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Issue #1663      November 5, 2014

Editorial

Taking Australia down wrong path

On October 24, China and 20 other countries signed a memorandum of understanding for the establishment of the Asian Infrastructure Investment Bank (AIIB), which is expected to be up and running by the end of 2015. The bank will be based in Shanghai and its members are India, Vietnam, Uzbekistan, Thailand, Sri Lanka, Singapore, Qatar, Oman, the Philippines, Pakistan, Nepal, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Lao PDR, Malaysia, Mongolia, Myanmar and China. Japan, the US, South Korea, European countries and Australia were also invited to become founding members but have not joined.

The Australian government’s refusal to join is causing consternation in ruling class circles and within Labor Party ranks. It appeared that Australia was going to join and play a role. Treasurer Joe Hockey supported the move; his main focus is economics and big business interests. Cabinet, according to media reports, backed him.

That was until some behind-the-scenes lobbying by the US and Foreign Minister Julia Bishop’s meeting with Cabinet’s National Security Committee which opposed joining on strategic grounds. So Bishop, whose loyalty is first and foremost with US interests, in particular, the US’s military “pivot” in Asia and its aggressive war plans for China, advised Cabinet Australia should not join for strategic reasons. Hockey was rolled to the horror of a number of business leaders. The Australian government refused to sign, making excuses about governance and lack of transparency. The US also successfully lobbied Japan, Indonesia and South Korea.

The AIIB poses a serious challenge to the US’s plans for global financial domination. China and India, in particular, over the decades since the Bretton-Woods institutions were set up in 1944, have increased their wealth considerably but like other “developing” countries failed to get reforms and appropriate recognition at the European and US dominated International Monetary Fund (IMF) and World Bank. Likewise the Japanese-headed Asian Development Bank needed reform. These banks attached political and economic conditions to their loans, which increased poverty and often resulted in economic failure, requiring more loans. The banks served the interests of the US, Japanese and European corporations. The US blocked reform.

It is not surprising that there have been a number of moves to establish alternative international banks that operate on a more just basis. In July, the month of the 70th anniversary of the World Bank and IMF, the BRICS countries (Brazil, Russia, India, China and South Africa) established the New Development Bank, also known as the BRICS Bank. The BRICS Bank consists of two new institutions: the New Development Bank, with US$50 billion in initial capital to finance infrastructure and sustainable development projects, and the Contingent Reserve Arrangement (CRA), with US$100 billion in initial capital, to provide assistance to members in financial difficulty (also the role of the IMF). Developing nations hope that BRICS Bank may eventually challenge World Bank-IMF domination. The BRICS Bank aims to make electricity, transport, telecommunications, and water/sewage a priority.

On the Latin American continent work has been done to establish the Bank of the South (Banco del Sur). The concept was first raised by Venezuelan President Hugo Chávez, in 1998, who saw it as a step towards Latin American integration and an alternative to the clutches of the IMF and World Bank, lending money to nations in the Americas for the construction of social programs and infrastructure. The bank also lends without conditions such as privatisation or deregulation. Its founding members were Venezuela, Argentina, Brazil, Paraguay, Uruguay, Ecuador, and Bolivia.

Australia is faced with a choice. It can continue as the US deputy sheriff, spending big on armaments and undermining security in the region or it can kick out the US bases, end the US Alliance and play an important and constructive role in the region. The contradictions posed by relying on Asia economically and following the US militarily and politically will only deepen. The government’s decision not to join the AIIB reflects US interests, not Australia’s. If Australia continues down this path, we will wake up one day to find we have become an isolated, depleted quarry and missed great opportunities to play an important role in the development of the Asian/Pacific region.

Next article – PM and Premier booed off stage

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