War in Ukraine: China-backed AIIB freezes Russia, Belarus loans

The China-backed Asian Infrastructure Investment Bank (AIIB) has said that it has put on hold and is reviewing all activities relating to Russia and Belarus in the wake of the current conflict in Ukraine.

The China-backed Asian Infrastructure Investment Bank (AIIB) said on Thursday that it has put on hold and is reviewing all activities relating to Russia and Belarus in the wake of the current conflict in Ukraine.

A residential building destroyed by shelling, as Russia's invasion of Ukraine continues, in the settlement of Borodyanka in the Kyiv region. (REUTERS)

In a statement announcing the freeze and review, the AIIB referred to the situation as “war in Ukraine”, the closest to “invasion” that any Chinese government-affiliated institution has until now described the situation in the east European country.

Officially, China has stuck to “special military operation” in describing Russia’s actions in Ukraine.

China is the largest shareholder in the development bank holding 26.5% of its voting power.

Headquartered in Beijing, Russia is the third largest shareholder in AIIB after China and India and the bank has approved two projects across the finance and transport sectors, totalling $800 million.

The AIIB said in a statement on Thursday that its management would do its utmost to safeguard the financial integrity of AIIB, against the backdrop of the evolving economic and financial situation

“As the war in Ukraine unfolds, the Asian Infrastructure Investment Bank (AIIB) extends its thoughts and sympathy to everyone affected. Our hearts go out to all who are suffering,” read a statement published on the website of the Beijing-based lender.

“Our Bank is actively monitoring the situation and assessing its impact on AIIB’s operations and our members’ economies. We the Management will do our utmost to safeguard the financial integrity of AIIB, against the backdrop of the evolving economic and financial situation,” the statement said.

“Under these circumstances, and in the best interests of the bank, management has decided that all activities relating to Russia and Belarus are on hold and under review,” the statement added.

Neither Ukraine nor Belarus are members of the bank, which was founded in 2016 as an alternative to the US-led World Bank.

“AIIB is a multilateral organisation created by an international treaty, and adherence to international law lies at the very core of our institution. AIIB Management believes that multilateralism provides the best framework for countries to cooperate in dealing with common challenges and supporting development,” the bank said.

Russia’s economy ministry had proposed that the AIIB help finance five projects in Russia worth almost $12 billion, the Vedomosti daily reported this January.

The largest of the five projects is the Russian part of a highway running from China to Europe, Vedomosti said, whose cost was estimated at $10 billion.

The 7th AIIB Annual Meeting was to be held in Sochi in October, 2022.