North Korea approached China to join the new Beijing-led
Asian Infrastructure Investment Bank (AIIB) only to be
summarily rebuffed by its chief economic and financial ally,
Emerging Markets can reveal.
A senior envoy from the Democratic Peoples Republic of
Korea (DPRK) approached the presumptive inaugural president of
the AIIB, Jin Liqun, probably in Beijing in February, only to
be spurned, senior Chinese diplomatic sources said.
Chinas message to North Korea was a
straight-and-simple no way, the diplomat said,
adding that China had asked for, and had failed to secure, a
far more detailed breakdown of North Koreas financial and
economic picture, seen by the new China-led development bank as
a basic first step in admitting the hermit state to its
The snub came as a shock to the North Korean delegation.
North Korea remains entirely absent from the global
multilateral community, being a member neither of the twin
Bretton Woods institutions, the World Bank and the
International Monetary Fund,
nor the Asian Development Bank.
It saw membership of the new China-led development bank as a
realistic ambition, sources said, given that China regularly
and unilaterally lends money to the isolated DPRK regime in
return for uranium and other mineral ores.
But China and its pragmatic presumptive
president Jin could hardly accept such forms of payment
as the founder member and leading shareholder of the new
development bank, the diplomatic source told Emerging
Others said that North Koreas ham-fisted attempt to
join the new development bank came as no real surprise. The
impoverished country may rattle its sabre at the outside world,
but it also cares about its standing in the global community,
and is in dire need of capital to rebuild its crumbling
When I met Jin [Liqun] in December, he told me that
North Korea had come to him, and that he had given them a clear
indication that the AIIB would need to disclose sufficient
information, in order to be considered as an inaugural
member of the new development bank, said Masahiro Kawai,
a professor of public policy at the University of Tokyo and the
former dean and chief executive officer of the Asian
Development Bank Institute in Manila. But the North
Koreans were not willing to provide that information.
Barriers to entry
The barriers to entry for the DPRK were simply too
high, Kawai said, and for several reasons. Jin, he said,
had asked for a proper snapshot of North Koreas
finances, including all economic activity broken down by
industry, and the state of the countrys public finances,
including its tax base.
North Korea was also asked to define the scale and purpose
of the infrastructure projects it would seek to build with AIIB
cash, and to make a formal pledge to repay any loans that would
flow from the coffers of the new development bank to the
pockets of the small clutch of officials running the hermit
After failing to secure sufficient data from the DPRK, the
new banks future president Jin was given no choice, Kawai
added. The AIIB needs ultimately to be repaid when it
lends to sovereign states, he said. Its a
multilateral. Its not an institution set up to disburse
grants: these will be commercial loans. So unless North Korea
can disclose information [at a future date] to a satisfactory
extent, I dont think the AIIB is going to be able to
include the country as a member.
The picture, he added, was further clouded for North Korea
by the recent inclusion of several Western states, including
Britain, Germany and Australia, as founder members of the new
development bank. Even without European countries
joining, the AIIB was asking a lot of the DPRK to provide
financial and economic data that the North Koreans had never
previously divulged, Kawai said. With European countries
joining, that task became all but impossible.