Issue Two: Can't Beat 'Em, Join ‘Em.
JEN PSAKI, STATE DEPARTMENT SPOKESWOMAN: The decision of any country to join is certainly a decision made by a sovereign country, but it will be important for prospective members of AIIB to push for the adoption at those same high standards, including strong board oversight and safeguards, and the international community certainly has a stake in seeing the AIIB compliments (sic) and works effectively alongside existing architecture, excuse me, that's already in place that does have those high standards.
MCLAUGHLIN (voice-over): China has created a new International Development Bank, the Asian Infrastructure and Investment Bank, AIIB.
For months, with personal calls to world leaders, President Obama tried to dissuade European and Asian allies from joining the new bank as founder members. He worries that China will use the AIIB to buy political patronage from Asian Nations and to dillute American influence in the region.
But ignoring the US president’s protests earlier this month, the United Kingdom and other European nations join the AIIB anyway.
So, now, President Obama has changed tack. Today, he’s saying that the World Bank and the new Chinese bank should work together, quote-unquote, "co-funding development projects in Asia and beyond". But it's clear that China has scored a stunning diplomatic victory, bringing close American allies on board as founder members of the bank.
China has outmaneuvered the U.S. government and shaken up the foundations of international finance.
MCLAUGLIN: Question: what does it say about American influence that our European allies turned deaf ears to President Obama's appeals not to join the Asian infrastructure bank?
I ask you, Tom.
ROGAN: I think actually, in this case, -- you know, I’m normally pretty critical of President Obama's foreign policy -- I think the Europeans are concerned about the economic potential with this bank with China, the AIIB. And so, they are just predicating that is(sic) their sole focus. They want to be able to make money off it. They want to be able to get the business projects, and they see it as an economic opportunity that is too lucrative to turn down, and that is their perspective.
CLIFT: Yes, China has got a lot of money to throw around, and they have a command and control economy. So, they don't have to go through a lot of decision-making, and the at(sic) Obama administration's pivot to Asia has been less than robust, you might say. And so, there's a bit of a vacuum there.
I mean, I think it's a diplomatic coup for China, but it's certainly not the end of the special relationship with the U.K. It's an irritant, I think to the president, but he seems to have found a way to turn it into something positive with these joint projects.
BUCHANAN: But the Europeans are looking to the future, John. Look, China has $4 trillion in cash reserves. This $50 billion they’re putting up for the AIIB is peanuts. But the Europeans are looking at the Chinese as an economy that is virtually the size of the United States, but it's growing still at 6 or 7 percent. It's the nation in(sic) the future in Asia. It’s going to build the silk roads by land and a silk road by sea, all the infrastructure projects.
And while they like the Americans, they are good friends, Tom is right, they're not going to cut themselves out of this huge pie, if they can get themselves some slices of it. They are good capitalists in Europe after all up(sic).
GLASTRIS: Let's turn this back a little bit get to the origin to this problem. In 2010, you know, the Obama administration orchestrated a deal to open up the IMF, the International Monetary Fund, to allow China, India, Brazil, some of these other countries, to have a little bit more influence, which needed to happen. This was also the year Republicans turn up(sic) took over Congress, Republicans refused to ratify it.
This was how we were going to rope China into the international system. Unable to do that, China and many other countries were sort of fed up with the United States and its control of these Bretton Woods organizations, and now, you see this coming back to haunt them. This is a case where the dysfunction in Washington is hurting us internationally.
ROGAN: I do --
MCLAUGHLIN: They know that they can be dismissive of Obama without paying an unnecessarily high price. The Chinese know that.
GLASTRIS: Well, look, we know that China is a rising power. We have to find international mechanisms to channel that power, channel that money in ways that work for everybody.
The way to do that was to get them into the international organizations that we control. But by not doing that, now, they have any(sic) international organization they control.
CLIFT: Right. The same thing --
MCLAUGHLIN: Because they know that Obama is a lame duck.
CLIFT: Well --
GLASTRIS: They know that Obama can't get anything done because Republicans won't pass anything in Congress.
MCLAUGHLIN: Right, lame duck.
CLIFT: It’s the same thing with the trade deals. I mean, the president is talking about, you want to get the other countries, the Asian countries in to play by the rules, and if that's not ratified, then they create their own rules. So, Obama gets what’s happening and he’s trying to fix it.
BUCHANAN: Paul is right, you know, Dumbarton Woods -- Bretton Woods and Dumbarton Oaks, and all these institutions, World Bank was created around the end of World War II, IMF which created then, Asian Development Bank is run by the Japanese now. It’s a Japanese-American thing. I think China is saying, look, we don't want to necessarily all get together, we want to be number one. We’ll build our own institutions.
MCLAUGHLIN: Let’s exit with this. Exit question: on a salesmanship scale from zero to 10, zero meaning Willie Lomax in "Death of a Salesman", and 10 meaning Tony Robbins "Unleash the Power Within". Rate President Obama's powers of persuasion with American allies, zero to 10.
BUCHANAN: Attention must be paid. It’s Willie Loman.
CLIFT: I give him in(sic) eight. He’s kept thinking(sic) the Europeans on board with sanctions against Russia. He’s involved in world talks to restrain the Iranian nuclear ambitions. He's – America, via Barack Obama, is still pretty powerful on the world stage. Eight.
ROGAN: Yes, I'm going to cut Eleanor’s in half, four. But I would just simply say, I think the opportunity for United States going forwards with China with these international regulation view banks is that ultimately, wealth and capital will still flow through American systems because the rule of law there in the credibility and the transparency is far greater and always will be far greater than that of China.
MCLAUGHLIN: So theres a happy ending here?
GLASTRIS: I give him a two on the AIIB, but about an eight on everything else.
MCLAUGHLIN: Well, I think that’s quite reasonable.