Prime Minister Benjamin Netanyahu signed an agreement Tuesday to join the newly formed China-based Asian Infrastructure Investment Bank, despite a US snub to the initiative.
Analysts believe geopolitical trends are leading Israel to increasingly pivot east toward Asia, amid growing hostility toward the Jewish state from its principal trading partners in Europe.
A personal strain in ties between the Israeli leader and US President Barack Obama may also be a factor in the move: Obama said the US would “reevaluate” ties with the Jewish state over Netanyahu’s contentious statements during his campaign for reelection.
The China-led bank seeks to compete with similar organizations such as the International Monetary Fund, the World Bank, and Asian Development Bank. Over 49 countries signing up to the institution, despite US and Japanese calls for a boycott — Washington sees the fund as a blow to US hegemony in global finance.
“Israel’s membership in the bank will open opportunities for integration of Israeli companies in various infrastructure projects, which will be financed by the bank,” the Foreign Ministry said in a statement Tuesday.
The move marked a “recognition of the importance of joining major Asian organizations on the continent,” the statement continued, and noted that in the coming months, the Finance Ministry would participate in negotiations relating to the bank’s founding documents.
The bank was established by China’s President Xi Jinping in October 2014 with plans to invest an initial $100 billion in infrastructure projects across Asia, half of which China plans to endow.
A slew of countries in Europe and the Middle East filed petitions to join the fund, including Britain, Germany, France, Italy, Australia, Singapore, Taiwan, Jordan, Kuwait, Oman and Qatar, among others.
The AIIB could erode the role of the World Bank, with Tokyo’s Chief Cabinet Secretary Yoshihide Suga saying it remains “dubious” about governance.
The US is also concerned about the standards of the new bank, US Treasury Secretary Jacob Lew told reporters in Beijing, adding that “caution may be warranted” given China’s poor track record in the past.
“The initial decisions of what kinds of projects are invested in will obviously be a very important signal as to how it will proceed,” Lew said.
“The record of Chinese lending to places like Africa and Latin America, let’s just say is chequered at best,” Christopher Balding of Peking University’s HSBC Business School told AFP.
“[They have] invested in projects that have either essentially defaulted or are very tenuous,” Balding said, citing a multi-billion-dollar deal for Venezuelan oil in particular.
AFP contributed to this report.