- India elected to Board of Directors of China-backed AIIB
- Opening of AIIB part of global financial revamp
- U.S. lifts sanctions on Iran
India elected to Board of Directors of China-backed AIIB
India, one of the founding members of the AIIB, has been elected to the board of directors of the China-sponsored Asian Infrastructure Investment Bank which is expected to begin loan approvals before the end of this year.
- India’s Dinesh Sharmahas been elected to the board of directors of the China-sponsored Asian Infrastructure Investment Bank (AIIB). He has been elected to the 12-member board for which a secretballot was recently held.
- This will be the first board of directors for the new bank in which 57 members joined founding members.
Opening of AIIB part of global financial revamp
Formally established in December 2015, the China-led Asian Infrastructure Investment Bank (AIIB) was formally opened for business by Chinese President Xi Jinping.
- Analysts say that the AIIB is likely to lend anywhere between $10 billion-$15 billion a year during the first five or six years of its existence.
- The AIIB was established as a new multilateral financial institution aimed at providing “financial support for infrastructure development and regional connectivity in Asia.”
- It was founded in October, 2014, and will have its headquarters in Beijing.
- Its goals are also to boost economic development in the region, create wealth, prove infrastructure, and promote regional cooperation and partnership.
- The value of AIIB’s authorized capital amounts to $100 billion, with almost $30 billion invested by China.
- It has 57 member states.
- The bank expects to lend $10 billion to $15 billion a year for the first five years of its operations, beginning in the second quarter of 2016.
- The bridging the digital divide between the regional and global economies would be the bank’s top priority in the future.
- The bank will focus on digital infrastructure including fixed broadband networks, cross border and undersea fiber optic telecommunication cables, wireless sensor networks, satellite services, new generation mobile telecommunication networks, cloud computing and big data platforms.
AIIB -a new channel of funding:
- The AIIB is expected to open a new channel of funding for the Global South, which was so far dependent on the western backed International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB), in which Japan plays a pre-eminent role.
- Observers say that the new lender will focus on infrastructure development in Asia-a move that is likely to support the Eurasian connectivity initiative under the China-led Belt and Road framework.
Backed by Europe:
- China has confirmed its closer structural bonding with Europe, after China formally joined the EBRD as its 67th member.
- The EBRD also affirmed that Europe fully backed the China-led Eurasian connectivity initiative under the Belt and Road or Silk Road framework.
The EBRD was set up in 1991 to aid infrastructure development in Eastern Europe. Since then it has broadened its area of operations to include central Asia, some Mediterranean and North African nations, the Balkans and Southern Europe.
U.S. lifts sanctions on Iran
The United States has removed a wide range of sanctions against Iran.
- This move has come after International Atomic Energy Agency (IAEA) confirmed that Tehran has met its commitments to roll back its nuclear programme, under an agreement with China, France, Russia, the United Kingdom, the U.S and Germany in July 2015.
- It is important to note that the U.S has only removed secondary sanctions that restrict the dealings of other countries with Iran. Primary sanctions that bar U.S citizens and companies from business with Iran will remain.
Actions by Iran:
- All the excess stockpile and nuclear parts are kept at an IAEA-monitored location.
- Iran has reduced its enriched uranium stockpile.
- It has reduced the number of installed centrifuges by two-thirds.
Benefits to Iran:
- The removal of restrictions on its oil, petrochemicals, banking, natural gas and port sectors will hugely benefit Iran and allow it to re-enter the global market.
- As an instant relief, Iran will be able to access the huge amount of cash it has accumulated overseas from restricted oil sales during the sanctions.
- Most of this money is sitting in China, India, Japan, South Korea and Turkey.
Benefits to India:
- The removal of sanctions will tremendously help India’s plans in Iran, which are many and include the Chabahar port, an Indian Oil petrochemical plant and the proposed Iran–Pakistan–India (IPI) gas pipeline.
- India’s oil imports from Iran have been restricted by the sanctions and the recent forward movement on Chabahar port was accommodated within the exemption granted for projects exclusively serving commerce with Afghanistan.
Tough task ahead for U.S.:
- The U.S has the tough task ahead, of keeping anti-Iran allies in West Asia such as Saudi Arabia and Israel happy and countering domestic criticism by the Republicans that it is going soft on Iran.
- U.S allies in the region fear that the U.S. focus on the nuclear threat distracts the United States from the array of other threats that Iran poses to the region. The U.S will have to reassure Saudi and UAE and others.
- The U.S has also made it clear that it continues to treat Iran as a state-sponsor of terrorism, and punitive actions prescribed for promoting terrorism, human rights violations and missile tests will continue.
There are still many reasons each side is distrustful of the other. Iran wanted to be treated like a normal country, while other countries want Iran to behave like a normal country.