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Asian Infrastructure Investment Bank Bill 2017: Second Stage (Continued)

Thursday, 18 May 2017

Dáil Éireann Debate
Vol. 951 No. 2

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(Speaker Continuing)

[Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath] There is, of course, a cost to this, which is €25 million over a five year period. In the context of the level of trade we have and which we aspire to have with the Asian economy it is a modest investment, which will pay a very rich return to the country. To take one example in terms of our trading relationship with China alone, which the Minister has put on the record, in 2015 bilateral trade between Ireland and China reached €11 billion. It is significant trade. In the context of Brexit, at a time when we are trying to diversify market penetration for so many Irish firms that are quite dependent on the UK economy and the UK market, having a foothold in Asia fits in very well with the objectives to lessen this dependence in terms of our trade with the UK and to diversify and widen our market penetration. The Minister of State, Deputy Eoghan Murphy, has had quite an engagement on the Asian front in the area of financial services and I am sure he will speak about this over the course of the debate on the Bill. It is a very important area for our country as we seek to attract further investment in the area of financial services.

I note the Minister for Finance of the day will become a governor of the Asian Infrastructure Investment Bank so Ireland will have a seat at the table, and this is to be welcomed. In addition, I note we will be part of a constituency of euro area member states, where Ireland will have a turn on the board of directors in terms of the more day to day operational element of the bank. It is very important to have influence at this level so we can ensure the activities of the bank meet the strategic objectives of our economy and what we seek to achieve.

I note from the Minister's speech that it is the objective of the Government that the contribution of €25 million will be recognised as part of Ireland's overseas development aid requirement, which is 0.7% of GNP, and while this issue has not been finally determined, it is likely it will meet the test to form part of the contribution. It is fitting and appropriate this would be the case given the nature of the activity in which the bank will be involved, for example, in the areas of energy and developing better infrastructure, including transport infrastructure. Looking at various projects that have already been approved by the bank, it is fair to say those investments will help to develop the Asian economy and, in turn, will help to create significant opportunities for Irish firms.

The trade missions to Asia in recent years, which have been led by various Ministers and heavily supported by Enterprise Ireland and other State agencies, have been successful. There is an economic dividend for the European Union and particularly for Ireland in ensuring the Asian economy continues to be developed and that infrastructure bottlenecks there are addressed. Irish firms will not just develop export opportunities but will also directly provide services as part of projects which will be funded by the Asian Infrastructure Investment Bank.

The Asian Infrastructure Investment Bank is a very new bank. I have to say I did not know a whole lot about it until I started researching it in anticipation of the debate today. China will be the most significant player, along with India and other countries in Asia. It is operated on a multilateral basis. I note and welcome the level of co-operation that exists between the new bank and other international institutions such as the IMF, the World Bank, the European Investment Bank and the Asian Development Bank. The fact Ireland has a vice president of the European Investment Bank in the form of Andrew McDowell presents an excellent opportunity for Ireland to develop stronger relations through this channel with this new Asian Infrastructure Investment Bank.

The Bill itself is quite short and, in effect, what we are doing is providing for the approval of the articles of agreement of the new bank and consent for the payments to be made. We should ensure there is a proper reporting mechanism and that Ireland's involvement in the bank is accounted for, and I suggest, for example, this be a standing item on the agenda in the finance committee. At least every year we should be given an update on the work of this bank and Ireland's role in this regard, and we should seek to measure in so far as we can what the economic benefits are to Ireland as a result of being directly involved in and being a member of the bank. I will leave my opening remarks at that. I welcome the Bill. We look forward to Committee, Report and Final Stages of the Bill. We support the Bill and we look forward to the remainder of the debate.

Deputy Peadar Tóibín: Information on Peadar Tóibín Zoom on Peadar Tóibín I pay tribute to the Minister for Finance on the announcement of his retirement from that role. The Minister for Finance and I have a very different world view in nearly every respect politically, but it is obvious he has played a very strong role in Fine Gael over the years. He has been a mainstay of the Fine Gael Party since I was a child and no doubt he had a very settling effect on the Fine Gael Party every time it got little bit giddy over recent years. I wish him well in his retirement and many happy years with his family.

  I welcome the Bill. My party is an internationalist one and believes the State should play a full role in development across the world. We are members of the World Bank and the Asian Development Bank, which are the American and Japanese dominated development banks, so there would be no reason to shun the Chinese equivalent.

  For some time I have been asking the Minister about when our application would be progressed. In April 2015, when the bank was founded, my colleague, Deputy Pearse Doherty, asked the Minister if Ireland would join. At that point, Deputy Doherty was told that no decisions had been taken or proposed in the matter. At that point, Britain, Germany, France and practically all other European countries had joined or indicated they would join as founding members. The agreement is clear that founding members enjoy special privileges in nominating and voting for directors. Most of our neighbours will have these privileges but Ireland will not. Unfortunately, the country hesitated and dithered and we were nearly left behind. By delaying our application for no good reason we have put this country at a tactical disadvantage.

  It is not clear why we delayed but the possibility exists that American sensitivities might have been behind it. American Nobel Prize winning economist, Joseph Stiglitz, thinks our sensitivity is misplaced, saying:

In fact, America’s opposition to the AIIB is inconsistent with its stated economic priorities in Asia. Sadly, it seems to be another case of America's insecurity about its global influence trumping its idealistic rhetoric – this time possibly undermining an important opportunity to strengthen Asia's developing economies.

  I cannot see any good reason a decision was not taken until December 2015. Hopefully, there will be no further disadvantages because of this. What matters ultimately is that the right decision was made. Asia is a huge part of the world with massive concentrations of population. Its economic potential compared to Europe is very large. Good trade links with China in agriculture and other areas in particular are essential to our export sector. As the Minister told Deputy Doherty last June:

Bilateral trade has grown in significance and, in 2014, Ireland's total trade with China was worth over €8 billion. Ireland's priorities relate to bilateral trade and investment, particularly: higher education; agrifood; tourism; and aviation-financing sectors.

  The economic rationale for joining is clear, but it should not have been the only rationale. I note the articles of agreement state, "The Bank shall ensure that each of its operations complies with the Bank's operational and financial policies, including without limitation, policies addressing environmental and social impacts." That is, presumably, a very weak sop to those of us who argue for investment that respect human rights and environmental protections. We cannot ignore such issues when we are talking about what is effectively a Chinese bank. Many of the countries that are the likely recipients of investments have issues with minorities or national rights that must be taken into account.

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