Prime Minister Justin Trudeau in 2017 ignored multiple warnings and committed Canada to membership in Xi Jinping’s pet project—an infrastructure bank that finances Beijing’s Belt and Road Initiative and furthers China’s bid to become an imperial power.
The bank, known as the Asian Infrastructure Investment Bank (AIIB), pretends to be benign—just another multilateral development bank, such as the World Bank and the Asian Development Bank—but its corporate structure belies such “business-as-usual” claims.
For one thing, the AIIB is majority-owned by credit-challenged borrowers, giving the borrowers an incentive to approve loans for vanity projects that make little or no economic sense. This governance structure is a high-finance version of an insane asylum run by its inmates. For another, the bank’s structure gives the Chinese regime an effective veto over major decisions, making the borrowers—Middle East countries like Turkey and Iran as well as east-Asian countries like the Philippines—dependent on Xi’s largesse.
The AIIB, effectively President Xi’s Imperial Bank, makes perfect sense for China and for many of its impecunious owners who have trouble getting financing elsewhere. But it makes no sense for a country like Canada, that has nothing to gain from membership aside from winning brownie points with China, and a billion dollars to lose if the bank goes south.
But even in the unlikely event that all the bank’s investments prove viable, Canadian taxpayers have nothing to gain by backing AIIB—taxpayers will never receive any dividends or any other tangible return. The sole financial rationale to justify Canada’s entanglement in AIIB is the sweetheart contracts the AIIB hands out to its members’ multinationals. Yet when Canadian corporations get contracts courtesy of AIIB, they merely amount to subsidies from Canadian taxpayers to Canadian corporations via the bank. When Canadian corporations don’t land the contracts, multinationals based in other AIIB member countries, which include Iran, Russia, and China, land Canadian-taxpayer-subsidized contracts.
Those who saw the AIIB as a sham bank from the get-go include U.S. President Barack Obama, Japan’s Prime Minister Shinzo Abe, and Canada’s Prime Minister Stephen Harper, all of whom refused to join the bank when Xi proposed it in 2015. Trudeau, who hoped to secure a free-trade deal with China when he became prime minister, ignored their warnings and signed up two years later amid happy talk about promoting inclusiveness and helping the global economy.
Any illusion Trudeau might have had that the world would see the AIIB as something other than Xi’s Imperial Bank was shattered last June when Canada’s Bob Pickard, the bank’s communications chief, suddenly quit and fled China for Japan, fearing for his safety.
As Pickard subsequently explained to the world media, including the Wall Street Journal, CNN, Reuters, The Guardian, and just about every Canadian outlet, the AIIB is a massive Chinese Communist Party influence operation that provides no “tangible benefit” to Canadians.
“AIIB is a way that China packages internationally, its geopolitical ambitions focused on lending money to countries across Asia, who desperately need the money,” he elaborated in an interview with The Bureau’s Sam Cooper. “And after they do that, they are sucked into the Chinese sphere of influence almost as surely as a gravitational field that goes around a planetary body.”
The working conditions and atmosphere inside the AIIB reflects Xi’s iron hold over it, and his ambitions. “In the bank, just about every department has a Communist Party member” that acts “like an in-house KGB or Gestapo or Stasi,” Pickard explained. “AIIB has been a way to create a positive international image for China’s Belt and Road Initiative, where everyone can get used to the idea of China sitting at the head of the table and running the multilateral system.”
Since AIIB provides no benefit for Canadians and inflicts much harm on the poor countries that accumulate unrepayable debt that may keep them in perpetual servitude, Canada should cut its losses by withdrawing now from AIIB, before a financial crisis leads creditors to claim from Canadians the $1 billion taxpayer backstop that is currently at risk.
