News Analysis: S.Korea selects national interests by joining AIIB

South Korea selected national interests by finally deciding to join the China-initiated Asian Infrastructure Investment Bank (AIIB) and go with a global trend, after eight months of deep deliberation.

The country's finance ministry issued a statement on Thursday night, saying that South Korea decided on it after making discussions on the issue among related ministries, before sending a letter about the decision to China.

South Korea reportedly began to consider seriously whether to join the AIIB after Chinese President Xi Jinping visited Seoul in July 2014 to hold summit talks with his South Korean counterpart Park Geun-hye.

During the summit, Xi expressed his wish for South Korea to participate in the AIIB as one of founding members, and in response, the presidential office Cheong Wa Dae unveiled a statement that said both countries shared the need for an expanded infrastructure investment in Asia, and South Korea thought highly of the proposed AIIB and agreed to continue consultations on it.

Four days after the summit, the United States publicly called on South Korea to get cautious about the AIIB issue, discouraging South Korea from signing a memorandum of understanding in Beijing in October 2014 to build the AIIB jointly with 21 countries including China, India and Singapore.

Such atmosphere was reversed after Britain, a traditional U.S. ally, applied for the AIIB membership on March 12. Five days later, major European countries, including France, Germany and Italy, followed suit. Besides China, now 35 countries, including the above mentioned countries as well as Australia, New Zealand, Switzerland and Luxembourg have jointed or expressed interest in joining in the AIIB.

South Korea reached a final conclusion to join the China- proposed international body as the country thought that the joining will be of its great interests. South Korean Finance Minister Choi Kyung-hwan told reporters on March 19 that it would decide on whether to join the AIIB after comprehensively reviewing "our national interests."

"In case that the AIIB is effectively in operation, a large market for infrastructure constructions will be opened in Asia," said the statement. "By joining the AIIB, our companies will have greater opportunities to participate in the projects as the companies have many experiences in infrastructure projects such as construction, communications and transportation."

Joining the AIIB will be of great economic benefits to South Korea as its companies and banks will be allowed to participate in large-scale infrastructure development projects in Asia as a founding member of the bank.

"Builders will be allowed to take part in construction projects, and banks to join the funding process as South Korea enters the AIIB. Construction materials exports will rise. Those are all in South Korea's interests," Jee Mansoo, research fellow at Korea Institute of Finance (KIF), told Xinhua.

"There had been worries among the United States and Japan about governance structure and way of operation of the AIIB. South Korea initially seemed sympathetic to the worries, but situations changed after European countries declared their entry," said Jee.

The researcher said that Europe's entry into the program indicated South Korea capable of discussing governance and operation of the AIIB along with European countries as well as China, giving more confidence to South Korea in the AIIB's transparency. "South Korea depends on China for about a quarter of its exports. The ASEAN member nations, which joined the AIIB already, account for some 14 percent of South Korea's total exports. How could South Korea snub the AIIB?" said Kim Dongwon, visiting professor of economics at Korea University. "Whether to enter the AIIB is a matter of national interests," Kim said.

The AIIB has a special meaning for South Korea as the bank would become the first international finance agency, in which the country participate as one of founding members. The statement said South Korea needed to play an active role commensurate with its economic status in the international community, noting that the AIIB would become an important tool to expand the country's domain in a financial diplomacy.

Rival political parties hailed the AIIB joining as a right thing to do. "The decision to join the AIIB was a right thing to do. Though it was a belated decision, the government should make efforts to maximize our national interests," said Kim Yong-rok, spokesman of the main opposition New Politics Alliance for Democracy.

Park Dae-chul, ruling Saenuri Party spokesman, said in a commentary that South Korea pioneered a new area by joining the international finance agency as one of major founding members, hoping an economic development in the region with the opening of Asia's infrastructure construction market.

Some experts said that the AIIB could also help encourage the Democratic People's Republic of Korea (DPRK) to walk a path of reform and opening over the long haul.

"The AIIB will contribute to North Korea (DPRK)'s opening and reform. Active participation (in the AIIB) will benefit South Korea as well," said Lee Moon-gi, professor of Chinese commerce and trade at Sejong University.

According to Lee, the AIIB is highly likely to help fund the DPRK's infrastructure development projects.

"The AIIB will possibly provide a significant support for developing North Korea (DPRK)'s infrastructure during the potential opening and reform process," said the professor.

"Imagine the reunification of the two Koreas. Standards of infrastructure, for example the width of railways, should be the same to prepare for the reunification. It will be the best way for South Korean companies to participate in North Korea (DPRK)'s infrastructure development to prevent such mismatch," Lee said. Endi