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jeffrey simpson

To join or not to join? That is the question before Prime Minister Stephen Harper, caught between his ambivalence toward China and his annoyance at the U.S. government.

Mr. Harper's cabinet must decide shortly whether to join the Asian Infrastructure Investment Bank, a Chinese idea that's fast gaining traction among Western countries. In reality, the decision will be Mr. Harper's, because he makes all the important ones, and this decision is important.

Beijing, long frustrated by the Western dominance of the World Bank and International Monetary Fund, is organizing the $50-billion AIIB. China would be the largest investor and correspondingly have a much larger voice, including perhaps a veto, than in the World Bank and the International Monetary Fund.

For this reason, and because of the obvious Chinese drive to extend further its political and economic (and military) influence throughout Asia, the United States has opposed the AIIB. It argues that the Chinese creation will lack the transparency of the World Bank and IMF and therefore should be viewed with suspicion. It believes the new institution will undercut the World Bank's work in Asia and the existing Asian Development Bank, which is headquartered in the Philippines and led by a Japanese president. Japan, always wary of China, is not joining the AIIB.

The United States urged its traditional allies not to join the AIIB, but these entreaties have largely fallen on deaf ears. New Zealand signed up early. Britain, Germany, France and Italy said in recent days that they would become members. Smaller West European countries will undoubtedly fall into line.

Reports out of Australia suggest that the Aussies are now leaning towards membership, as likely will the South Koreans. These newcomers will join the original 21 Asian countries, including India, that said yes to China's proposal.

With traditional allies in Europe and Asia joining or likely to join, but with the United States and Japan opposed, where is the Harper government? China, which has already offered several extensions to countries thinking of joining, has said all countries must be aboard by the end of March, which means that the clock is ticking in Ottawa.

The AIIB's mandate will be to invest in major projects throughout Asia. Presumably, Western countries are joining in part because they believe they will influence the shape of the organization and because their companies will be better positioned to win contracts. Maybe, too, without saying so, they recognize that the AIIB is part of an unstoppable expansion of Chinese influence throughout the region.

These arguments might be compelling to Mr. Harper, whose government's Asia policy has mostly revolved around economics and trade promotion. Trade liberalization proposals have been mooted with Japan, Thailand and India but gone nowhere fast. The Harper government rebuffed a Chinese proposal for a bilateral trade deal. Canada is part of the Trans-Pacific Partnership trade negotiations involving 12 countries, but not China.

Being part of the new Asian action would definitely hold some economic appeal, especially given that some of Canada's traditional partners are getting in on the action on the ground floor. However, does Mr. Harper want to irritate the Americans on this file? Or would he care, given his own grievances (see Keystone XL) with President Barack Obama's administration?

The Obama administration was miffed at Britain's decision to join the AIIB, and said so publicly. It would not take kindly to Canada doing a Britain – not when from Washington's perspective, the AIIB is more than just a new international institution but a bold assertion of Chinese power and influence in Asia, the part of the world toward which Washington had already announced a "pivot," without giving much substance to the term.

There is a kind of Great Game going on in the Pacific part of Asia, as China extends its economic influence, asserts widened maritime territorial boundaries and beefs up its defence budget by 10 per cent a year. The United States and its allies, such as Japan and the Philippines, and even countries such as Vietnam, view these Chinese moves warily.

The AIIB is intended to be a new vehicle for raising and investing money for needed infrastructure in the world's fastest-growing region. If it were just as simple as creating an economic institution, Canada would likely jump to join.

Mr. Harper is decidedly ambivalent about anti-democratic China and the role it plays in the world. No wonder that as other countries are making up their minds, Canada's Prime Minister is hesitating.

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