Asian Infrastructure Investment Bank Controversy: Claims of Chinese Communist Party Infiltration – Australian Institute of International Affairs

The Mechanics of the Asian Infrastructure Investment Bank (AIIB) Amid Claims of Infiltration

The Chinese Communist Party commands a tight structure of control. What does this mean for the mechanics of the Asian Infrastructure Investment Bank (AIIB), amid claims of their infiltration?

Introduction

Discerning truth from fiction in Beijing’s claims can be extremely difficult, even to Chinese Communist Party members. The recent fiasco at the headquarters of the AIIB illustrates that without transparency and accountability, claims that no political influence in the decision-making structures of the AIIB exist cannot be taken at face value. The burden of proof is on China.

In June, the AIIB’s global head of communications, Canadian citizen Bob Pickard, resigned from his position and immediately caught a flight to Japan. Once out of China, Pickard released a number of explosive claims on social media, announcing that the AIIB had “one of the most toxic cultures imaginable,” and that it had become infiltrated by the Chinese Communist Party (CCP). According to his posts, he was advised to leave the country for his safety, and to not return for some time. Following these events, Canada’s finance minister, Chrystia Freeland, announced that the nation’s government would “immediately halt all government activity at the bank” while an investigation unfolds. An internal review conducted between 15-26 June by Alberto Ninio, a Brazilian national that serves as AIIB general counsel, found “no evidence to support or validate” Pickard’s allegations. The Chinese embassy in Ottawa strongly repudiated the claims, stating that “China is an important member of AIIB and has always followed multilateral rules and procedures, and participated in decision-making through [a] multilateral governance mechanism.”

CCP Influence and its Implications

CCP doctrine, which takes a Marxist-Leninist approach to all things, is foundationally about control and economics – in that order. Control begins with core interests, which are the survival of the CCP and, increasingly, the legitimacy of one-man rule. Every other interest of the state is subordinate to these goals, including economic and social development, international governance, and foreign relations.

Since 2013, this command-and-control structure has tightened considerably around the party and the personality of Xi Jinping. The anti-corruption campaign, which began in 2013 to address corruption, but also help Xi arrest control of the factious party, is the means by which conformity to this tightening is generated and monitored. In other words, even if Chinese leaders within the AIIB, of which there are eight in a total of 31 senior positions, could avoid party doctrine in their day-to-day decision-making, prudence dictates that they shouldn’t. Since Xi’s reign began, five million Party members have been caught in the highly networked and in many ways arbitrary dragnet (according to Chinese sources), with a 100 percent conviction rate. As in the corporate sectors, CCP influence within the AIIB is likely to be “subterranean,” as Pickard describes it, with parallel governance systems that are, to those on the outside, highly amorphous. In an open market, this influence includes CCP-induced regulation to drive regularity and financial control. In the private sector, internal governance ensures external liabilities don’t threaten the Chinese economy, while also promoting the party’s strategic five-year plans. Other instances can include seemingly innocuous changes to legal language in international institutions that were originally designed to hold actors accountable for their actions.

In every other role, from civil society to education, and now increasingly the private sector, a CCP command hierarchy dominates decision-making. In state-owned enterprises, company-party secretaries are required to also sit as chairmen of the board. For foreign enterprises with joint-venture charters, this means that the party has to be consulted in any major decision. As the European Chamber of Commerce recently remarked, there is “no way to say no.”

The AIIB is no different. To be sure, the multilateral development bank (MDB) was created precisely because Beijing could not gain more voting rights on other important MDBs, like the World Bank or the Asian Development Bank. While the AIIB “has no declared party structure,” nor do many other apparatuses of the state, despite the overwhelming presence of the CCP.

China’s Problem with International Trust

There is no statement by Pickard to indicate what he meant by “Chinese influence.” But much of the damage has already been done. And these are charges, even if untrue, that will continue to trouble China’s image – an outcome of its own making, to be sure.

