Over forty countries have expressed interest in joining the Asian Infrastructure Investment Bank (AIIB), a $50 billion Chinese-led fund launched last October with the aim of providing project loans to developing countries in Asia. Despite warnings from Washington to keep safe distance, many of the countries that have joined are close US allies from around the world. Even Japan is mulling membership, caught between the preferences of its largest ally – the US – and its largest trading partner – China. These countries are hedging their bets for a world in which American leadership and global leadership are no longer so similar.

Why is Washington so squeamish? For decades, the US has used its authority in the World Bank and IMF to strengthen relations with European partners and to guide developing countries toward Western values. In Asia, Washington has used its power within the Asian Development Bank toward the same end. These institutions can issue loans with a quid pro quo: to implement reforms in line with the lenders’ preferences. Washington worries that China can do precisely the same thing. With a stake of up to 50%, China may dictate the AIIB’s values.

Yet earlier this month, Britain became a member. In a rare fit of public anger toward its closest ally, the White House accused Britain’s government of “constant accommodation” of China. Then France, Germany, Italy, and Switzerland followed Britain’s lead. The Saudis signed on; so too did Australia and South Korea, key US allies in the region that initially balked at joining the AIIB. The IMF and World Bank suddenly announced last weekend they would be “delighted” to work with the AIIB. It’s been a long time since Washington has looked so isolated.

Some will blame the Obama administration for this setback, but Britain’s decision to sign up for China’s bank reflects its need to attract more Chinese investment, particularly as its future within the EU remains questionable. Germany and France face stagnant growth environments and also need to diversify their commercial and financial partnerships. Australia counts China as its top trade partner. South Korea enjoys higher trade volumes with China than with the US and Japan combined. The Saudis understand that America will become less dependent on its oil over time. Even Japan must protect its relations with both America and China.

For US allies, shared values still matter, and strong relations will continue. But the value placed by Washington in Western, not Chinese, led institutions comes from a broader dynamic of US influence under threat. Now that US troops are home from Iraq and Afghanistan, Obama knows there’s little domestic support for military operations. So he’s relied on sanctions, surveillance, drones, and partnerships with allies to fight his foreign policy battles. These tactics aren’t working. So he pushes US influence within international institutions.

But America’s allies aren’t convinced. It’s not that they’re betting on China over the US. Rather, as global economic power becomes more widely distributed, they’re betting that political power and preferences will follow suit. This leaves Obama, and his successors, with a difficult question: In a world that needs America less, how can Washington protect and maintain its dominant influence?

This article is published in collaboration with LinkedIn.

This piece is adapted from a column for TIME magazine last week, outlining what the Asian Infrastructure Investment Bank means for US global leadership

Publication does not imply endorsement of views by the World Economic Forum.

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Author: Ian Bremmer is president of Eurasia Group, global research professor at New York University and foreign affairs columnist at TIME. 

Image: China’s President Xi Jinping (front C) poses for photos with guests at the Asian Infrastructure Investment Bank launch ceremony at the Great Hall of the People in Beijing October 24, 2014.  REUTERS/Takaki Yajima/Pool