India on Monday was among the 57 countries to sign the legal framework and management structure for the China-initiated Asian Infrastructure Investment Bank (AIIB), cited as an example of rare Sino-India synergy between the countries on a project of shared interests.
With an authorised capital of $100 billion, the bank is expected finance infrastructure projects across Asia and will likely become operational by the end of the year.
India, even as the second largest shareholder in the bank, will of course play second fiddle to China.
“China, India and Russia are the three largest shareholders, taking a 30.34%, 8.52%, 6.66% stake, respectively. Their voting shares are calculated at 26.06%, 7.5% and 5.92%,” state-run Xinhua news agency said in a report.
But government ministers and academics attempted to play down fears that China will obviously call the shots and strike down decisions taken, if the need arose, by other member countries.
“China wants to make it (the bank) work. China will help in the bank’s achievements. China cannot force anything on others,” Ye Hailin, South Asia expert with the government-affiliated Institute of International Strategy Studies said at an interaction with Indian journalists on Monday.
Allaying fears about China’s “veto powers” in the bank, Ye said: “If it was only to veto, we would not have helped to create it. We need support from all the countries especially India, which is the second largest shareholder.”
“It is not like the IMF (International Monetary Fund) system. To make a major decision, you will need the support of three-quarters of the members. Not the same as veto power. And, this veto power is only temporary, not permanent. As more members join, China’s share of the total percentage might be diluted,” Liu Xiaoxue from the Department of International Economic Relations Study of the Chinese Academy of Social Sciences said.
Unlike the other initiative taken by Xi like the land-based Silk Route and the Maritime Silk Road projects, New Delhi sees more “synergy” with China on the AIIB, as was indicated by Indian diplomats during Prime Minister Narendra Modi’s China-visit in May.
But apprehensions remain that overarching powers within the bank – which includes Pakistan, Sri Lanka, Bangladesh and Maldives – will remain with China. And, that it was important to have checks and balances.
“The Articles of Agreement signed today make sure that key decisions, including on operational and financial policies, can only be made by a super majority of signatory countries. This will ensure that no single country is able to force through decisions that do not have widespread support,” the UK foreign office said in a statement after signing in on Monday.