Ahead Of Historic AIIB Event: China Says Will Hold 30.3% Stake, Russia Says Will Become Key Manager

Today, delegates from prospective founding members of the $100 billion Asian Infrastructure Investment Bank (AIIB) will converge in Beijing for a historic signing ceremony centered on the bank’s legal framework, which will lay down the rules, including each member’s share and voting powers, decision-making processes, and the bank’s initial capital.

Ahead of the AIIB ceremony, China says that it will hold over a 30 percent stake in the bank with over a quarter of the voting rights, and Russia says it will be a key manager and one of the top members of the bank.

“Russia would be among AIIB’s top five leading countries, at least, that’s why it would be entitled to a corresponding voting share and thus to a corresponding share in the bank’s management,” Andrey Denisov, Russia’s First Deputy Foreign Minister, told Russia’s RIA Novosti news agency on the sidelines of the World Peace Forum in Beijing on Saturday.

Denisov noted that Russia’s decision to join the AIIB has “a very concrete and tangible value,” and not just a political gesture or an expression of solidarity.

“First of all it is understanding of our interests and their realization through joining this financial institution. The need for infrastructure construction in the Asia-Pacific region is estimated to be very strong… Currently operating financial institutions such as the World Bank and the IMF cannot offer enough resources,” Denisov said.

In April, Russia’s Deputy Minister of Economic Development Stanislav Voskresensky said that Russia could become the third largest participant in the AIIB and could enter its board of directors.

“According to expert estimates, Russia … claims to be the third largest participant, which means it could gain a seat on the board of directors,” Voskresensky said.

Voskresensky said that this means that Russia will be able to influence the bank’s policy and offer projects for the bank to fund.

Established in 2014, the AIIB, China’s alternative and potential rival to the Asian Development Bank (ADB) and the western-led International Monetary Fund (IMF) and World Bank is aimed to finance much-needed Asian infrastructure projects such as construction of roads, railways, and airports.

Leading up to the March 31 deadline, in the U.S., the Obama administration openly lobbied to prevent its allies from joining the AIIB.

However, U.S. efforts failed, and much to its embarrassment, they got burned after Western allies flocked to join the bank, despite pleas from the White House to stand back amid concerns that Beijing will extend its influence in the region.

In a winning strategy, China agreed to forgo veto power over AIIB decisions in a proposal that helped to attract European countries to break away from Washington and line up as founding members.

The U.S. and Japan are the most prominent nations whom are not represented in the bank. However, China has said that it has left the door open for them to join.

The President of the Asian Development Bank (ADB), Takehiko Nakao, met with Liqun Jin, Secretary General of the Multilateral Interim Secretariat of the Asian Infrastructure Investment Bank (AIIB) on the sidelines of ADB’s 48th Annual Meeting.

In May, Japan said that it would dedicate around $110 billion in funding for Asian infrastructure development projects in a competitive slap to the AIIB.

However, despite the lack of support from the U.S. and Japan, officials at other development banks have widely welcomed the AIIB.

In May, the AIIB and ADB agreed to team up to jointly bankroll infrastructure development projects in Asia.

Asian countries are expected to own up to 75 percent of the bank while European and other nations will own the remainder, according to Reuters. Each Asian member country will then be allotted a share of that 75 percent quota based on their economic size.

It has been estimated that China would hold around a 25-30 percent stake in the AIIB, while India will be the second-biggest shareholder with around a 10-15 percent stake, with Russia seen as being the third-biggest shareholder.

However, China’s Finance Ministry said on Monday that it will hold a 30.34 percent stake in the AIIB and will hold 26.06 percent of the voting rights, according to Reuters.

China’s Finance Minister Lou Jiwei also said on Monday that he was confident that the AIIB will start functioning before the end of 2015.

Russia is one of 57 nations that have signed on to become a founding member of the bank, which will have its headquarters located in Beijing. Russia officially became a founding member of the AIIB on April 14, 2015.

According to the Philippines-based ADB, Asia needs $8.22 trillion worth of infrastructure investment in the current decade to address the region’s fast population growth and its high pace of urbanization.