Dutch participation in the AIIB, an international bank with Chinese characteristics

In its recent policy memorandum on China 'A New Balance', the Dutch government identifies its position as a shareholder in the AIIB as an opportunity to discuss conditions for financing and standards at international financial institutions with the People's Republic. We urge the Netherlands to make full use of this opportunity. The AIIB claims it wants to be 'lean, clean and green' but a lack of transparency and space for civil society participation, as well as weak social and environmental standards, suggest that the opposite is true.

Clear Chinese mark

The AIIB is an international multilateral bank that focuses on financing infrastructure projects, primarily in Asia and Oceania. The bank is officially not controlled by China, but as initiator and largest shareholder, the People's Republic clearly leaves its mark on the bank. The AIIB's headquarters are located in Beijing, the first AIIB president Jin Liqun is Chinese, and Chinese finance minister Lou Jiwei has been appointed first president of the board of governors. In the early stages, the bank kept its distance from China's Belt & Road Initiative, but more recently the AIIB president has spoken of the complementary nature of the two initiatives. He has also openly said to be in favour of the AIIB investing more in Chinese infrastructure projects.

After three years, it has become clear that this is an international bank with Chinese characteristics. A number of problematic issues that occur in China can also be observed in the practice of the bank. The AIIB displays a lack of good and strict social and environmental standards, of transparency and of participation by civil society.

Unfilled conditions

When the Netherlands decided to participate in the AIIB in 2015, parliament adopted a motion stating that the bank's social and environmental standards had to be at least equivalent to those of other international financial institutions. The AIIB's standards, however, are much more open ended and leave a lot more room for interpretation. A number of other important policy instruments, like the complaints mechanism and the policy document on the openness of information, did not become effective until 2019, by which time the bank had already invested millions of dollars. A much-heard argument to justify the project financing in this early period is that the projects were co-financed by other public banks, whose standards were applied. One project, however (Beijing Gas) was fully financed by the AIIB itself, with no co-financing from others.

Inadequate monitoring and supervision

A further problem is that the bank's executive board has little power to monitor and supervise the actions of the management. This also provides insufficient safeguards for compliance with international standards. Last year, shareholders approved a proposal that public investments of up to 200 million dollars and private investments of up to 100 million dollars would be left to the bank's president, with no clear monitoring by the board.

This inadequate monitoring cannot be rectified externally by NGOs and journalists, as there are no clear rules for when and how information must be made public, and decision-making is not transparent. This minimises the chances for external checks on decisions made by the bank's president.

Inaccessible complaints mechanism

Lastly, there are few opportunities for people adversely affected by the bank's projects to register complaints. The complaints mechanism is extremely inaccessible, especially when compared to that of other banks, and those wishing to submit complaints must comply with very strict conditions. The complaints mechanism does not have an independent status within the bank: an operational manager is responsible for both assessing complaints and evaluating projects.

Exclusion from the 2019 annual meeting in Luxembourg

We have seen during the preparations for the AIIB's 2019 annual meeting that, unlike with the World Bank or the Asian Development Bank, no opportunity has been granted to civil society to organise side-meetings. And unfortunately a number of our partner NGOs have been excluded from participating in the meeting, while the reasons for this and the applied selection process remain unclear.

European taxpayers' money

The AIIB annual meeting in Luxemburg presents an ideal opportunity for the Netherlands and the other European shareholders of the bank to take their responsibility. We call on them to place human rights and the environment clearly on the agenda, and to involve civil society more actively in discussions on these issues. This will send a clear signal that the bank belongs to all its participants and not only to China, where space for civil society is steadily shrinking and NGOs cannot take part in discussions on human rights. It is also an opportunity for the Netherlands and other European participants to demonstrate the importance they assign to openness of information, civil participation and monitoring of policy compliance to European taxpayers, who help to finance the bank.