A development bank led by China is suspending its activities in Russia and Belarus.

March 4, 2022, 12:47 pm

The deci­sion is the lat­est sign of the lim­its of Bei­jing’s sup­port for Moscow as it faces sanc­tions and cen­sure over the war in Ukraine.

A Chi­nese-led devel­op­ment bank has sus­pend­ed all busi­ness with Rus­sia and Belarus, a pos­si­ble sign of the lim­its of Bei­jing’s sup­port for Moscow as it faces sanc­tions and cen­sure for its war in Ukraine.

The Asian Infra­struc­ture Invest­ment Bank (AIIB) said it had sus­pend­ed all activ­i­ties relat­ed to the two coun­tries in light of “the chang­ing eco­nom­ic and finan­cial situation”.

“Under these cir­cum­stances, and in the best inter­est of the Bank, man­age­ment has decid­ed that all activ­i­ties relat­ed to Rus­sia and Belarus are sus­pend­ed and under review,” the Bei­jing-based insti­tu­tion said in a state­ment on Thursday.

The mul­ti­lat­er­al devel­op­ment bank, which has 105 mem­bers world­wide, did not spec­i­fy the rea­sons for its deci­sion, but expressed “our thoughts and sym­pa­thy to all those affected.

“Our thoughts are with all those who are suf­fer­ing,” the bank said.

The announce­ment comes after sev­er­al Chi­nese state-owned finan­cial insti­tu­tions, includ­ing the Bank of Chi­na, stopped financ­ing Russ­ian com­mod­i­ty deals.

Gary Ng, a senior econ­o­mist at Natix­is in Hong Kong, said the AIIB’s deci­sion was “sym­bol­ic” as the bank had only financed two projects in Rus­sia to the tune of $800m and none in Belarus.

“Even though most of Chi­na’s cross-bor­der lend­ing to Rus­sia can take place with polit­i­cal banks, this is yet anoth­er exam­ple that Chi­na can­not uncon­di­tion­al­ly sup­port Rus­sia as it would weigh its own ben­e­fits and costs of any geopo­lit­i­cal move,” Ng told Al Jazeera.

“The with­draw­al from the AIIB shows that the pres­sure of glob­al finan­cial sanc­tions on Rus­sia has become more appar­ent in supra­na­tion­al organ­i­sa­tions,” Ng added.

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