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Open Letter to Jack Lew – US Treasury Secretary – Concerning the Asian Infrastructure Investment Bank

by Andrew White  |  March 25, 2015  |  3 Comments

Open letter to Jack Lew, US Treasury Secretary

Dear Sir,

I write in earnest to encourage your sincere desire and willingness to recommend to the President of the United Sates and Congress that the U.S. apply as a founding member of the China-backed Asian Infrastructure Investment Bank (AIIB).

As U.S. Treasury Secretary you are in a unique position to understand the likely influence this bank will have on world affairs in the next fifty years.  In your position you are no doubt thinking of how you can further advantage our children’s position in the future. And with history on your side I know you also appreciate the opportunity, and risks, this bank will brink.

I am sure you are far more aware than me concerning the equivalent situation facing the U.S. at Bretton Woods in 1944. Britain’s Imperial preference was to be disabled and the Empire’s debts were to be settled in dollars, just as large imbalances in sterling balances prevented full convertibility.  In a similar way China and other countries hold significant dollar denominated debt and the global economy is tilting toward China.  The similarities between 1944 and now are quite interesting, as you know.

The new bank promises to invest in the development of Asia.  Such development should bring increased stability if and when such investment is governed by fair, open, and collaborative means.  Bretton Woods provided the framework for the IMF and World Bank, and U.S. took a leading role in their formation as the presumed global financial hegemony.  This bank will play a key role in the future and so it needs to coordinate closely with our established organizations.  The U.S. is not in the same situation the UK was in 1944 since there has been not shock like WWII.  So the opportunity is golden.

China was a founding signatory at Bretton Woods.  Why can’t the U.S. be a founding member of this bank?

The new bank’s initial funding was set at $50bn and will approach $100bn.  The World Bank’s official goal is reduction of poverty.  As you know it spends its money on many different projects.  The new Asian bank will challenge the World Banks’ position especially in Asia.  I am sure you will agree that we want to help others less well-off and in so doing create a more level playing field for all future investments in the region. It is also possible that the new bank will take on a similar role to that of the IMF.  It would be unforgivable if we allowed this to happen when in fact we are not at the table.  The goodwill and access to Asia this offers is just there for the sharing.

The value of the dollar and its position as reserve currency will also be challenged – not now, but gradually over time.  Perhaps not this year or next, but 5 years hence the dollar will be less desirous by this countries able to work with the new bank.

So what better way than to join the UK, France and Germany, and apply for founding membership.  By not applying as a founding member the U.S. might look weak to some, especially in Asia.  By not directly participating and influencing others inside the governance framework, the U.S. might look disinterested.  By not being involved at the start, the U.S. runs the risk of being left out.

And what is the risk from participation?  I would suggest, most humbly, that the risks are minimal.  China is betting on a long, sustained path of growth.  We know how this works.  I think we can help China and the bank become a force for good in Asia specifically, and the world in general.

Sir, I implore you, convince the President and Congress that reasons why we need to join.

Respectfully your,

A.G. White

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Category: asian-infrastructure-investment-bank-aiib  china  economic-growth  economic-history  jack-lew  

Andrew White
Research VP
8 years at Gartner
22 years IT industry

Andrew White is a Distinguished Analyst and VP. His roles include Chief of Research and Content Lead for Data and Analytics. His main research focus is data and analytics strategy, platforms, and governance. Read Full Bio

Thoughts on Open Letter to Jack Lew – US Treasury Secretary – Concerning the Asian Infrastructure Investment Bank

  1. […] Andrew White Open letter to Jack Lew, US Treasury SecretaryDear Sir,I write in earnest to encourage your sincere […]

  2. citizensoldier says:

    Dear Mr. White,

    If after you attend the lecture below and still have questions as to why Congress and the President are not eager to join AIIB, perhaps you might feel like writing about it.

    I will look forward to your response regarding the material presented in the lecture at the link below:
    A second look at the Federal Reserve-
    The Creature From Jekyll Island (by G. Edward Griffin)

    “Appearances to the mind are of four kinds. Things either are what they appear to be; or they neither are, nor appear to be; or they are, and do not appear to be; or they are not, and yet appear to be. Rightly to aim in all these cases is the wise man’s task.”

    “The wise man does at once what the fool does finally.” – Niccolo Machiavelli

  3. Andrew White says:

    Dear CitizenSoldier,

    Thanks for dropping by and leaving a comment.
    Interesting clip. I had not heard of G Edward Griffin until your comment and I found his lecture very interesting. It was so engrossing I listened to it all the way through – and had to replay a few pieces here and there. I find much of what he says to be most agreeable. I loved Ron Paul’s End the Fed (See Economic Minute #6: What is money, anyway? Certainly the history behind central banks is well known. It was the idea of a central bank and a national debt that created the opportunity for Britain to keep forces in the field long enough to learn how to beat Napoleon.

    I was taken aback regarding the somewhat dubious reasons how and why the Federal Reserve System was created. Was it really the main banking leaders in cahoots with the governance? Why is this not more well-known? What does this mean to how we look at the Fed today? I have ordered the book in question and will read it shortly. I don’t think a return “to gold” is the answer – that system has its own problems. In both systems it comes down to confidence in the sovereign state, and its wiling ness to avoid profligate spending. You cannot only use a commodity like gold since its supply varies, and that supply would dictate overall economic growth. So I don’t see this as an either/or choice.

    As to your comment and my original blog: I am not so sure I understand why this history lesson explains why the US does not want to play well with the AIIB. Clearly the US wants to defend its own position in the world; this is no different to when the UK trotted along to Bretton Woods in 1944. However, the big difference is that the UK was broke then, and the US is not now. Well, I guess that is until you understand how the Fed actually creates money. But ignoring that, the US can help defend its position by getting involved with newer, competing models. It has much less chance in defending what it does not understand or cannot influence. Hence my open letter to Jack Lew.

    Again thanks for dropping by. Andrew

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