(photo credit: REUTERS)
The Knesset Finance Committee on Monday approved a bill laying out terms for Israel becoming one of 57 founding members of the Asian Infrastructure Investment Bank, China’s answer to the World Bank.
Once the bill is passed into law, it will represent the first time Israel becomes a founding member of a global development bank.
“Israel’s accession to the Asian Bank is an investment that could generate large economic and political returns in the future,” said committee chairman MK Moshe Ganfi (UTJ).
The bill, which is expected to pass its second and third readings in the Knesset in the coming week, would allow Finance Minister Moshe Kahlon to finalize the treaty ahead of the bank’s first official meeting in Beijing next week.
In March, Israel became one of several major allies to flout US wishes by announcing that it would join the bank.
Though the US feels that China is intent on using the bank for political gain, and might undermine the Washington- based World Bank, Israel, the UK, Germany, France, and Australia signed on.
“This law will help us a lot,” said Finance Ministry chief economist Yoel Naveh.
“This will be the only Asian multi-lateral bank of which Israel is a member.”
Israel’s dues for the bank’s $100 billion capitalization will amount to $150 million, plus another $600 million in shares. It will participate in management, and fall into a Korean-led subgroup alongside Mongolia and Uzbekistan, but not have the right to appoint one of the AIIB’s 12 directors.
“China surpassed Japan two years ago as the second-largest economy in the world after the United States, and the founding of this bank is a sign of this, and dissatisfaction from the United States as a result was foreseeable,” Zionist Union MK Manuel Trajtenberg said. Despite that fact, he added, the move is a worthwhile investment.
Though the committee debated issue such as immunity for the bank’s representatives in Israel, the fact that the terms were similar to those of other international bodies eventually won over all the committee members.
Naveh assured a concerned Gafni that large bodies such as the AIIB typically refrain from investing in controversial areas subject to large geopolitical conflict, given that they need the approval of so many member states in order to do so. Zionist Union MK Erel Margalit agreed that Israel’s presence would be strategic.
“The Chinese will be a very central part of the world economy, and we must act to ensure that they won’t go just toward Europe and Iran, but also to countries like ours,” Margalit said.