Cabinet's National
Security Committee has cleared the way for Australia to invest as much as $3
billion to join the China-led $US100 billion Asia Infrastructure Investment
Bank.T he committee's green light is expected to lead to a formal decision to
sign up to the precedent-setting Chinese initiative when the full cabinet meets
on Monday, marking a milestone for China's influence in the region.
Leaked details of
the high-level discussions this week follow six months of messy debate which
has set cabinet ministers and US allies against each other.
The amount of money
Australia will tip into the bank has not been finalised, but figures ranging
from hundreds of millions to up to $3 billion are being discussed.
The committee did not discuss a
final dollar figure.
Supporters of the potential
$US100 billion bank say it could trigger a wave of infrastructure development
throughout the Asia-Pacific region, driving economic development and thus
benefiting Australia and other countries in the region.
The leak of details of
discussions in the NSC – which includes Tony Abbott, Julie Bishop, Warren
Truss, Kevin Andrews, Peter Dutton and Joe Hockey – held this week in part also
reflects China's success in signing up nearly 30 other players before the end
of March deadline set by Beijing.
Some sources in government have
suggested Finance Minister Mathias Cormann could sign up when he attends the
Boao forum in China late next week, subject to cabinet approval, but others
suggest that deadline was too soon.
A proposal to join by Mr Hockey
was knocked back by Ms Bishop and Mr Abbott in the same NSC forum last October,
with reports at the time claiming Mr Abbott had succumbed to American pressure.
The expected cabinet decision
will be to sign a "memorandum of understanding" to enter direct
negotiations on the final structure of the bank. In theory, this will still
provide room for Australia to pull back if China does not deliver on governance
commitments.
As recently as last week the
Obama Administration was reportedly angry and embarrassed when the United
Kingdom broke ranks to join the bank, with minimal consultation, prompting
other European nations including Germany, France and Italy to follow suit.
Regional allies of Australia
including New Zealand, India, Singapore and Indonesia have also signed up.
Several sources with direct
insight into the NSC say that internal and international conversations have
been considerably more subtle than that.
One such source said he was
"bemused" at prominent reports that Mr Obama had personally lobbied
Mr Abbott against joining last year, when it was Mr Abbott who had actually
raised his concerns with Mr Obama.
Mr Abbott said last weekend a
decision by government was due in a week or so and that "we are looking
very carefully at it" though he emphasised it would have to be a
"genuinely multilateral institution" and not simply controlled by
China, in the same way the US does not directly control the World Bank or Japan
the Asia Development Bank.
Mr Abbott and Ms Bishop had been
concerned that a lack of transparency and proper governance would create a risk
that the bank could be used as a tool of Chinese foreign policy.
Concerns have also been raised
about the potential for corruption and undermining of environmental, governance
and community-liaison standards.
Mr Hockey, in contrast, has
emphasised the bank's role as a source of much-needed infrastructure capital in
Asia and in providing an internationally-transparent way for China to shoulder
increased regional responsibility. Trade Minister Andrew Robb has backed those
arguments and the decision is a win for both men.
Senior ministers and regional
nations have differed over whether nations have more leverage while China is
trying to convince them to join or after they are "inside the
tent".
The process is being seen as a
pivotal test of how Australia and close friends and allies can persuade China
to play within the open, rules-based international system as it grows its
political, military and economic power.
The move to join also represents a
compromise after China made improvements to its proposed governance rules. So
far, however, it has fallen short of having a World Bank-style "resident
board" that could provide head-office scrutiny over investment decisions,
according to sources.
The decision is not due to be
announced until proper consultation with like-minded nations, most notably
South Korea, Japan and the US.
Reports out of Seoul suggest a
South Korean decision to join is also imminent, which would round out China's
year-long blitz to secure international backing. SMH
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