THE Obama administration, stung by allies who have thrown their weight behind a new China-led development lender, has turned its focus to a new front: exerting its remaining leverage to influence the bank’s lending standards.

    For months, the United States had urged countries to think twice about joining the Asian Infrastructure Investment Bank (AIIB) until it could show sufficient standards of governance and environmental and social safeguards.

    The AIIB has been seen as a challenge to the World Bank and Asian Development Bank, institutions Washington helped found and over which it exerts considerable influence.

    By Sunday, however, the AIIB’s interim head was able to announce that at least 35 countries will join the Beijing-based bank by a March 31 deadline.

    Despite Washington’s misgivings, U.S. allies Britain, France, Germany and Italy have said they would join the bank, while Australia, Japan and South Korea are considering doing so.

    That reality has led the Obama administration to reassess its stance on the bank, which will be capitalized at an initial US$50 billion to provide project loans to developing states.

    “Our priority now that this has happened is to try to marry up the Chinese infrastructure bank with the existing global financial institutions such as the World Bank and IMF,” a senior administration official told Reuters Monday.

    “I don’t think the United States handled it very well,” the official added in an unusually stark admission of shortcomings in Washington’s approach. The official spoke on condition of anonymity given the sensitivity of the issue.

    In a statement provided to Reuters on Sunday, U.S. Treasury Under Secretary Nathan Sheets demonstrated Washington’s new tack. “Co-financing projects with existing institutions like the World Bank or the Asian Development Bank will help ensure that high-quality, time-tested standards are maintained,” he said.

    Indeed, World Bank President Jim Yong Kim said the Washington-based institution was “already in deep discussion” with the AIIB “on how we can closely work together.”

    “We have every intention of sharing knowledge and co-investing in projects throughout Asia,” he said.

    The head of the Asian Development Bank (ADB) said yesterday that it could cooperate with the AIIB through co-financing if the ADB’s standards for loans were met.

    Takehiko Nakao, at a news conference in Tokyo, said he had been told by a Chinese official that the AIIB would not compete but cooperate with the ADB.

    Nakao is a former Japanese vice finance minister for international affairs.

    The AIIB has been seen as a significant and possibly historic setback to U.S. efforts to extend its influence in the Asia Pacific region to balance China’s growing power.

    All countries are welcomed to join the AIIB, China’s Vice Finance Minister Shi Yaobin said yesterday.

    “The AIIB is an open and inclusive multilateral development bank. China welcomes all countries to join and make contributions to the infrastructure improvement in Asia,” Shi said, responding to a question on whether China communicated with the United States or Japan during the preparation for AIIB.

    “However, China will respect their decision whether or when to join,” he said.(SD-Agencies)