NEW YORK (TheStreet) -- Europe is moving to ensure its place in the changing world.
Against the urging of the United States, on Tuesday, Germany, France, and Italy followed England in joining the Chinese-led Asian Infrastructure Investment Bank, also known A.I.I.B., an new organization that could come to rival to the World Bank and the International Monetary Fund.
American leadership opposed the move, first citing the fact that there are already other organizations that do what the A.I.I.B. is intended to do. When this argument failed, the administration argued that China's lending practices, especially involving infrastructure projects, "fostered corruption" and undermined good government practices in emerging countries. Certainly, European nations would not want to be a part of this.
But, the European Union is attempting to establish itself as a major economic and financial block with global reach and to not be a part of this effort would lessen its role in the world.
Furthermore, America has dominated the World Bank and the International Monetary Fund from their inception at the Bretton Woods conference in the 1940s. Here we are seeing countries attempting to create a place for themselves to be influential in the world, something that the United States has not fully allowed in the other international investment banks.
Announcing the association between China and Germany, France, and Italy, was Wolfgang Schäuble, Germany's finance minister. This seems consistent with the German leadership of Eurozone efforts. It speaks of how the countries of the union are attempting to position themselves within global trade and finance. And, doing this independently of the United States, exhibits the fact that Europe must achieve its own position in the world if it is to be a fully functioning economic union.
This move can also help European economies as China serves as a major trading partner of the Eurozone, with China being Germany's fourth-largest trading partner. Furthermore, Europe is expecting to be an even larger destination for Chinese investments.
China, on the other hand, sees this as a part of its efforts to reshape the global balance of power.
"China has worked for years to break what it regards as an unfair grip by the United States on global political and financial institutions and to set up rival structures more responsive to Chinese demands for a voice in international affairs commensurate with its status as the world's second-biggest economy," write Andrew Higgins and David E. Sanger in the Times.
One can expect that getting in at this stage of the effort, these European nations will participate in bringing the standards of underwriting of the A.I.I.B. more in line with what has been the standards of the World Bank and the International Monetary Fund. It is hard to believe that they would become a part of this exercise without influencing the new institution in this area.
Most of all, this combination of countries is just one more sign of how the world is changing. China is now the second largest economy in the world. It wants to play a major role and has the resources to do so. It wants to participate as an equal and its wants its institutions and instruments to gain equal footing with others. Its wants to eventually see its currency achieve the same status in the world as the United States dollar and the Euro.
Europe is also fighting hard to be considered a major player in this changing environment. And, by joining with China, it is saying to the United States, "you are not the only game in town anymore."
As for the United States, it has just maneuvered itself into a position where even good friends are going to combine with others to make sure that they find their role in this "new" world. This is especially true of Germany.
Germany has worked long and hard to lead the European Union to where it now is. The EU still has a long way to go, but Germany cannot back down now in its efforts to see the eurozone play a major role in the evolution of global markets. And, the more success the European Union has in world economic alignments, the more power the leadership of the EU will have in forging the political union that is so necessary for the success of the currency union.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.