Can the Asian Infrastructure Investment Bank limit South China Sea pressure?

In the end, such a vote would offer only a pyrrhic victory for either side. It could open up such large political divisions within the AIIB that the organization breaks apart. No one wants that. 

To date, China’s underestimated the blow back from its geopolitical over-reach in the South China Sea. It’s been made worse by China’s domestic propaganda machine. 

It’s been using the South China Sea as a distracting nationalistic lightning rod to shift attention from issues like needed reform of domestic residency laws (the hoku system), pollution and corruption.

The AIIB is an important symbol for the Communist Party that China’s emergence as a global player represents the ripening fruit of decades of personal sacrifice by the Chinese people.

While it’s an overstretch to call the AIIB it a ‘vanity project’ for China - it is something close.

Given this, China will work hard to keep controversial items off the AIIB’s agenda. This gives other members an avenue for getting China’s attention that other avenues - like appeals to UN Tribunals -haven’t.

Happily, the issue of the South China Sea need not be framed in such naked political terms. If the AIIB shies away from funding compelling infrastructure projects in Southeast Asia like the TAGP and TAEG, others can step in.

These include theAsian Development Bank (ADB), the World Bank,theGreen Climate Fund and even Japan’s $200 billion export infrastructure fund - which alone boasts twice the capital of the AIIB.

If these organizations worked together to fund a common plan in the South China Sea and share funding, the AIIB’s hand could be forced. This would be particularly so if the AIIB were internally divided along the voting lines outlined above. 

The big issue here isn’t azero-sum involving one side or the other prevailing over the legality/acceptability of China’s Nine Dotted Line. The bigger issue is the preparation of the world economy for the 21st Century.

That means building out the infrastructure to enable more of Asia’s people to join the global economy and to enable Asia’s economies (like everywhere) to progressively decarbonize and more sustainably steward their resources like fisheries.

Given this, joint development in the South China Sea can set a crucial precedent benefitting everyone, particularly China.