National / Politics

U.S. questions Japan about stance on China-led bank

Kyodo

The United States has questioned Japan about the possibility it might participate in China’s initiative to set up a regional development bank, sources familiar with bilateral relations said Friday.

In the wake of a Financial Times report at the end of March that said Japan “is likely to join the Asian Infrastructure Investment Bank within a few months,” in a move it said “would see Tokyo break ranks with Washington,” the U.S. has grown suspicious about Japan and asked whether the report is true, the sources said.

The development shows that Washington’s concern is growing since major allies including Britain, Australia and South Korea filed applications to become “founding members” of the AIIB before China’s March 31 deadline for countries and territories.

In response to the U.S. inquiry, Tokyo explained that the report was “inaccurate” and said it “does not have a specific time frame” in mind, as suggested by the report, the sources said, adding that Washington eventually accepted the explanation.

A government source said the report, based on a Financial Times interview with Japanese Ambassador to China Masato Kitera, was “a deliberate attempt to drive a wedge into the firm relations between Japan and the United States.”

On March 31, Chief Cabinet Secretary Yoshihide Suga dismissed the report as “completely inaccurate.”

Foreign Minister Fumio Kishida said, “It is not true that Ambassador Kitera made a forecast about Japan’s AIIB participation.”

Underscoring Japan’s cautious position on the new bank, which China has pledged to launch by the end of the year, Prime Minister Shinzo Abe said on March 31 that “There is no need to participate hastily.”

“The United States now knows that Japan is trustworthy,” Abe told a meeting of the ruling Liberal Democratic Party, especially when Britain and other European members of the Group of Seven industrialized nations expressed their intention to join the AIIB.

While more than 50 countries and territories have signed up to join the institution, Japan — together with the United States — has decided to stay out of it, citing concern over the opaqueness of AIIB governance standards and its screening process for loans.

Because some see the AIIB as a challenge to the World Bank and Asian Development Bank, which are traditionally led by the United States and Japan, respectively, how the two allies will deal with the new multilateral bank is expected to be on the agenda for Abe’s visit to the United States on April 26.

While publicly expressing caution, an internal government document obtained by Kyodo News showed that Japan has not yet ruled out the possibility of joining the AIIB, and would contribute up to $1.5 billion in the event that it does.

The document also said Japan — in close coordination with the United States — will continue to urge China to ensure fair governance and transparent management of the institution “from outside.”

“The government is conducting various studies, but our country maintains a cautious stance about participation in the AIIB,” Suga, the top government spokesman, told reporters in Tokyo on Thursday.

“In coordination with relevant countries, (Japan) has been urging China that the AIIB meet standards suitable for so-called international financial institutions, which we believe is naturally necessary,” he said.

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