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China’s “Diplomatic Victory” over Japan

SNA (Tokyo) — Japan Innovation Party leader Kenji Eda couldn’t have framed the events in starker terms when he discussed the issue of the Asian Infrastructure Investment Bank at a press conference last Thursday: “It was a victory for Chinese diplomacy and a complete defeat for Japanese diplomacy,” he declared. “We should be making a contribution to creating the order of the Asian economy and infrastructure development—and it’s not too late even now for us to participate.”

Finance Minister Taro Aso responded to criticism such as Eda’s on Friday: “I don’t believe that it’s a defeat at all.” He cited the fact that even in the case of the Asian Development Bank Japanese firms receive only about 0.5% of all construction orders for building infrastructure. “In the case of Chinese capital, the ratio would be even less,” he asserted.

Beijing had set a March 31 deadline for nations to decide whether or not to participate as founding members of the institution. Chinese government spokespeople have declared repeatedly that the door will be open for other countries to join later on, should they decide so. By the end of last month, almost 50 countries appear to have signed up for the AIIB, including such nations as Australia, Britain, France, Germany, South Korea, and even Taiwan.

The AIIB is expected to be capitalized at about US$50 billion and will focus on infrastructure investments in developing countries—a concern about which there is a consensus that there is a need to be filled.

The government of the United States has remained aloof from the Chinese initiative and had encouraged its allies to stay away as well. The argument was that the AIIB might have standards of transparency, regulation, and policies of toward the natural environment that wouldn’t reach the level of current international practices. Many found these arguments unpersuasive, pointing out that the best way to ensure that the AIIB functions properly is to be inside the bank shaping its policies as it launches rather than simply standing aside and expecting the worst.

Open critics of the US approach to this issue have emerged even from within the American establishment. Former Secretary of State Madeleine Albright, for, example, told an audience at the Center for Strategic and International Studies last Tuesday, “The bottom line is that I think we screwed up. We should not have done it this way.” Albright noted that many countries around the world have been frustrated by the tight hold that the United States has kept on the World Bank, and that this set the stage for the China’s success. She added, “Frankly I think we miscalculated. Other countries also wanted to be part of the Chinese initiative.”

Opinions have been mixed in Tokyo as well. The main argument that apparently convinced the Abe administration to stay out of the AIIB for now was concern that it would negatively impact US-Japan relations to go against Washington’s admonitions. It may also be the case that the rise of China’s prestige as a major player in global diplomacy and international finance chagrins Japanese conservatives like few other issues can do.

The rush of countries to join the AIIB highlights the psychological dependency of Japanese conservatives on the United States in a particularly distinct fashion. No one can accuse Britain, for example, of not being a very close US ally. Likewise, no one can say Taiwan’s security concerns about mainland China are less severe than those of Japan. And yet, these countries and many others were willing—as Japanese leaders were not—to think independently about their best approach to the establishment of the AIIB.

Indeed, the comments by Madeleine Albright and other US establishment figures put the writing on the wall that the Obama administration itself is in the process of rethinking their own approach to the AIIB. In the weeks and months ahead we should probably expect a fresh US line to emerge.

So the “sin” of Japanese diplomacy in this case is not simply that they were forced to prioritize their relationship with Washington once again, but that they utterly failed to think for themselves, and thus stayed loyal to an obviously doomed US policy.

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