Society (GAPS), the Master of Science in Foreign Service (MSFS), and the Asian Studies Program (MASIA) co-hosted a lecture by Dr. Joachim von Amsberg, Vice President of the Asian Infrastructure Investment Bank. Ambassador Nancy McEldowney, MSFS Director, and SFS Dean Joel Hellman gave the welcome remarks and introduced Dr. von Amsberg, respectively.
Dr. von Amsberg introduced the emergence and work of AIIB by walking through three key elements; “The Infrastructure Finance Paradox”, “The MDB Success Story”, and “AIIB as the New Kid on the Block”. In the next 15 years, the world’s need for development is estimated to be $93 trillion. Dr. von Amsberg stressed that there is actually a huge supply of private assets along with the huge infrastructure demands, but a paradox occurs when such supply and demands do not meet. This could be the result of the lack of credibility of governments or unfamiliarity with the emerging markets, therefore investors perceive that risks and returns do not match.
A clear need of building bridges across these gaps and the need of many actors to come together was evident, and this is where the “MDB Success Story” comes in. The MDBs were successful in overcoming the paradox and has become the main channel for financing infrastructure in developing countries. It proved to be more effective than bilateral finance because countries were able to come together and turn little capital into large investments, getting access to the cheapest funding and low interest rates.
So, why a new bank? – The world has changed, now reflecting a different composition and weight of the countries’ role in the global economy than before. The World Bank countries’ influence has been declining. With the inability of legacy MDBs to adjust to the new world, China proposed a new bank that focused on infrastructure in the fast-growing Asia region. China, with its role growing in the global economy, wanted to establish a showcase for leadership in a multinational initiative. “The attraction of AIIB is not only the commitment to high standards of projects, but also the true multinational governance”, says Dr. von Amsberg. This means that decision making will be under a consensus, not dominated by China. Since opening, AIIB has already committed to 20 or so projects, from mega to small scale and private and public projects. AIIB aims to work with existing MDBs and think tanks by building network and partnership. Dr. von Amsberg emphasized that, AIIB still at a small capacity with just 120 staffs but having a huge balance sheet, would make it a perfect complement to existing institutions rather than a replication or competition.
Dr. von Amsberg concluded with expressing his hopes for AIIB to build and strengthen global cooperation and to help the system of multinational development, where different countries could take a lead in multinational cooperation.