Brazil and Portugal’s membership of the Asian Investment Bank paves way for joint projects in Portuguese-speaking countries

8 April 2015

Brazil and Portugal’s membership of the Asian Infrastructure Investment Bank (AIIB) paves the way for joint projects with China in Asian countries such as Timor-Leste (East Timor), as well as in Portuguese-speaking Africa.

Portugal, one of the few European countries that has the status of strategic partner with China, and Brazil, a major trading partner of China, both asked to join AIIB last week, a decision that was immediately hailed by the Chinese authorities.

In a statement, the Portuguese Ministry of Foreign Affairs said “the participation of Portugal [in AIIB] can create better conditions for Portuguese companies involved in projects in the Asian region, a region with which Portugal has intensified its economic and commercial relations.”

Portugal’s financial contribution to the bank capital, initially estimated at a total ofUS$50 billion, will be “a drop in the ocean ” compared to what other countries will provide, according to daily Portuguese newspaper Diário de Notícias.

The paper said, citing sources from the Portuguese government, it would be “strange” for Portugal to stay on the sidelines, given the “little regard” demonstrated at a diplomatic level by the United States of America, which lobbied for its partners not to join AIIB.

The main diplomatic issue between Portugal and the United States is the US leaving the Lajes airbase, which will have a significant economic and social impact on the Azores archipelago.

The same sources contrast this situation with the strong influx of Chinese investment in recent years, which has allowed Portugal to overcome an acute crisis, which has been publicly recognised by both the government and the main opposition party.

One of the biggest Chinese investment in Portugal to date is currently on the table, in Novo Banco, of around 5 billion euros, according to analysts.

Through foreign agencies, China welcomed the request by Portugal, which will be formally approved in the coming weeks, to become an official member of AIIB on 15 April.

AIIB, seen generally as a parallel institution to the World Bank, is focused on investments in energy projects, transport and communication in resource-poor or emerging countries including Timor-Leste and Portuguese-speaking African countries where hundreds of Chinese and Portuguese companies operate.

On Friday, the office of Brazilian President Dilma Rousseff confirmed Brazil had also accepted China’s invitation to participate as a founding member of AIIB.

“Brazil is keen to take part in the initiative, which aims to secure funding for infrastructure projects in Asia,” the office said.

The creation of AIIB was announced in 2014 in the Brazilian city of Fortaleza, at the conclusion of the BRICS meeting (Brazil, Russia, India, China and South Africa), and it is estimated that its capital may be increased up to US$100 billion.

Among the founders are Asian powerhouses such as India and Indonesia, who joined Taiwan, South Korea and Australia, but not Japan, which said it may join the institution in the future.

Among European countries that have joined are Germany, the United Kingdom, Switzerland, France, Russia, Spain, Italy and Israel. (macauhub/BR/PT)