The most damning charge is the claim that Pickard was advised to flee the country for his own safety. The case of Canadians Michael Kovrig and Michael Spavor, who were detained in 2018 and charged for unspecified national security breaches, looms large in these allegations and has no doubt coloured the lenses through which many Canadians, including in government, now view China. Indeed, China’s arbitrary detainment of foreign citizens and its lack of a transparent judicial system is a larger public relations problem than the Chinese government perhaps understands.

The truth is, the fear of “picking quarrels and provoking trouble” (xúnxìn zīshì), which encompasses all actions of a political nature deemed problematic by the party, has permeated the international community, leading to a distancing of predominantly Western corporate and academic experts from China. Other examples include the case of Richard O’Halloran, an Irish businessman, who was detained in China without charge for nearly three years before he was allowed to return home in January 2022 after an associated Chinese executive was charged with embezzlement.

American businessman Mike Swidan has been detained in China since 2012 on narcotics trafficking charges even though he wasn’t in the country at the time of the allegations and nor did he have any drugs in his possession. Both the US government and the UN believe that Swidan’s detention is both “arbitrary and unjust.”

Conclusion

While it has always been expected that China would dominate decision-making within the AIIB, being the founder and core financial backer, the very considerable investments by other nations have required the bank to adopt a more conservative and internationally standardised operational program. To date, the AIIB has been widely praised for its comparatively liberal, institutional foundations.

With that being said, the explosive allegations by Pickard serve to remind the international community that Chinese governance institutions, processes, and systems don’t adhere to accepted practice and are likely to, over time, seek the revision of norms that have conveniently served the Chinese state. CCP influence in the AIIB will work in the end to undermine the promises of the AIIB and the trust that states have placed in China.

About the Authors

Dr Adam Bartley is a Fulbright Scholar and a post-doctoral fellow at the Royal Melbourne Institute of Technology and

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 16: Peace, Justice, and Strong Institutions

The issues highlighted in the article are connected to SDG 16, which focuses on promoting peaceful and inclusive societies, providing access to justice for all, and building effective, accountable, and inclusive institutions at all levels. The article discusses the lack of transparency and accountability in the decision-making structures of the Asian Infrastructure Investment Bank (AIIB), which raises concerns about the effectiveness and accountability of institutions.

SDG 17: Partnerships for the Goals

The issues highlighted in the article also relate to SDG 17, which emphasizes the importance of global partnerships for sustainable development. The article discusses the allegations of infiltration by the Chinese Communist Party (CCP) in the AIIB, which could impact the trust and partnerships between countries and undermine the goals of the AIIB.

2. What specific targets under those SDGs can be identified based on the article’s content?

Target 16.6: Develop effective, accountable, and transparent institutions at all levels

The article highlights the need for transparency and accountability in the decision-making structures of the AIIB. The allegations of infiltration by the CCP raise concerns about the effectiveness and accountability of the institution. Therefore, Target 16.6 is relevant to the issues discussed in the article.

Target 17.15: Enhance global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources

The allegations of infiltration by the CCP in the AIIB could impact the trust and partnerships between countries. This raises concerns about the need to enhance global partnerships for sustainable development and ensure that multi-stakeholder partnerships are based on trust, knowledge sharing, and mobilization of resources. Therefore, Target 17.15 is relevant to the issues discussed in the article.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

No specific indicators are mentioned or implied in the article that can be used to measure progress towards Target 16.6 or Target 17.15. The article primarily focuses on the allegations and concerns surrounding the AIIB’s decision-making structures and the potential impact on trust and partnerships.

However, potential indicators to measure progress towards Target 16.6 could include transparency measures within the AIIB, such as publishing information on decision-making processes, disclosing conflicts of interest, and ensuring external oversight. Indicators for Target 17.15 could include the establishment of effective mechanisms for knowledge sharing, technology transfer, and financial resource mobilization among AIIB member countries.

Overall, the article does not provide specific indicators but highlights the need for transparency, accountability, and trust-building measures within the AIIB.

4. SDGs, Targets, and Indicators

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: internationalaffairs.org.au

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