US Sen­ate passes $60bn for­eign de­vel­op­ment bill

Rare bi­par­ti­san move aimed at coun­ter­ing China’s grow­ing global in­flu­ence

The Star (St. Lucia) - Business Week - - FRONT PAGE - BY FT COR­RE­SPON­DENTS DAVID PILLING IN PORT LOUIS AND JAMES POLITI IN WASH­ING­TON

The Sen­ate has passed a bill that will cre­ate a $60bn agency to in­vest in de­vel­op­ing coun­tries in what has been sold to Don­ald Trump, the US pres­i­dent, as a way of coun­ter­ing China’s grow­ing global in­flu­ence

The Sen­ate has passed a bill that will cre­ate a $60bn agency to in­vest in de­vel­op­ing coun­tries in what has been sold to Don­ald Trump, the US pres­i­dent, as a way of coun­ter­ing China’s grow­ing global in­flu­ence.

In a rare spirit of bi­par­ti­san­ship, on Wed­nes­day the Sen­ate passed the Bet­ter Uti­liza­tion of In­vest­ments Lead­ing to De­vel­op­ment (Build) Act by 93 votes to 6.

The bill, which was in­cluded in leg­is­la­tion to reau­tho­rise the Fed­eral Avi­a­tion Ad­min­is­tra­tion, could reach the pres­i­dent’s desk as early as this week, peo­ple with close knowl­edge of its progress said. The White House has al­ready in­di­cated that the pres­i­dent will sign it into law.

The Build Act has been pack­aged as vi­tal to counter what has been de­scribed as China’s “debt trap diplo­macy” — en­snar­ing de­vel­op­ing coun­tries by load­ing them up with un­payable loans.

Un­til a year ago, the US Over­seas Pri­vate In­vest­ment Cor­po­ra­tion, which makes loans to busi­nesses in the de­vel­op­ing world, had been in dan­ger of be­ing scrapped. Although it makes com­mer­cial in­vest­ments and turns a profit, the Trump ad­min­is­tra­tion had viewed it as dis­pens­ing aid and what many Repub­li­cans de­scribed as “cor­po­rate wel­fare”.

Aubrey Hruby, co-founder of the Africa Ex­pert Net­work, said that Ray Wash­burne, Opic pres­i­dent and chief ex­ec­u­tive, had changed the nar­ra­tive by per­suad­ing leg­is­la­tors that the or­gan­i­sa­tion was an es­sen­tial tool for US com­mer­cial diplo­macy.

“This ad­min­is­tra­tion is very gov­erned by the view that the US needs to be more com­pet­i­tive vis-à-vis China,” she said. “This is some­thing that those of us in Wash­ing­ton who care about emerg­ing mar­kets, busi­ness and Amer­i­can com­pet­i­tive­ness have been work­ing on for years.”

Mr Wash­burne said: “This is a huge shake-up.” Speak­ing from Carta­gena, Colom­bia, where he had watched the Sen­ate vote on his mo­bile phone, he said an en­hanced Opic of­fered “a fi­nan­cially sound al­ter­na­tive to the state-di­rected ini­tia­tives pur­sued by China that have left many de­vel­op­ing coun­tries deep in debt”. It would in­crease the US’s soft power and help it to bring jobs and sta­bil­ity to coun­tries that might oth­er­wise be a dan­ger to US na­tional se­cu­rity.

Bei­jing has strongly re­jected claims that it uses debt to gain po­lit­i­cal sup­pli­cants, ar­gu­ing that it has lent to de­vel­op­ing coun­tries in the spirit of co­op­er­a­tion and trade pro­mo­tion. China has fi­nanced tens of bil­lions of dol­lars of in­fra­struc­ture in Asia, Africa and Latin Amer­ica.

Repub­li­can sen­a­tors have ac­cused Bei­jing of gain­ing con­trol of Ham­ban­tota port in Sri Lanka af­ter Colombo was un­able to re­pay its debts.

Opic will now be folded into a new agency called the In­ter­na­tional De­vel­op­ment Fi­nance Cor­po­ra­tion, which will in­cor­po­rate some func­tions of USAID. For the first time, it will be able to take eq­uity stakes in what ad­vo­cates say will al­low it to in­vest more ef­fec­tively and match its Euro­pean coun­ter­parts.

“It not only en­sures our ex­is­tence — which wasn’t as­sured a year ago — but gives us eq­uity author­ity and dou­bles our size,” said Mr Wash­burne.

The bill won sup­port from both par­ties. “The Build Act will be­gin to move us away from pro­vid­ing di­rect as­sis­tance with mixed re­sults and in­stead help coun­tries be­come more self-re­liant while sav­ing tax­pay­ers mil­lions of dol­lars,” said Bob Corker, the Repub­li­can chair­man of the Sen­ate For­eign Re­la­tions Com­mit­tee.

Chris Coons, a top Demo­crat on the panel, said he was “thrilled” the bill was head­ing to­wards Mr Trump’s desk, adding: “This in­vest­ment will al­low us to re­duce poverty in ar­eas that are crit­i­cal to our na­tional se­cu­rity, com­pete with Chi­nese in­flu­ence in the de­vel­op­ing world, and help US busi­nesses grow and suc­ceed.”

This ad­min­is­tra­tion is very gov­erned by the view that the US needs to be more com­pet­i­tive vis-à-vis China. This is some­thing that those of us in Wash­ing­ton who care about EMs, busi­ness and US com­pet­i­tive­ness have been work­ing on for years - Aubrey Hruby, Africa Ex­pert Net­work

Ham­ban­tota port in Sri Lanka cost £1.3bn to build, us­ing Chi­nese fi­nance: the new US bill is de­signed to coun­ter­act this soft power © AFP

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