Somewhere 'down there' I wrote recently that at this time the first, last and only duty of HMG is to build our economy, using that word in its widest sense. Whilst that obviously includes the manufacture of 'widgets' and 'flange sprockets' it also, and perhaps more importantly, includes high, international finance. I should make clear at this point that personally I have considerable difficulty with low, personal finance which is why the 'Memsahib' only lets me out on my own with £2.50 pocket money! Even so, I try to take an interest in the stratospheric goings-on in high finance and so the rumbling row that has erupted between Washington and London over the UK's decision to join a Chinese dominated Asian Infrastructure Investment Bank (AIIB) is fascinating even if I can't quite follow all the nuances.
Still, we all know - do we not? - that the God-almighty dollar rules the world. As far as this country is concerned that has been a blessing several times over but also a curse! According to Ben Wright at The Telegraph, the British decision to join the AIIB now has the support of Germany and France who are both cocking a snook at Washington. Frankly, support from those two would make me think twice! However, it is essential that Britain, like a door-to-door salesman, gets its foot in the door of any of these regional associations.
America’s influence is derived from its economic might but also the sway it holds over the Washington-based International Monetary Fund and World Bank. Last week, China reportedly asked the IMF to include the yuan in its basket of reserve currencies. Time will tell whether the IMF agrees. It seems clear that Washington would like to restrict China’s access to, and influence on, the global financial system until Beijing makes unlikely concessions.
Of course, the creation of Asian-based supranational institutions – such as the AIIB – would help accelerate the rise of the yuan and lessen the need for any such concessions. It is this possibility that appears to be rattling Washington policymakers.
The empire is long gone but Britain remains a country with a global view rather than a regional (European) view and we should pursue our commercial aims around the world even if it upsets Washington.
