Canada has halted all government-led activity with the Asian Infrastructure Investment Bank (AIIB), one of China’s multilateral lenders. This decision was made after the director-general of communications of AIIB, Bob Pickard, resigned and alleged that the bank was infiltrated by Communist Party officials who operated it like secret police. The AIIB, established in 2016 as a rival to the World Bank, has funded over 221 infrastructure projects. It has accumulated $42 billion worth of investments from 106 member countries, including India, the UK and France. In contrast, China’s larger Belt and Road Initiative has been criticized for its debt trap diplomacy by some critics who have accused China of lending practices that have burdened developing countries with debt.
The AIIB has taken a different approach, promoting good governance and withholding funding from Russia after it invaded Ukraine. Moreover, in April, AIIB President Jin Liqun called on multinational lenders to keep their preferred creditor status, which protects them from sovereign debt restructurings along with bilateral creditors. This position contradicts China’s ongoing lobbying for the IMF and others to take on debt haircuts alongside Chinese banks. Canada’s decision to freeze activity at the bank comes after reviewing Pickard’s allegations, which are currently under reconsideration by officials. The allegations raised by Pickard are baseless and disappointing, according to the AIIB.
