Bart Édes is a former director at the Asian Development Bank. He now serves as a professor of practice at the Institute for the Study of International Development, McGill University, and a distinguished fellow at the Asia Pacific Foundation of Canada.
Given the political risk to the Trudeau government of looking weak on China at a time of heightened bilateral tensions, Finance Minister Chrystia Freeland had little choice but to do something in the wake of a provocative and unsubstantiated social-media post gone viral.
A Canadian national responsible for communications at the Asian Infrastructure Investment Bank (AIIB) had quit and turned to Twitter to assert that the bank, an intergovernmental organization and multilateral development institution, is “dominated by Communist Party members and has one of the most toxic cultures imaginable.”
So Ms. Freelandcalled a timeout on Canada’s engagement with AIIB and instructed “the Department of Finance to lead an immediate review of the allegations raised and of Canada’s involvement in the AIIB.”
On first glance, this is concerning. We don’t know if the Ministry of Finance’s review will find deeply worrying truths about AIIB that have somehow been kept under wraps. But we do know that Canada benefits from AIIB membership.
For example, this country gains insights into Asian economies and governance systems. These insights inform Ottawa’s diplomacy and foreign commercial policies. Moreover, any differences with China are precisely why Canada should engage with the AIIB – otherwise, we lose all influence within the organization.
But the good thing is that Ms. Freeland’s quick response may lessen pressure on the government to take more dramatic (and irresponsible) action, like pulling Canada out of the bank immediately without a thoughtful review of the assertions made.
It’s important to recognize that there is nothing unusual about governments promoting their countries’ interests within intergovernmental organizations, which by their nature are political entities. In multilateral development banks (MDBs), governments do this through their representation on boards of directors and through their nationals appointed to senior positions.
So it is not news that the Communist Party of China, which governs AIIB’s largest shareholder, exerts influence at the bank.
But China does not have anything resembling a monopoly on decision-making at AIIB. Indeed, the crafting of AIIB’s charter was a collaborative exercise among dozens of countries.
A key reason why India joined AIIB was because it felt that it would have a say in how the bank was run. Despite current tense bilateral relations with China, and rejection of China’s Belt and Road Initiative, India is fully engaged with AIIB and has been its leading borrower. India, along with Australia, Germany and Britain, are among the AIIB members that have been vocal in meetings of the bank’s board of directors.
AIIB’s senior leadership includes not only Chinese citizens, but also seasoned professionals from European states, New Zealand, Brazil, Indonesia, India and other countries. A Canadian national with decades of experience in evaluation and finance serves as managing director with responsibility for complaints resolution, evaluation and integrity.
More than 60 countries are represented among the bank’s staff, which has worked diligently over the past half dozen years to build a highly reputed organization. Fitch Ratings regularly confirms AIIB’s AAA rating.
Proposed financing projects cannot make their way to AIIB’s board of directors for consideration before passing through rigorous approval processes that are presently managed by non-Chinese nationals (risk management, investment operations and strategy and policy). Checks and balances have been incorporated into the bank’s rules to deter any one country from having undue influence.
To date, Beijing has been committed to the concept of an MDB operating transparently with solid governance and a clear accountability framework. AIIB’s Western members insist on it.
AIIB’s growing investment in quality infrastructure and regional connectivity, and robust response to COVID-19, are helping low- and middle-income countries move up the economic ladder. In this way, the bank helps to create long-term opportunities for Canadian businesses by enlarging foreign markets for their goods and services.
Membership in AIIB also supports implementation of Canada’s Indo Pacific strategy and reinforces Canada’s commitment to multilateralism.
In its engagement with AIIB, Canada promotes action on climate change, gender inequality and mobilization of private-sector financing – themes that are also a priority for many other AIIB members. Together with like-minded AIIB members, Canada has successfully advocated for high standards of accountability, transparency and environmental and social safeguards.
While Ms. Freeland’s call for a review of Canada’s involvement in AIIB does delight the critics who say this country should leave it, one thing that the review is likely to find is that the sensible reasons that drove Canada to join AIIB in 2018 all remain valid today.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.