Russia is the elephant in the room when it comes to deciphering the Asian Development Bank’s cautiously cooperative stance toward China’s Asian Infrastructure Investment Bank (AIIB), says a former ADB official.
Russia isn’t an ADB member. But it is a member of the World Bank and the AIIB. This complicates relations between Asia’s two biggest development banks.
“This helps to explain why the ADB regards the AIIB with much more caution than does the World Bank,” said Jeff Procak, a recently retired ADB official who had responsibility for Central Asian trade and who also served as the World Bank’s country officer for Russia.
The World Bank and the AIIB, in contrast, signed a cooperation framework on April 23 in Washington. The two banks agreed to work together in areas of common interest, including development financing, staff exchanges, and analytical and sector work. They are also looking at enhancing coordination at the regional and country levels.
Why Russia isn’t in ADB
Why didn’t Russia join the ADB, as it did with the International Monetary Fund and the World Bank? Procak says Moscow may have passed on the ADB because it felt the bank was too closely tied to US and Japanese regional interests.
He says Japan’s unresolved Northern Territories dispute with Russia (four small islands annexed by the Soviets at the end of World War II) also soured Tokyo on Russian ADB membership. Nor has Russia’s growing tensions with the West helped.
Japan and the US are the ADB’s two biggest shareholders, with stakes of 15.6% each.
Geopolitical posturing by the US and Japan, according to Procak, may explain why the ADB hasn’t admitted new members since Georgia joined the bank in 2007.
“There are rumors that other countries such as Brazil and Hungary had expressed interest in joining the ADB, but the existing membership developed a bit of angst, recognizing that accepting more members yet denying Russia a seat at the table might be bad form. Hence, no new members since 2007,” Procak said.
Procak believes Russia’s future role in China’s Belt and Road Initiative may lie in the Moscow-led Eurasian Economic Union (EEU), which is made up of Russia, Kyrgyzstan, Kazakhstan, Belarus and Armenia.
He notes that the EEU has helped liberalize cross-border movements among its members. It’s also managing to do this on its external borders with China, Tajikistan and Mongolia.
The benefits of transport links among China, Mongolia, Tajikistan and EEU member states have already been demonstrated, according to Procak. He says a trial run last summer involving the participants and the International Road Transport Union, a global transport trade group, showed that it’s possible to move goods quickly across borders from Tianjin in China to the Russian city of Ulan-Ude in eastern Siberia.
It usually takes more than 10 days for cargo shipped by rail from Tianjin to reach Mongolia and Russia – posing problems for perishable goods such as food. But the new freight route cuts the transit time by two-thirds, to three days.
The Russian side will also be able to ship fish from Lake Baikal and beer to Chinese consumers.