The Philippines’ last-minute decision to join the China-led Asian Infrastructure Investment Bank (AIIB) is a “bittersweet” experience for the country which has to balance its economic interests with its sovereign authority in a maritime dispute with its giant neighbor, according to a security expert.
“It’s a bittersweet participation. The AIIB will likely compete with other financial organizations like the World Bank and it reflects a rising China. But the Philippines has to be realistic and pragmatic, or else we will be left behind,” Chester Cabalza, a professor of Chinese studies at the National Defense College of the Philippines.
Cabalza said joining the AIIB gives the Philippines, among other things, another avenue to source funds for its development projects.
And as a founding member, it will have “certain rights in the decision making” within the AIIB, he said.
Last to sign up
The government announced its participation in the AIIB on Dec. 30, the deadline for prospective members to join the group, making the Philippines the last of the 57 founding members to sign the articles of agreement.
Under the articles of agreement, the Philippine share in the AIIB’s capitalization requirement totals $979.1 million for capital subscription. The bank’s total capital stock is $100 billion.
However, the Philippines’ AIIB participation will still be subject to the availability of funds to pay for its share of the new bank’s capitalization, as well as Senate ratification.
AIIB members have until December next year to have their respective memberships ratified by their governments.
Cabalza surmised that the government’s decision must have been made at the “last hour” because it had to take into consideration the dispute with China in the South China Sea region.
But he said international relations have evolved through the years in such a way that countries now practice “dual engagements,” so that the Philippines can handle the sea dispute and its economic interests separately.
“When it used to be that a country allies itself with another in all aspects—military, political, economic—today, a country can deal with the United States for its security concerns and with China for its economic concerns,” Cabalza said.
“Is there a hidden agenda?” he asked.
Certainly, there are doubts about China’s intentions for putting up the AIIB given that there are already more established financial institutions doing exactly what the AIIB intends to do, Cabalza said.
He said the AIIB is part of the realization of the Chinese Dream, Chinese President Xi Jinping’s platform in the lead-up to 2049, the centenary of the Chinese Communist Party.
“The AIIB is actually one of China’s ways of cementing its position that it is a superpower. China always keeps a low profile but always plans for the long term,” Cabalza said.