Russia first to approve China-led Bank charter
July 2, 2015, 7:59 am

File Photo: Russian Premier Dmitry Medvedev (left) with Russian President Vladimir Putin [Image: PPIO]

Russian Deputy Finance Minister Sergey Storchak was present at the signing of the banks’ charter on Monday in Beijing.

The new Asian Infrastructure Investment Bank (AIIB) is expected to rival institutions such as the World Bank and the Asian Development Bank which are dominated by the US.

The Russian Finance Ministry has been instructed by the Cabinet on Thursday to sign the bank’s charter.

Following the signing of the bank’s charter, the agreement on the $100 billion AIIB will now have to be ratified by the parliaments of the founding members.

Russia owns 65,362 shares of the bank.

China has a 30.34 per cent stake in it and 26.06 per cent of the votes, according to the agreement.

BRICS members China, India and Russia are the three largest shareholders, with a voting share of 26.06 per cent, 7.5 per cent and 5.92 per cent, respectively.

Seventy-five per cent of the shares are distributed among countries within the Asian region.

Many US allies in the EU, including Germany, Britain, Italy, France among others, have joined the China-led Bank.

“The formal signing marks an important next step in our plan to build a deeper partnership between the governments, companies and entrepreneurs of Britain and the fast growing economies of Asia…I believe our involvement at its birth will help unlock enormous opportunities for British companies and British jobs,” George Osborne, British Finance Minister said in a statement.

Meanwhile, at a Cabinet meet earlier last week, Russian Premier Dmitry Medvedev said the AIIB is expected to finance projects in Russia’s Far East and regions on the China-Russia border.

China has maintained it will not have veto powers at the AIIB, unlike the World Bank where Washington has a limited veto.

The Bank will base its headquarters in Beijing.

The Chinese Finance Ministry said the new lender will start operations by the end of 2015 under two preconditions: At least 10 prospective members ratify the agreement, and the initial subscribed capital is no less than 50 per cent of the authorized capital.

China and other emerging economies, including BRICS, have long protested against their limited voice at other multilateral development banks, including the World Bank, International Monetary Fund and Asian Development Bank (ADB).

China is grouped in the ‘Category II’ voting bloc at the World Bank while at the Asian Development Bank, China with a 5.5 per cent share is far outdone by America’s 15.7 per cent and Japan’s 15.6 per cent share.

The ADB has estimated that in the next decade Asian countries will need $8 trillion in infrastructure investments to maintain the current economic growth rate.

TBP and Agencies