Australian Prime Minister Tony Abbott
IN PHOTO: Australian Prime Minister Tony Abbott (L) gestures during a joint news conference with New Zealand Prime Minister John Key (not pictured) on Abbott's first official two-day visit, in Auckland February 28, 2015. REUTERS/David Rowland/Pool

None other than Prime Minister Tony Abbott has declared that Australia is close to signing a memorandum of understanding with China formalising its participation in the Asian Infrastructure Investment Bank, or AIIB.

In a statement, Mr Abbott said only a handful of issues needed to be resolved before he finally affix his signature. The said issues, however, are major ones. Australia wants to be assured that the bank's board of directors have authority over key investment decisions, and that the bank should not be controlled by a single country.

“The government is today announcing it intends to sign a memorandum of understanding on the Asian Infrastructure Investment Bank, which would allow Australia to participate — as a prospective founding member — in negotiations to set up the bank,” the prime minister’s office stated.

Australia is joining because it is the right thing to do, Joe Hockey, Federal Treasurer, said. “It’s right for Australia to be part of a multilateral bank that is going to be providing tens of billions of dollars in loans in our region, to our neighbours,” Hockey said in a Channel Ten interview on Sunday.

Australia’s announcement comes after the UK, France, Germany, Italy and South Korea signified this month to join the AIIB. Mr Abbott said the AIIB has the potential to play a valuable role in addressing infrastructure needs and boosting economic growth in the region with potential benefits for Australia.

Russia said it will be joining the multilateral bank. Denmark, Brazil and the Netherlands have also signified their intentions to participate, according to China’s finance ministry over the weekend.

As to concerns thrown by the United States that the China-led AIIB will undermine the influence of the US-based World Bank, Hockey said it would just be better that nations help to make sure it has proper governance principals and that it is actually delivering the infrastructure necessary to grow the economy of the Asian region. Such merits “will in turn help us," Hockey believed.

Hugh White, professor of strategic studies at Australian National University, lauded the country’s policy shift. “This marks a very sobering moment for Australia as until now we have subcontracted to the US our policy in relation to how to respond to China’s rise,” he told the Financial Times. White believed Australia will strive to become a full member of the China-led bank.

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