Daily Management Review

Iran becomes founding member of AIIB


China-led Asian Infrastructure Investment Bank (AIIB) has accepted Iran as a founding member. The decision was made by existing members including China, Britain, France, India and Italy while adding UAE as well. Britain, Brazil and Switzerland are also among the 35 founding members of the AIIB while more than 50 countries have applied for membership.

The Investment bank also accepted Australia and Russia into its fold two weeks ago. The acceptance of these many countries has made US, which was maintain opposition to the bank as it sees it as a threat to the west-dominated World Bank, to take a step back. Washington has recently shifted its tone towards the AIIB. Besides World Bank, AIIB will also be a rival to other west-dominated organizations such the International Monetary Fund (IMF), and the Manila-based Asian Development Bank (ADB) which is dominated by Japan and the US. Both the World Bank and International Monetary Fund have 188 member states and are based in Washington, D.C.  The smaller Asian Development Bank, which is based in Manila, boasts 67 members. All three of these multinational lenders have welcomed the AIIB and declared to work to work with it.

The China-led infrastructure bank is expected to launch with an initial subscribed capital of $50 billion and focus on financing infrastructure projects across Asia – including energy, transport and telecommunications infrastructure, urban and rural development, and the environment.

For Iran, the inclusion in the new development bank is another positive step in the global stage. Only last week, world powers and Iran agreed to the Joint Comprehensive Plan of Action, which would lift Iran sanctions in exchange for verifiable restrictions to its nuclear program. The country had been tarnished due to its controversial and secretive nuclear program, bringing in more economic sanctions on the Islamic Republic.

While Australia needed to resolve some pertinent issues including the Bank's Board of Directors having authority over key investment decisions, the country was optimistic about the partnership.
The government statement also said it would continue to work with existing international organizations as well as the AIIB.  "Working with other key multilateral institutions such as the World Bank and the Asia Development Bank, the AIIB has the potential to play a valuable role in addressing infrastructure needs and boosting economic growth in the region with potential benefits for Australia," it read.