Can the US sell its China-countering infrastructure plan to Europe?

By Olivier Caslin
Posted on Friday, 8 October 2021 12:00

Joe Biden (r.), then vice president, alongside Antony Blinken, deputy secretary of state, during exchanges with South Korean and Japanese officials in Honolulu, 14 July 2016. US Pacific Command/Flickr/Licence CC

On 5 October, ambassadors from OECD member countries met in Paris to discuss the Blue Dot Network, a US-led initiative that aims to develop infrastructure in developing countries and which is seen by many as a response to China’s Belt and Road Initiative.

The hushed rooms of the Château de la Muette, the Paris headquarters of the Organisation for Economic Co-operation and Development (OECD), hosted a highly anticipated meeting on 5 October. A high-profile panel addressed the ambassadors of the institution’s 38 member countries.

In addition to Australia’s Mathias Cormann, the OECD’s secretary-general, the panel included Yves Perrier – CEO of Amundi, Europe’s leading asset management company with €1,729bn in assets under management – Brendan Bechtel – CEO of the Bechtel Group, the leading US construction company – and Antony Blinken, the US Secretary of State.

The latter joined by videoconference, “but at one point, the plan was that he would come to the conference,” said the OECD… as if to emphasise the importance of the event.

Projects favouring transparency, respect for the environment and… profitability

Even though the head of US diplomacy was prepared to travel to Paris, he would not have done so just to take part in yet another conference on “investment in quality infrastructure”, but rather to present the broad outlines of the multilateral project known as the “Blue Dot Network” (BDN) to the representatives of Washington’s closest allies. This project was launched under the Trump administration and reactivated by his successor.

Unveiled for the first time in November 2019, during the 35th assembly of the Association of Southeast Asian Nations (Asean) in Bangkok, this initiative aims to equip developing countries with model infrastructure, which will be built in full transparency and in compliance with environmental standards and the laws of market profitability.

This is a virtuous circle of business that the US administration hopes will restore confidence in the US private sector and see it pour its billions of dollars into regions previously considered “at risk.” Starting with the capital managed by pension funds and other insurance companies.

BDN will help meet a demand for equipment, which is estimated to cost $94,000bn over the next 20 years, and ensure that US companies have a place in the construction, energy and digital sectors. Above all, it is seen in the eyes of informed observers as the US alternative to the “New Silk Roads”, which China has been implementing throughout the world over the last 10 years.

Shared standards

To compete with Beijing’s Belt & Road Initiative (BRI), Washington is counting on its future network of small blue dots, a nod to how our planet appears from space. These will be made up of a set of high-tech infrastructure projects built in partnership with the private sector, in line with the best political, economic and ecological practices, and be certified “BDN”.

“Like Michelin stars for a restaurant,” said Matthew Pottinger, then White House deputy national security advisor, in Japan in 2020. “By setting standards shared by governments, the private sector and civil society, we will improve connectivity, which will, in turn, strengthen the economy and increase job opportunities worldwide, while contributing to a better environment,” said an OECD expert.

A $60bn contribution

To date, not much concrete information has been released about the projects, their financing or even the budget needed for such a programme. During the November 2019 presentation, Keith Krach, the former under secretary of state, mentioned that the International Development Finance Corporation (DFC), the US development bank, had made a $60bn contribution.

But BDN has since increased in scale, as Washington has been trying to gather support for it, by more or less declaring that it intends to make the initiative the receptacle for various bilateral development programmes, such as South Korea’s New Southern Policy.

DFC, a central player in the Blue Dot Network initiative, is very present in Africa.

Last year, the US institution approved no less than $650m in financing for projects in Africa and institutions on the continent. It also signed off on a $250m loan for the Africa Finance Corporation, an infrastructure specialist, a $50m loan to build a Marriott hotel in Addis Ababa and a $200m loan to construct the Temane Power Plant in Mozambique.

OECD at the forefront

The OECD has been a stakeholder and official technical supporter of the BDN initiative since June. It has already hosted a first meeting in Paris, which concluded with the establishment of an advisory committee. More than 150 representatives from the international private and financial sector were in attendance, from US giant J.P Morgan to Thailand’s Sovereign Wealth Fund.

The OECD seems to have been at the forefront of the project ever since the US, Japan and Australia, three of its most influential members, finalised the 4 January 2020 agreement to set up a BDN steering committee.

From that date onwards, most of the treaties that the US has signed with its partners mention this initiative. This was the case with India in February 2020, the 12 European countries of the Three Seas Initiative (TSI) in October of that same year, then Taiwan the following month and Georgia in January 2021.

Washington in discussion with Brussels

The list has not been expanded since Joe Biden became president, but he has quickly taken up his predecessor’s idea, which was still in its infancy, and become its spokesman. In March, he met with British prime minister Boris Johnson to discuss “an initiative led by democratic countries, similar to China’s, that would help developing countries.” In April, the 46th President of the US clearly identified the danger in his State of the Union address.

“China and other countries are catching up. We must continue to lead when it comes to the products and technologies of the future,” he told a – for once – unanimous Congress. A few days after the first OECD-held meeting, Biden took advantage of the G7 meeting held in the UK on 12 June to get the other powers – as well as Australia, India and South Korea – to adopt the Build Back Better World (B3W) partnership, which incorporates the main principles of the BDN initiative. Finally, Washington has been in discussions with Brussels for over a year to convince the European Union (EU) to join its programme and thus isolate China a little more.

Everyone is welcome, according to the BDN promoters. Even China, provided that its infrastructure projects meet the international standards that have been defined by the Equator Principles since 2013, the G7 summit in Charlevoix’s 2018 declaration and that of the G20 in Osaka in June 2019.

Apart from the general framework, Blinken shared few details about the content of the initiative during his speech in Paris. But the US, with support from OECD member countries, is expected to continue its diplomatic offensive until the end of this year. Furthermore, it is safe to say that the BDN initiative will be brought up during the G20 summit in Rome in October and at the COP26 in Glasgow in November.

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