China wants to grab a chunk of the World Bank’s business, and Washington can’t do anything to stop them from muscling in on DC’s Shylock operation.
China’s Asian Infrastructure Investment Bank is looking to put the government’s large Treasury positions to work on large second and third world projects.
The new institution has already line up important US allies such as the City of London and other G-7 countries as co-founders before the March 31 launch.
The US-led World Bank is beginning to take a more conciliatory approach to the idea, in so much as not wanting to be frozen out.
There are mixed messages of whether the new Asian bank will follow the World Bank/IMF playbook or not.
The WB/IMF works like this not in theory but in practice.
WB comes into a country needing a large water project for farming. Bankers from US and London set up the borrowing for a project, which will be run bu US and/or EU companies.
Once the project is completed the project host country has trouble servicing the large debt, which the project’s revenues were suppose to cover.
A year later the IMF comes in to renegotiate the notes and will extract a favorable contract for other US/EU multinational firms to extract natural resources from the country.
This contract may have been the ultimate reason for providing the country with the initial project.
This is not new by any stretch, it has been going on for well over three centuries during colonialism, but was codified under the WB/IMF in post-WWII expansionism.
This game plan was laid out by John Perkins in his 2004 book, “Confessions of an Economic Hit Man,” which has probably been translated in Mandarin.
So keep an eye on the this week to see how the Obama administration and the World Bank posture and glad hand the Chinese over the Asian Infrastructure Investment Bank.