US Secretary of State Mike Pompeo announced on July 30, 2018, at the Indo-Pacific Business Forum the upcoming launch of an infrastructure development plan for Asia.
The United States is expected to invest $ 113 million in infrastructure development in Asia. This investment would be made through the USIDFC (United States International Development Finance Corporation), a new US agency. In June 2018, the US Senate approved the “BUILD Act” (Better Use of Investment Leading to Development) that would allow the creation of the USIDFC, grouping OPIC (Overseas Private Investment Corporation, the agency for private investment in the US) and USAID’s Development Credit Authority
What prospects for the American initiative?
This program appears to be Washington’s response to Beijing’s Belt and Road initiative. The United States has repeatedly criticized the BRI and warned countries that would be interested in joining it about possible risks of indebtedness.
In November 2017, the United States, Australia, Japan and India announced the rebirth of the Quadrilateral Dialogue (Quad), which was first established in 2007 to respond to China’s rise to power in Asia. Japan and Australia may join US new initiative and help finance it.
It is still too early to assess this United States project, however it seems to be quite unambitious compared to the BRI. The initial amount pledged by the United States is relatively small to meet Asian states financial needs in terms of infrastructure.
But the main weakness of this project lies in US foreign policy’s unconsistency. The United States will have to convince Asia of the durability of this program. US growing protectionism through its tariff policy, withdrawal from the trans-Pacific partnership, and finally its unilateral denunciation of the Iran nuclear deal may prompt Asian states to reconsider their possible commitment to the US project.
One should not forget that the BRI is not just about infrastructure, it also aims to facilitate exchanges and promote free trade; the American project does not seem to tackle this issue.
Less competition, more coordination
In his speech, the US Secretary of State did not directly mention China, however this policy may be considered as an answer to China’s growing influence in Asia (through the BRI).
The US initiative may revive tensions between the United States and China. Beijing reacted to Pompeo’s announcement with Geng Shuang, Foreign Ministry Spokesperson, saying China was waiting for the concrete achievements of the US initiative.
However, we may hope that competition between the United States and China will be limited and that the financing of infrastructure projects will not be not conditioned by the alignment of host countries on Washington or Beijing position. Exacerbated competition between the two superpowers would be a source of instability for Asian countries.
On the contrary, greater coordination between these different programs is needed to avoid infrastructure replication.
Questions may be raised about possible issues related to the BRI such as debt risks or the predominance of Chinese companies. This debate is legitimate; a project of this magnitude cannot be perfect from its inception. There must be dialogue and negotiations between parties. The American new initiative may unfortunately deepen antagonisms between the United States and China, and these two projects could then give priority to American and Chinese companies respectively.
China told the world that the new Silk Roads were open to all. Every nation must seize this opportunity and join this program; together, in cooperation with China, they may improve the BRI from the inside.