With the March 31st application deadline quickly approaching for countries interested in joining the Asian Infrastructure Investment Bank (AIIB), Australia is rethinking its prior decision not to apply. The investment bank, led by China, recently added the United Kingdom, France, Italy, and Germany as members, even though the United States has issued warnings about the bank. The decision by these four major European countries to join the bank against United States wishes has led Australia to reconsider its position on AIIB, and look to possibly invest up to $3 billion in the AIIB.
The decision to join the AIIB pits one of Australia’s major allies in the United States against China, Australia’s biggest trading partner. The United States has warned countries about the AIIB, worrying that China will use the bank to influence global politics. Whether the bank ever becomes that powerful remains to be seen, but that fact has not dampened the United States dissatisfaction with the growing list of countries who have joined. Australia does not want to anger the United States, a longtime military ally, but with other United States allies joining the bank, Australia wants to take a closer look at the opportunity to further strengthen economic ties to China.
Australia’s ties to China run deep, as over $75 billion worth of goods are exported from Australia to China every year. The AIIB represents a chance for Australia to further the relationship between the two countries, a relationship that is especially important to Australia and its economy. If the AIIB becomes an important force in the region, Australia will want to be part of it. And with other regional powers such as Japan and South Korea exploring possible membership in the bank, Australia will have to think very carefully about its decision, as its lasting political and economic impacts loom large.