US Senate passes $60bn foreign development bill
Rare bipartisan move aimed at 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
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