SEP 3, 2018 (BE2C2 Report): The United States is working to create a new agency with broad-based authority to compete with China in offering countries financing options for major infrastructure and development projects, according to a major American newspaper.
In a report, The Wall Street Journal said the Congress was working to resolve the last barriers to passing a bill that would boost the US role in international development in an attempt to “counter China’s growing influence” around the world.
The bill would seek to “combine several little-known government agencies into a new body, with authority to do $60 billion in development financing” — more than double the cap of the current agency that performs that function.
The measure, supported by the Trump administration, easily passed the House (of Representatives) this summer; it however faces its biggest test in the Senate, the report said.
“The bill’s momentum reflects growing bipartisan concern in Washington about the scale of China’s ambitions to restructure global trade routes so that all roads lead to Beijing,” it added.
WSJ said US Senators have become especially concerned with China’s global investment plan known as the One Belt One Road (OBOR) initiative now renamed as Belt and Road Initiative (BRI). The China Pakistan Economic Corridor is its flagship project which would guarantee China trade and shipping access to Middle East and beyond through warm waters of the Arabian Sea.
The US administration has been keenly watching such initiatives by Beijing specially in global hotspots — some Think Tanks consider them geostrategic and geopolitical double-decker sandwich.
While a game-changer for Pakistan, CPEC and such other impending initiatives are indicative of China’s growing influence in the region — US wants to counter-balance it in the emerging multipolar world scenario.
The Diplomat reports: “This fall will mark the fifth anniversary of the launch of what is now called in English the Belt and Road Initiative or BRI. Five years on, the jury is still out about the BRI’s nature and actual outcomes, but Beijing’s promises of investments in infrastructure projects across Eurasia and beyond have undoubtedly managed to capture the world’s attention. The BRI’s real objectives and multilayered ambitions are still not well understood, but there’s an emerging awareness that its impact will be felt far beyond the realm of infrastructure construction. What has become very clear is the BRI’s importance for the top Chinese leadership: Now that the BRI has been enshrined in the Chinese Communist Party (CCP) Charter, and its offshoot, the “community of shared future,” has been included in the People’s Republic of China Constitution, it is harder for skeptics to continue to claim that the BRI is an empty slogan that will soon fade.”
“People are waking up to what China is doing and see that we have to counter that,” said Republican Congressman Ted Yoho, one of the House co-sponsors of the bill, which was introduced with bipartisan sponsorship in both chambers, report WSJ.
The legislation represents a sharp reversal for the agency that currently promotes US investment abroad, the Overseas Private Investment Corporation (OPIC). In President Donald Trump’s first budget in 2017, the agency was proposed for elimination with the administration saying it provided unnecessary federal interventions that distort the free market.
But as trade tensions rose with China, so did focus on the extent and consequences” of China’s infrastructure spree, reported WSJ.
The main body of the new agency would be OPIC, founded by President Richard Nixon in 1971 to help American businesses invest in developing and emerging markets in order to further US trade and foreign-policy goals. The new agency would also take over several programs run by the US Agency for International Development (USAID), the biggest of which is known as the Development Credit Authority (DCA).
The bill, according to the report, is popular because OPIC has been profitable every year for the last 40 years and has contributed $8.5 billion to deficit reduction.
The agency has a portfolio of $23 billion, with its business consisting of loan guarantees, direct lending and political-risk insurance for projects it finances or insures, such as the toll road in Colombia, a geothermal power plant in Honduras, cellphone towers in Uganda and a nuclear-fuel storage facility in Ukraine.