The Biden administration plans to use a "Build Back Better World" agenda to compete with China for foreign investment in Latin America.
The initiative will fund infrastructure in an effort to compete with Beijing’s growing influence in the region.
Once dominated by the U.S. and Europe, foreign investment in Latin America has seen China funnel more than $137 billion to governments and state corporations in the region during the past 15 years, reported the Financial Times, citing a database compiled by the Inter-American Dialogue in Washington.
China also has become the biggest trading partner for Brazil, Chile, and Peru, and is close to achieving that status in Argentina. A wave of Chinese donations of medical equipment and supplies during the COVID-19 pandemic even led to talk of Beijing’s "mask diplomacy."
The U.S. appears ready to compete against China, though President Joe Biden's deputy national security adviser said Washington was not asking Latin American countries to choose between the two superpowers.
"We're there to compete because we do think we have a better product," deputy national security adviser Daleep Singh told the Financial Times after touring Colombia, Panama, and Ecuador to outline the administration’s initiative.
"Build Back Better World" is an attempt to use development finance from such sources as The Export–Import Bank of the United States, the U.S. Agency for International Development, and the U.S. International Development Finance Corporation to help unlock far bigger sums from the private sector, in coordination with other G7 countries.
Singh said the initiative will target renewable energy, digital technology, medical equipment, and lending to smaller businesses led by women, the Financial Times said.
"We decided to make our first listening tour to Latin America … given the proximity to the United States and our core interest there," said Singh, who added that other regions will follow.
Margaret Myers, a China-Latin American expert at the Inter-American Dialogue, questioned how much of an impact the U.S. initiative would make.
"If this is supposed to be a response to [China’s] Belt and Road Initiative, BRI is not just about infrastructure," she told the Financial Times. "It's also focused on a lot of other areas, such as boosting trade, widespread public diplomacy … and financial connectivity."
Although early Chinese investment and trade in Latin America focused on traditional areas – e.g. raw materials – more recent deals have concentrated on higher-value sectors such as technology and communications.
"It's very hard to compete with China at this juncture," Myers told the Financial Times. "China is already so well established in many of these highly competitive sectors."
Singh said the Biden administration's ambition was "to mobilize hundreds of billions of dollars towards this effort" globally.
"There is no Build Back Better for Latin America and the Caribbean without the funding and the expertise to implement these infrastructure projects," one official at an international financial institution told Financial Times.
"The problem is that the U.S. government doesn't do financing. The DFC can be a wonderful tool, but right now it doesn't have the money nor the experience to really have an impact on these types of projects."
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