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The Beijing-based Asian infrastructure investment bank has left the door open for project financing in Myanmar, even if the Southeast Asian nation does not return to democracy.
Joachim von Amsberg, vice president of the AIIB, told the Financial Times that while the bank had no new projects under consideration for Myanmar, it did have a framework for dealing with “de facto governments”.
“We would not consider the form of government, we would review our checklist,” he said.
The statement comes as governments and companies with interests in Myanmar are increasingly pushing to sever ties with the country’s military junta after overthrowing Aung San Suu Kyi’s administration and repressed about the protesters.
In response to concerns from activists, Western energy groups Total and Chevron last week cash dividends suspended to the Myanmar state oil and gas company.
Japanese brewing group Kirin and South Korean steelmaker Posco have also announced plans to leave joint ventures with military-controlled conglomerates in Myanmar.
The AIIB checklist includes assessments of whether a de facto government has effective control of the territory, recognition of the status of other financial obligations, and the position taken by neighboring countries, as well as potential financial risk.
“I do not think it is possible to answer hypothetically. It has to be based on a specific moment, based on a specific project proposal, ”von Amsberg said.
When was the AIIB launched in 2016 by Xi Jinping, was widely regarded as a component of the Chinese president’s ambitious infrastructure plan for belts and roads. Since then, the AIIB has approved more than $ 24 billion in funding on 119 projects.
Although some critics have seen the bank as part of the expansion of Beijing’s influence through diplomacy and international economic governance, its composition has doubled in nearly 103 countries, including Australia, Canada, the United Kingdom, France and Germany.
The crisis in Myanmar, however, has raised questions about what relationship will be formed with the Beijing Board, a long economic life in the country.
Yun Sun, an expert on Myanmar-China relations at the Stimson Center, a think tank, said that while Western groups broke away from Myanmar and instituted sanctions against coup leaders, he hoped investors and companies Chinese enter and fill the void. .
“If Western companies decide to withdraw, it will be inevitable that China will increase its footprint and also its Burmese market share, which also raises the question: ‘Is isolation and sanctions the best strategy?'”
The only AIIB project with Myanmar, which is also a member, was in 2016 when it funded $ 20 million for a private sector gas plant.
The World Bank and the Asian Development Bank, lenders in Myanmar and operating there, suspended disbursements and new contracts temporarily after the coup.
The government of National Unity, formed by supporters of ousted leader Aung San Suu Kyi, has warned foreign lenders which will not honor the debts assumed by the military regime.
Although the AIIB was a relatively young institution, multilateral lenders generally had decades of experience working in complex situations and could play a role in reducing tensions, said von Amsberg, a World Bank veteran.
“The beauty of multilateral development banks is that they are a forum where you have a governance mechanism that includes countries that have difficult and sometimes conflicting or even troubling relations,” he said.
Since the February 1 coup in Myanmar, more than 800 people have been killed and 4,000 imprisoned, while the country’s health, education and banking systems are struggling to function, provoking fears that Myanmar could become one failed state.
Like the the political crisis is deepening, another crucial consideration for the international community is the well-being of the country’s 54 million people. The UN has warned that the double success of the coronavirus pandemic and the coup could leave almost half of the population alive. below Myanmar’s official poverty line of about $ 1 a day next year.
Von Amsberg said the AIIB would always “try to prioritize” funding applications for members with “particularly severe funding and development needs.”
It is clear that when we receive funding proposals from countries that have, say, large infrastructure deficiencies or large unmet needs of the population (for energy, transport, water and services like this), we would pay more attention to these requests, “he said.
“This does not override our policies or our concerns with sound banking, but we prioritize projects when the development case is particularly strong.”
Additional reports of Sherry Fei Ju in Beijing
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