The Asian Infrastructure Investment Bank said Thursday it has suspended all operations with Russia and Belarus, a rare example of the Beijing-based multilateral lender citing geopolitical factors in its decisions.
The lending pause appears to reflect the AIIB’s assertion of itself as a multilateral institution with a global shareholder base, rather than a statement to condemn the war. China’s government founded the bank as an alternative to Western-backed multilateral lenders, such as the International Monetary Fund and the World Bank. China holds about 27% of the voting power in the bank, which has a Chinese president.
The World Bank has also halted programs in Russia and Belarus. China’s top banking regulator said this week China wouldn’t join Western-led sanctions on Russia.
The six-year-old AIIB said it would “safeguard the financial integrity of AIIB, against the backdrop of the evolving economic and financial situation,” according to a statement on the bank’s website.
The bank has approved two Russia projects totaling $800 million, of 168 total approved AIIB projects valued at almost $34 billion, according to disclosures of investment projects on the bank’s website. Two projects for Belarus have been proposed.
Russia plays an important role in the management of the bank. It holds 6% of the voting power, the third-biggest stakeholder after China and India. As one of the 57 founding members of the bank, Russia holds a seat on the bank’s board of directors.
One of the bank’s five vice presidents is Russian, Konstantin Limitovskiy, one of two vice presidents in charge of bank lending. Efforts to reach Mr. Limitovskiy weren’t successful.
Scott Morris, a Washington-based senior fellow at the Center for Global Development and an adviser to AIIB, said Thursday the decision “reflects the multilateral character of the institution,” including the sizable voting power of North Atlantic Treaty Organization members. NATO members collectively account for 23% of voting power at the bank, according to Mr. Morris. The U.S. and Canada aren’t AIIB members; nor is Japan.
Jin Liqun, AIIB’s founding president and a former financial policy maker in the Chinese government, speaks frequently about the bank’s multilateral ownership and has repeatedly rejected any suggestion the bank’s headquarters in Beijing make it beholden to Chinese political policy.
“We work under the guidance of the board. China is just one member,” Mr. Jin told The Wall Street Journal in 2020. The U.S. and Japan declined to join the bank when it was founded out of concern it would undermine Western-run institutions like the World Bank.
AIIB said in Thursday’s statement that it is prepared to extend financing to members affected by the war.