Mint explainer: Why has Canada suddenly abandoned China’s reply to the World Bank?

• AIIB was launched in 2016 with 57 founding countries. China created the bank, which was seen as China’s answer to international institutions such as the World Bank.
• The bank has grown since then, and now has 92 members with a declared capital of $100 billion. China has contributed about $30 billion in funding to the AIIB and has the largest voting share. According to its website, the bank has invested about $42 billion in 221 projects.
• On 14 June, AIIB’s head of communications, Bob Pickard, resigned from his role. In a scathing post on Twitter, Picard, who is Canadian, accused the bank of being “dominated by Communist Party members” and having “one of the most toxic cultures.”
• Picard said, “I do not believe that my country’s interests are served by membership of the AIIB.” Shortly afterwards, Canadian Finance Minister Chrystia Freeland announced that her country would suspend participation in the bank, pending a review of the allegations. Directed the Department of Finance to urgently review Canada’s involvement in the AIIB and the allegations.”
• Minister Freeland said the decision was also taken in light of the growing desire of democracies to “de-risk” their economies by reducing dependence on authoritarian regimes.
• China, for its part, has not taken the news of Canada’s decision well. The country’s foreign ministry issued a statement calling Bob Picard’s allegations “baseless” and “disappointing”. The AIIB also disputed Picard’s characterization of the events.
• India is no exception to the controversy as it has the second-strongest voting power in the AIIB after China and has received billions of funds from the bank for infrastructure projects.
• The dispute highlights a growing divide between the West and China. When the bank was first launched, the US lobbied its allies to avoid getting involved. Given its optimistic outlook on China, its efforts ended in embarrassing failure. Even the United Kingdom, Washington’s closest ally, signed on. Canada’s withdrawal from the AIIB shows how much attitudes towards China have changed since then.

Updated: June 16, 2023, 02:53 PM IST