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