US Rolls Out OPIC to Compete With China’s Belt and Road; ‘That’s Called Competition’, Says Pompeo
IRSHAD SALIM, Oct 21, 2018: Greta Van Susteren, a VOA contributor, interviewed U.S. Secretary of State Mike Pompeo Friday in Mexico City, where Pompeo is traveling and warned Panama and other nations about accepting China’s ‘Belt and Road’ loans weeks after warning Imran Khan-led newly installed government in Pakistan that any potential International Monetary Fund (IMF) bailout the debt-ridden country seeks should not provide funds to pay off Chinese lenders related to China Pakistan Economic Corridor (CPEC).
“Make no mistake. We will be watching what the IMF does,” Pompeo said, but “assured that Washington would not try to block any request for a bailout from the IMF”, Information Minister Fawad Chaudhry said last month.
Besides discussing US-Mexico relations and Venezuela in the interview, Pompeo expressed Trump administration’s concerns on China’s increasing footprint in Panama and US discomfort with the Chinese engagements in the country as well as elsewhere under Beijing’s ambitious multibillion dollar Belt and Road Initiative (BRI).
Earlier on Thursday, the US Secretary of State issued a warning to Panama and other nations in the region about the potential dangers of accepting Chinese investment, as Beijing expands its development projects to increasingly distant corners of the world.
“When China comes calling, it’s not always to the good of your citizens,” Pompeo said while addressing reporters in Mexico City after a meeting with Panamanian President Juan Carlos Varela. A day later, Pompeo sounded off similar concerns in his interview with VOA’s Greta Van Susteren (see transcript below).
Pompeo’s remarks came as Washington’s own overseas investment agency is actively competing with China to finance infrastructural development projects in Panama, Overseas Private Investment Corporation (OPIC) president and CEO Ray Washburne confirmed to media.
Washburne also confirmed that OPIC was negotiating a memorandum of understanding with India to bring it into a development partnership between the US, Japan and Australia.
In line with the US government’s “Indo-Pacific Economic Vision”, announced in July by Pompeo, such partnerships are designed to streamline joint development projects with allies in order to check China’s growing influence in the Asia-Pacific region now being looked at by the Trump administration through Indo-Pacific Strategy involving the Quadrilateral (Quad) – a loose coalition between Australia, the US, Japan, and India for a “Free and Open Indo-Pacific” (FOIP) region.
OPIC was at one point earmarked for termination by the Trump administration. But in the face of China’s expanding monetary presence around the world, the agency was given a lifeline, and next year is set to receive a doubling in its finance cap from US$30 billion to US$60 billion.
Unlike China’s finance development model, which operates primarily through state-owned enterprises and their subsidiaries, OPIC offers financing and political risk insurance to private US firms bidding for infrastructure and development projects overseas and use local subcontractors, locally-made equipment, materials, etc. as much as possible within the framework.
“The United States encourages local governments, like for example in Panama, to use local people and to use local infrastructure to do the projects,” said Washburne, who recently visited Panama.
Pompeo said the US welcomed “straight-up, legitimate investment that’s transparent and according to the rule of law”. His two-day visit to Latin America has included meetings with top officials in Panama and Mexico. “That’s called competition,” Pompeo said.
However, the US objects “when state-owned enterprises show up in a way that is clearly not transparent, clearly not market-driven, and is designed not to benefit the people of Panama, but rather to benefit the Chinese government”, he said.
The remarks came not long after the five-year anniversary of the launch of Chinese President Xi Jinping’s signature “Belt and Road Initiative (BRI)”, a strategy to funnel government money into development projects throughout Asia and beyond.
The $62 billion China Pakistan Economic Corridor is the flagship project of the BRI initiative. China has over a 2 year period, made debt-based investments –on BOT basis, on highways, motorways and power plants in the range of $26 billion to $30 billion.
For Pakistan CPEC/BRI is a game-changer from geostrategic and geoeconomic perspective– notwithstanding the growing pains and short-term difficulties in paying off the loans associated with it.
Pompeo gave no indication as to how Varela received his warnings about Chinese investment, but Panamanian officials like the Pakistani officials and thought-leaders, have previously spoken enthusiastically about the country’s involvement in the belt and road plan.
“As a place of strategic importance within the American continent, Panama hopes to become a key part of the ‘Belt and Road Initiative’,” the country’s ambassador to China, Francisco Carlo Escobar, told Xinhua in March.
As for Pakistan, it considers the “CPEC” pivot for its economic growth and by extension BRI the future’s ecosystem to swim in.
Excerpt of Pompeo’s interview with Greta:
Q: “Before Mexico you were in Panama. Why did you stop in Panama?”
Pompeo: “Longtime partner of the United States. On security, on counternarcotics. I’ve known President (Juan Carlos) Varela for some time and I wanted to go back to talk to them about several issues where there’s more work to be done between the two countries, including some concerns we have about Chinese investment throughout Central America, and Panama, and in South America and make sure that we understood each other with respect to the wide range of issues where Panama and the United States work together and important economic relationships as well. And I wanted to make sure he understood we want an investment from them and we were looking to build U.S investment in his country as well.”
Q: “Are you suspicious of the motives of the Chinese investment in Panama?”
Q: “In what way?”
Pompeo: “Look, we’ve watched this all around the world. Panama is fortunate, they are a sophisticated country with a real economy and a growing GDP, so they’re in a pretty good place relative to some other countries. But we’ve watched Chinese predatory activity in countries around the world where they show up with a bunch of money and then put strings on it which put the people in that country in a terrible position, two and five and 10 years down the road. And we think it’s very important that if the Chinese want to invest, that’s great, but it needs to be done in a way that is transparent and open and in the best interest of the people of the country in which their investing and not tethered to some constraint that the Chinese would place on that country in the event that country’s not able to pay the debt that they’re incurring.”
Q: “So how do you convince Panama to turn down Chinese money? Is the United States [ready to] sort of step up to the plate and do its own investment?”
Pompeo: “Country like Panama is pretty straightforward, they want to be a part of Western society. They want to do things by the book, by the rule of law, without the corruption. They want to engage in activity that’s beneficial to their own people and have the economic capacity to do so. They’re not in the position where the poverty in their country drives them to have to take money even under onerous conditions, and so you just talk about how you can help make sure that America will be there to provide alternatives and that other Western countries will be there too to make sure they understand that it’s in their people’s best interest to engage in commercial activity that truly, over the long haul, benefits their own people.”
Q: “Well it certainly seems like China’s getting a bigger footprint there, especially when the fact that about a year ago Panama recognized China and not Taiwan. It seems that China certainly is moving into that area.”
Pompeo: “Yeah, China is intent on that and again, we don’t have any problem with Chinese commercial investment. That’s their right to go compete in the world. I’m convinced that if we compete with them all over the world, we’ll do incredibly well. But what we can’t accept and what we need to make sure every country understands that when they show up and it looks too good to be true, it almost certainly is.”
Q: “And have you brought that up with China about their trading in the West but operating in Panama?”
Pompeo: “I don’t know that I’ve brought up Panama in particular, but I’ve certainly brought up what we view as commercial practices, whether state-owned enterprises that are inconsistent with good behavior around the world.” (END)
(The writer is a business & construction consultant, analyst, and Editor-in-Chief of PKonweb, DesPardes and BE2C2 Report)
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