• Kyodo

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Japan and the United States plan to reaffirm the need to ensure fair governance and transparent management in a China-led regional development bank during summit talks between their leaders in Washington later this month, diplomatic sources said.

The two allies, in coordinating their positions during the April 28 talks between Prime Minister Shinzo Abe and U.S. President Barack Obama, aim to prevent Beijing from making arbitrary loans as a competitor for influence in infrastructure investment in Asia, the sources said on Thursday.

Japan and the United States are in concert in staying out of the Asian Infrastructure Investment Bank, citing concerns over the opaqueness of the institution’s governance standards.

They have agreed to take a cautious stand about joining the AIIB and intend to call on European countries such as Britain, France and Germany, which have expressed their hope to participate in the bank, to make reforms from inside it, the sources said.

Ahead of the summit talks, the issue is also expected to be raised at a two-day foreign ministerial meeting of the Group of Seven industrialized countries starting next Tuesday in Germany.

Foreign Minister Fumio Kishida plans to urge his G-7 counterparts from Britain, Canada, France, Germany, Italy and the United States that the AIIB should be managed in line with international standards, the sources said.

Gaining momentum from the Abe-Obama talks, Japan and the United States, which regard the AIIB as a challenge to the existing lending institutions they lead, may also take up the AIIB issue when the G-7 leaders meet in Germany in early June, the sources said.

While Japan does not rule out the possibility of joining the bank and envisages a possible contribution of up to $1.5 billion to the AIIB, it will urge China to ensure fair governance and transparent management of the bank, according to an internal government document, a copy of which was obtained and reported by Kyodo News earlier this week.

Among the concerns over the structure of the AIIB is the lack of clarity on the part of China in identifying the authority of the bank’s Board of Directors.

The proposed bank is expected to be launched later this year and founding members confirmed on April 15. China aims to agree on the AIIB’s Articles of Agreement by the end of June through negotiations involving more than 50 countries and territories that have signed up for the bank.

The United States, for its part, has welcomed the AIIB so long as it becomes an entity that has high standards in infrastructure investment, according to a senior U.S. government official.

On top of the AIIB, Japan and the United States are expected to have in mind China’s growing military and economic power when they agree on bolstering their cooperation, the sources said.

Abe and Obama are also set to take up bilateral defense cooperation guidelines, which will define the roles of the Self-Defense Forces and the U.S. military, and the ongoing Trans-Pacific Partnership free trade talks, according to the sources.

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