Fifty-seven countries have signed up as founding members of the Asian Infrastructure Investment Bank (AIIB), a China-led regional institution to promote infrastructure investments in Asia. Japan and the United States are both absent from the list. At this stage, Japan and the U.S. are withholding their participation due to numerous concerns regarding the bank’s governance and transparency.

In my January column for this publication, I emphasized the need for Japan to join the AIIB, but here I would like to again set out the strategic significance of Japan’s membership.

First of all, Japan should consider the AIIB as a strategic challenge for the nation to work with other countries in Asia to build a regional architecture and order. With or without Japan, the process of regional order building in Asia will press on. It would be delusional for Japan to think otherwise. There is an enormous demand for infrastructure across Asia, particularly in India. Japan’s grand strategy for the 21st century must be to create robust cooperative ties with India by assisting in its development. Japan should then view the AIIB as an instrument to promote India’s development by making ample use of Chinese money.

For many years, Japan remained the world’s top provider of economic assistance to Asian countries. Even now, Japan’s official development assistance annually exceeds $10 billion, and close to 60 percent of this amount is directed to Asian countries. By comparison, China gives $5 billion annually in ODA, of which 30 percent goes to other Asian nations.

What is more, Japan boasts organizations with world-class expertise in technical assistance, such as the Japan International Cooperation Agency (JICA). Japan can offer this sort of technical expertise and experience to the AIIB — which would be a strategic involvement in the new institution. But Japan cannot even put on a performance or demonstrate its know-how without first getting up on the stage. It will simply remain a spectator.

Next, by becoming a member of the AIIB, Japan can expand the reach of the bank, making it a mechanism for linking Asia and the Pacific.

China has divided AIIB member countries into “regional members” and “non-regional members,” and defines regional members as the member states of United Nations ECAFE (now ESCAP, or Economic and Social Commission for Asia and the Pacific).

Middle East countries will thus be “regional members” while the countries of North and South America will be “non-regional members.” The same classifications are used by the Asian Development Bank (ADB).

The definition of regional members should be expanded to include countries of the Asia-Pacific. In particular, North and South American countries that belong to the Organization for Economic Cooperation and Development — namely the U.S., Canada, Mexico and Chile — should be counted as regional members. These four countries are all participants in the Trans-Pacific Partnership (TPP) trade talks.

Even if it is not possible for the four countries to join the AIIB as regional members, it is still desirable for them to join the bank as non-regional members. In short, it is vital that Asia and the Pacific remain undivided.

As the first Asian country to modernize and emerge as a world power in the latter half of the 19th century, Japan’s strategic position and identity were deeply shaken by its location at the threshold between Asia (the Orient) and the Pacific (the West). In the 1930s, Japan’s adoption of an “Asian Monroe Doctrine” sent it hurtling toward the second Sino-Japanese War and the Pacific War. In the postwar period, and especially after the introduction of Prime Minister Masayoshi Ohira’s “Pan-Pacific Concept,” Japan’s vision for the Asia-Pacific region has been based on the lessons learned from these prewar experiences.

If it does not join the AIIB, Japan could inadvertently divide Asia and the Pacific. This would not serve the interests of Japan, the U.S. or the Asia-Pacific region.

Third, Japan’s long-term mission and national interest is the establishment of a liberal international order in the Asia-Pacific region, based on such values as the rule of law, freedom of navigation, nondiscrimination, multilateral free-trade system and freedom of movement throughout the region.

The problem is that doubts persist over whether China will really operate the AIIB according to these principles. There are also concerns that China’s autocratic form of capitalism and corrupt state-run enterprises will “contaminate” the world economy through AIIB investments. For just this reason, it is absolutely essential that Japan and the U.S. establish practices and governance that conform to the principles of the liberal international order. Only by joining the AIIB, however, will their voices be heard seriously.

To be sure, Japan, like other countries, feels threatened by China’s recent aggression in disputed territorial waters, its endless military expansion and dubious civilian control. It is important to maintain and strengthen deterrence to counter this threat. At the same time, however, Japan and China can cooperate in this initiative to build a regional economic order. It is time to adopt both a hard and soft approach to China.

There are likely schemers within Zhongnanhai who hope to isolate Japan from the rest of Asia by leaving Japan out of the AIIB, or even to drive a wedge between Japan and the U.S. by admitting only Japan as an AIIB member. We must avoid becoming ensnared in this sort of trap. Japan and the U.S. must take scrupulous care in their policy coordination. And both governments should work to reach the TPP deal as soon as possible.

Yoichi Funabashi is chairman of the Rebuild Japan Initiative Foundation and former editor-in-chief of the Asahi Shimbun. This is a translation of his column in the monthly Bungei Shunju.

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