At the G7 Summit in Germany, which took place on June 26, 2022, Joe Biden made pledge to raise US$200 billion within the United States for “global infrastructure spending:, which in intended to counter Chinese President Xi Jinping’s Road and Bridge Initiative (BRI), although it is very much unlikely that Biden, a president with lowest approval ratings would succeed in generating such cash when he failed to pass the Build Back Better bill, with its scope being almost halved from US$3.5 trillion to US$2.2 trillion, due to unwillingness of the US Congress is giving nod to it.
The Partnership for Global Infrastructure and Investment (PGII) of the United States is not the first attempt by the U.S. to match the Chinese infrastructure investment globally, which initially took place bilaterally, and then after 2013 happened through the Belt and Road Initiative (BRI).
When the US war on Iraq was unfolding in 2004, the United States set up a body called the Millennium Challenge Corporation (MCC), which it claimed to be an “independent US foreign assistance agency”. Prior to forming such platform, the US authorities were running development lending through the United States Agency for International Development (USAID), which was established in 1961 as part of President John F. Kennedy administration’s charm campaign against the Soviet Union and against the Bandung spirit of non-alignment in the newly assertive Third World.
Criticizing USAID, former US President George W Bush said, it was too bureaucratic and expressed optimism stating MCC would be a project that would include both the US government and the private sector.
According to experts, the word “corporation” in the title is deliberate. Each of the heads of the MCC, from Paul Applegarth to Alice P. Albright, has belonged to the private sector (the current head, Albright is the daughter of former US Secretary of State Madeleine Albright).
The word “challenge” in MCC refers to the fact that the grants are only approved if the countries can show that they meet 20 “policy performance indicators”, ranging from civil liberties to inflation rates. These indicators ensure that the countries seeking the grants adhere to the conventional neoliberal framework. There are also great inconsistencies among these indicators: for instance, the countries must have a high immunization rate (monitored by the World Health Organization), but at the same time they must follow the International Monetary Fund’s requirements for a tight fiscal policy. This essentially means that the public health spending of a candidate country should be kept low, resulting in the required number of public health workers not being available for the immunization programs.
The United States Congress approved US$650 million to MCC for its first year in 2004, while in 2022 the sought amount was more than US$900 million.
Back in 2007, when President Bush met former president of Mongolia, Nambaryn Enkhbayar to sign an MCC grant, he said it “is an important part of our foreign policy. It’s an opportunity for the United States and our taxpayers to help countries that fight corruption, that support market-based economies, and that invest in the health and education of their people”.
Although MCC is an instrument of US foreign policy, its aim does not seem to tackle the Sustainable Development Goals set by the United Nations on hunger, health and education. It is rather intended to extend American influence and to inculcate the habits and structures of US-led globalization or market-based economies.
During Obama’s administration, the US government developed a new foreign policy orientation that had the US establishment focus more attention on East and South Asia. As part of it, in 2011, former US Secretary of State Hillary Clinton gave an important speech in Chennai, India, where she spoke about the creation of a New Silk Road Initiative. Clinton argued that the United States government, under Obama’s “pivot to Asia”, policy was going to develop an economic agenda that ran from the Central Asian countries to the south of India, and would thereby help integrate the Central Asian republics into a US project and break the ties the region had formed with Russia and China.
In 2013, the Chinese government inaugurated the Silk Road Economic Belt project, which is now known as the Belt and Road Initiative (BRI). Rather than go from North to South, the BRI went from East to West, linking China to Central Asia and then outward to South Asia, West Asia, Europe and Africa. The aim of this project was to bring together the Eurasian Economic Community (established in 2000) and the Shanghai Cooperation Organization (set up in 2001) to work on this new, and bigger project. Roughly US$4 trillion has been invested since 2013 in a range of projects by the BRI and its associated funding mechanisms (including the Asian Infrastructure Investment Bank and the Silk Road Fund). The investments were paid for by grants from Chinese institutions and through debt incurred by the projects at rates that are competitive with those of Western infrastructure lending programs.
Washington sees this stating China is using “economic inducements and penalties” to “persuade other states to comply with its agenda”. Although such claims are absolutely baseless and unfounded.
Instead, the MCC is part of the broad Indo-Pacific strategy of the US to undermine China’s influence in Asia.
It may be mentioned here that most of the recipients of MCC grants were smaller nations as the US wants to give these grants mainly to such smaller countries with the aim of straitening ties.
While about BRI, let see the case of Nepal, which in May 2017 signed agreement with the Chinese government under BRI framework with the plan to build a railway link between China and through the Himalayas. Once implemented, this rail link would allow Nepal to lessen its reliance on Indian land routes for trade and communication purposes. There also are many other projects under BRI framework on negotiation or feasibility level between Nepal and China, which include – extension of an electricity transmission line and creation of a technical university in Nepal.
At this stage, the United States hurriedly approached Nepal with US$500 million under MCC fund to disparage the BRI funding. But Nepal succeeded in received both and neither of the parties objected to it.
The case of Nepal can be a learning lesson to most of the developing countries in Asia and beyond.
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