Governance of the Asian Infrastructure Investment Bank in Comparative Context

Abstract

The Asian Infrastructure Investment Bank (AIIB) was launched in 2016 with governance arrangements that build on the foundations of its progenitors, with adaptations and updates reflecting AIIB’s own focus and founders. AIIB follows multilateral development banks (MDBs) such as the World Bank, Asian Development Bank, European Bank for Reconstruction and Development and Inter-American Development Bank in its governance structure (Board of Governors, Board of Directors and President). AIIB includes expanded powers for the Board of Governors to add flexibility in areas such as new types of financing and assistance to non-members. AIIB’s Board of Directors serve on a part-time nonresident basis, with detailed powers for policy, oversight and delegation. AIIB’s President is limited to two terms. AIIB’s voting structure is tied to shareholding but less so than in many other MDBs, as basic votes for all members and Founding Member Votes for founders reduce the impact of shareholding to less than 90 percent of total voting power. The underlying comparisons with other MDBs are spelled out in detail in this chapter, summarizing AIIB’s heritage and innovation in governance. *Ms. Lichtenstein is an Adjunct Professor, Johns Hopkins School of Advanced International Studies, Washington, DC. She was formerly the Inaugural General Counsel for the Asian Infrastructure Investment Bank, and Assistant General Counsel at the World Bank. This article draws in part upon her book, see Natalie Lichtenstein, A Comparative Guide to the Asian Infrastructure Investment Bank (OUP 2018). Email: lichtenstein@jhu.edu. Governance of AIIB in Comparative Context 51 Governance in public international financial institutions began at least as far back as the July 1944 discussions at Bretton Woods, New Hampshire on the formation of the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF). Seventy years later, discussions were launched to create the Asian Infrastructure Investment Bank (AIIB), currently the newest multilateral development bank (MDB) to follow in IBRD’s pioneering footsteps. In the intervening decades, a score of other MDBs has been established, each one adapting the MDB model and its governance characteristics to different goals in a different context, all with the objective of pooling financial contributions and commitments of countries into a new development finance institution. This article traces the influence of MDB governance structures on the governance arrangements for AIIB, comparing relevant legal frameworks. After a brief introduction to AIIB (Section 1) and MDB Origins (Section 2), Section 3 describes AIIB’s governing bodies (Board of Governors, Board of Directors, President) and Section 4 describes AIIB’s decision-making rules (voting and majorities). Section 5 offers concluding observations.