Baku. 17 May. REPORT.AZ/ A two-day summit to unveil what China is portraying as the infrastructure project of the century concluded on May 15. Realization of the initiative will depend in part on the effectiveness of a newly minted development mechanism, known as the Asian Infrastructure Investment Bank (AIIB).
Report informs referring to Valuewalk, the $ 1 trillion initiative is designed to vastly expand free trade in Africa, Asia and Europe. The summit held outside the Chinese capital Beijing, brought together 30 world leaders.
Fifty-seven states are participating in the AIIB. China is the largest provider of start-up capital for the bank, injecting almost $30 billion, or roughly 32 percent of the bank’s overall funds. Beijing also controls almost 28 percent of the bank’s voting shares. Other major donors include India, which controls 8 percent of voting shares, and Russia, which has a 6 percent stake. Azerbaijan’s voting share in AIIB is 0.517%.
The AIIB’s stated aims are to invest in and attract other long-term financing for transportation, telecom and energy projects throughout Asia. To date, the AIIB has approved loans worth US$1.73 billion to support 13 projects in eight countries, including the former Soviet states of Azerbaijan and Tajikistan. In Azerbaijan, the AIIB has invested $600 million in the $8.6 billion Trans-Anatolian Natural Gas Pipeline (TANAP) project, a key component in the Southern Gas Corridor. While China will not benefit directly from TANAP, the project could again create a blueprint for project financing and implementation that could be replicated for future initiatives involving pipeline construction to connect the Caspian Basin to China.
With its proposed capitalization of $100 billion, and an initial target of $4-5 billion in annual lending, the AIIB is a relatively small player in comparison to China’s largest policy lenders, China Development Bank and the Export-Import Bank of China. Nevertheless, the AIIB has an important role to play in the Belt and Road project. Beijing is keen to gain geopolitical and geoeconomic influence through the creation of additional institutions, including the AIIB, the New Development Bank and the Silk Road Fund.