New answers to China’s BRI (1): the Blue Dot network?

This fall, several multilateral connectivity projects were announced. Thus, on the one hand, in September 2019, the European Union and Japan unveiled their Partnership on Sustainable Connectivity and Quality Infrastructure, and on the other hand, the United States in association with Australia and again Japan announced the launch of the “Blue Dot” network. These initiatives have been described as possible alternatives to the BRI. However, if we study them carefully, we can see that these projects are very different from the BRI, and that they are still work in progress.

The Blue Dot network

This new initiative was unveiled by US Trade Secretary Wilbur Ross at the Indo-Pacific Business Forum held on the sidelines of the 35th ASEAN Summit in Bangkok in early November 2019.

This project will bring together the United States, through the US Overseas Private Investment Corporation (OPIC), Japan with the Japan Bank for International Cooperation and Australia with its Department of Foreign Affairs and Trade.

Unlike the BRI, this initiative is not intended to finance infrastructure in Asia, but to evaluate infrastructure projects. Host countries will be able to call on experts appointed by the institutions involved in the “Blue Dot” network. Robert O’Brien, US national security advisor described the project as the equivalent of a Michelin guide for infrastructure.

This is not the first attempt made by the United States to counter the Belt and Road initiative, the BRI has been criticized by the Trump administration. The “Blue Dot” network follows the July 2018 speech by US Secretary of State Mike Pompeo on the upcoming creation of an infrastructure financing program for Indo Pacific. A first project in Papua New Guinea, funded by the United States, Japan and Australia had already been decided in June 2019. The launch of the “Blue Dot” network, different from the previous programs, shows that the United States, Japan and Australia have not yet decided which model to adopt to counter the BRI, and therefore their proposal seems very late compared with the BRI. In addition, this lack of visibility could discourage investors and project developers from taking an interest in the “Blue Dot” network lest this program change again.

Subjective criteria

One of the weaknesses of the “Blue Dot” network, apart from its rather vague character, lies mainly in the subjectivity of the criteria used. The projects will not be evaluated according to international standards, but according to those of the three American, Japanese and Australian agencies, which may lead to situations of conflict of interest. Will these indicators encourage the involvement of all companies, not just American, Japanese, and Australian companies?

According to preliminary information, the criteria of the “Blue Dot” network would evaluate, inter alia, human rights, environmental protection, labor rights, transparency and property rights. This objective is respectable, but to be valid, evaluations should be conducted by entirely independent bodies.

What consequences for the BRI?

Although sometimes presented as a competing project, contrary to the BRI, the “Blue Dot” network is only at an early stage. It will take time for the first projects to star, while the BRI is now well advanced. This plan will also require strong coordination between countries that may have different interests in the region. Japan, for example, is also involved in the European Sustainable Connectivity Project and in the Asia Africa Growth Corridor (which does not seem to be advanced to date), while participating in some BRI projects. There is no doubt that Japanese companies will be very reluctant to the development of a “Blue Dot” network that would threatens their interests in BRI projects.

In view of the first information concerning the Blue Dot network, this initiative does not provide the financial solutions for developing infrastructure projects in host countries. One of the BRI’s advantages is to offer a comprehensive solution that includes financing, construction and training, so that emerging countries to have a better understanding of the projects they are developing.

It is true that the BRI has been criticized for some debt problems in the most economically fragile countries ;  the “Blue Dot” network wants to address this issue. However, this vision of the BRI is no longer relevant. While at the beginning, BRI projects may have been considered too expensive for developing states, this is no longer the case today. On the one hand, the BRI initiative has evolved since its launch, and some of its weaknesses have been remedied. On the other hand, host states, like Malaysia, have shown their ability to renegotiate the financing of projects related to the BRI.

Furthermore, it would be a mistake to believe that China hopes to strengthen its influence through loans that host states cannot repay, because such issue would damage the image of the BRI and encourage other states to stay away from China.

Finally, the assumption made by the initiators of the Blue Dot network that the BRI lacks transparency and does not respect quality standards is false. While BRI-related projects continue to be partially financed by loans from Chinese state-owned banks, these projects are increasingly dependent on private investment, and are therefore increasingly transparent.

Hopefully, developing states will not have to choose between the Blue Dot network and the BRI, and that this new program would become one tool among others for those states that are in dire need of infrastructure, as noted by the Asian Development Bank, to develop new projects.