Sunday Essay: Hard infra, soft power
WHAT some people have said is true: United States Ambassador to the Philippines Sung Kim does resemble George Clooney. But it was his wit and candor that impressed the audience during the American Chamber of Commerce-Visayas Chapter meeting last Thursday night in Cebu City.
Ambassador Kim began his speech by emphasizing that empowering US businesses to succeed in the Indo-Pacific would remain central to its strategy in this region. Three pillars of the economy that the US is particularly interested in are the digital economy, energy, and infrastructure. To that end, he said, the US will work to connect US firms “that have unique solutions and technology” with the opportunities presented by the Philippine Government’s infrastructure program.
In October 2018, the US Congress approved an allocation of US$60 billion for a new development finance institution, the US International Development Finance Corp. To ensure that this would have a meaningful impact, the US will “focus on areas with tremendous needs and potential,” the ambassador said, “and there is certainly a huge need here (in the Indo-Pacific region).”
One can’t help but see that this development, as well as its emphasis on “private sector, market-based solutions,” is a response to China’s massive Belt and Road Initiative. In a post they wrote for the Center for Strategic and International Studies, Daniel Runde and Romina Bandura said that the Better Utilization of Investment Leading to Development (BUILD) Act was “the most important piece of US soft power legislation in more than a decade.”
“Globally, there are 1.1. billion people without electricity, close to three billion people without clean cooking facilities, one billion without access to safe water, and 2.3 billion have no access to improved sanitation,” Bandura and Runde wrote. “Through the BUILD Act, these infrastructure challenges can be viewed as opportunities for the United States.” (Read the full post here: bit.ly/2qN4dLb.)
Skeptics may say that it’s merely a matter of American and Chinese companies racing to corner the biggest infrastructure projects in Asia and Europe. But it’ll help us feel better about the state of the world to see, too, that these are real opportunities to fill infrastructure gaps in countries that lack resources to do so on their own. We just have to ensure that the terms of each transaction are transparent and fair.
In the last six years, China has tried to take center stage in the push for international infrastructure-led development. Combined, several China-led institutions like the Asian Infrastructure Investment Bank are projected to lend almost US$200 billion before 2030. But its track record in the Philippines so far and the many questions raised about its loan and project terms (hello, potential seizure of patrimonial assets) are worth examining.
In 2018, the United States provided US$886.47 million in official development assistance (ODA) grants to the Philippines, which amounted to nearly six percent of total ODA. It was the fourth largest source of overall ODA loans and grants, and the top source of grants alone (it provided nearly 37 percent of all grants).
In contrast, China provided US$364.49 in total ODA, or less than three percent. Of that, 75 percent was in the form of loans. China was the seventh largest source of ODA for the Philippines last year but that was a huge leap, considering it wasn’t even among the top 15 sources as of 2016, according to the socioeconomic planning department.
How do diplomats manage to say the most emphatic statements so gracefully? Ambassador Kim assured that the US continues to “care very deeply about what’s happening” in the West Philippine Sea and remains “committed to protecting international rights for everybody.” But he also said: “I’m not as nervous about the (Philippine) leadership’s desire to improve relations with China.”