US Senate passes legislation challenging China's BRI with bipartisan support

The BUILD Act will see US$60 billion dedicated to the establishment of a new agency, the International Development Finance Corporation

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Image from pixabay user MotionStudios

Image from pixabay user MotionStudios

TAIPEI (Taiwan News) -- The U.S. Senate passed a bill on Wednesday, Oct. 3 that would allocate US$60 billion to the establishment of an agency aimed at strategic investment in developing countries, in what many see as a move to counter Chinese influence and its massive Belt and Road Initiative (BRI).

President Trump is expected to sign the legislation into law soon, likely following an address by Vice President Mike Pence on Oct. 4 in which Pence is expected to sharply criticize China’s recent actions on the international stage.

The Act, officially titled the “Better Utilization of Investments Leading to Development (BUILD) Act of 2018,” passed the Senate with bipartisan support in a vote of 93 to 6, after having passed the House last week.

The bipartisan legislation received strong support from both parties on the Senate Foreign Relation Committee.

In response to China’s international BRI initiative, the BUILD Act will call for the establishment of a new federal organization, the International Development Finance Corporation (IDFC).

The IDFC will consolidate the Overseas Private Investment Corp. (OPIC) and other government funded development organizations.

The current president of OPIC, Ray Washburne, told the Reuters news agency that the new IDFC will be able to offer an alternative for infrastructure projects in developing countries, and that the agency will be able to take equity stake in the projects.

“It also will let the agency provide political risk insurance to help foster private investment in emerging markets, an area where competition from Chinese enterprises has become particularly fierce.”

According to Lexology.com the IDFC will have the ability “to make loans or loan guarantees, acquire equity or financial interests in entities (as a minority investor),provide insurance or reinsurance to private sector entities and qualifying sovereign entities, provide technical assistance, administer special projects, establish enterprise funds, issue obligations.”

The legislation has been promoted as means to counter China’s “debt trap diplomacy.”Recent predatory actions in places like Sri Lanka, Africa, and El Salvador have caught the attention of Washington, which recognizes the need for a new approach to foreign aid and investment to balance China's creeping international influence.

"China's approach in the developing world is fueling debt dependency, undermining good governance and human rights,” reads a statement from Rep. Luke Messer on the Act.

Senator Coons was quoted in a press release praising the passage of the bill:

“The BUILD Act creates a 21st century development finance institution that will double the U.S. lending capacity, bringing U.S. private sector investment to low income countries around the world. 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 U.S. businesses grow and succeed.”

Through the BUILD Act, though far smaller than China's BRI in terms of funding available for investment, the U.S. will seek to establish strategic partnerships abroad, to engage in strategic joint development projects, while also encouraging foreign nations to become self-reliant.

The Act also includes several new safety regulations for the U.S. Federal Aviation Agency (FAA), which Senate Majority leader Mitch McConnell called a “fulsome re-authorization of the FAA," reports the Hill.