Joe Biden at the G7 summit.
At the G7 summit in Germany on June 26, 2022, US President Joe Biden pledged to raise $200 billion in the United States for global infrastructure spending. It was clarified that this new G7 project – the Partnership for Global Infrastructure and Investment (PGII) – aims to counter China’s Belt and Road Initiative (BRI). Given Biden’s failure to pass the Build Back Better bill (nearly halving its scope from $3.5 trillion to $2.2 trillion), it’s unlikely he will. get the US Congress to accept this new venture.
The PGII is not the first attempt by the United States to match Chinese investment in infrastructure globally, which first took place bilaterally and then after 2013 through the initiative. Belt and Road (BRI). In 2004, as the American war against Iraq was unfolding, the United States government created an organization called the Millennium Challenge Corporation (MCC), which it called “an independent American aid agency. foreign “. Prior to this, most U.S. government development loans were made through the United States Agency for International Development (USAID), which was established in 1961 as part of the country’s charm campaign. administration of President John F. Kennedy against the Soviet Union and against the spirit of Bandung. of non-alignment in the newly asserted Third World.
Former U.S. President George W. Bush said USAID was too bureaucratic, so MCC would be a project that included both the U.S. government and the private sector. The word “society” in the title is deliberate. Every MCC leader, from Paul Applegarth to Alice P. Albright, has been in the private sector (current leader Albright is the daughter of former US Secretary of State Madeleine Albright).
The word “challenge” in MCC refers to the fact that grants are only approved if countries can show they are meeting 20 “policy performance indicators,” ranging from civil liberties to inflation rates. These indicators ensure that the countries applying for the grants adhere to the conventional neoliberal framework. There are also big inconsistencies between these indicators: for example, countries must have a high vaccination rate (monitored by the World Health Organization), but at the same time they must follow the requirements of the International Monetary Fund in terms of strict fiscal policy. This essentially means that a candidate country’s public health expenditure must be kept low, resulting in the required number of public health workers not being available for immunization programs.
The US Congress provided $650 million to MCC for its first year in 2004, as a US government official told me; in 2022, the amount sought was over $900 million. In 2007, when Bush met with Nambaryn Enkhbayar, the former president of Mongolia, to sign an MCC grant, he said that the Millennium Challenge Account, which is administered by MCC, “is an important part of our foreign policy . This is an opportunity for the United States and our taxpayers to help countries that fight corruption, support market economies, and invest in the health and education of their people. Clearly, the MCC is an instrument of US foreign policy, but its purpose appears to be not so much to address the UN Sustainable Development Goals (on hunger, health, and education), as the Bush said, but to ensure the extension of the reach of American influence and to inculcate the habits and structures of US-led globalization (“market economies”).
In 2009, then-U.S. President Barack Obama developed an “Asia Pivot,” a new foreign policy orientation that led the U.S. establishment to focus more on East Asia. East and South. As part of this pivot, in 2011, former US Secretary of State Hillary Clinton gave a major speech in Chennai, India, where she talked about the creation of a new Silk Road initiative. Clinton argued that the United States government, under Obama’s “pivot to Asia” policy, would develop an economic program from Central Asian countries to southern India, and would thus help to integrate the republics of Central Asia into an American project. and sever the ties the region had forged with Russia and China. The impetus for the New Silk Road was to find a way to use this development as an instrument to undermine the Taliban insurgency in Afghanistan. This American project failed for lack of Congressional funding and sheer impossibility, since Afghanistan, which was at the heart of this road project, could not be persuaded to submit to American interests.
Two years later, in 2013, the Chinese government inaugurated the Silk Road Economic Belt project, now known as the Belt and Road Initiative (BRI). Rather than going North to South, the BRI went East to West, connecting China to Central Asia, then to South Asia, West Asia, Europe and the United States. ‘Africa. The objective of this project was to bring together the Eurasian Economic Community (established in 2000) and the Shanghai Cooperation Organization (established in 2001) to work on this new larger project. Around $4 trillion has been invested since 2013 in a range of projects by the BRI and its associated financing mechanisms (including the Asian Infrastructure Investment Bank and the Silk Road Fund). The investments were financed by grants from Chinese institutions and by debt incurred by the projects at rates competitive with those of Western infrastructure loan programs.
The US government’s “Indo-Pacific Strategy Report” (2019) notes that China uses “economic incentives and sanctions” to “persuade other states to comply with its agenda”. The report provides no evidence, and indeed, academics who have looked into these matters see no such evidence. US Admiral Philip S. Davidson, who previously commanded US Indo-Pacific Command, told the US Congress that China is “leveraging its instrument of economic power” in Asia. The MCC and other instruments, including a new International Development Finance Corporation, have been hastily set up to give America an edge over China in a US-led competition over the creation of investment in infrastructure worldwide. There is no doubt that the MCC is part of the larger US Indo-Pacific strategy to undermine Chinese influence in Asia.
Only a few countries have so far received MCC grants, starting with Honduras and Madagascar. These are often not very large grants, although for a country the size of Malawi or Jordan these can have a considerable impact. No large countries have been drawn into the MCC pact, suggesting that the United States wants to give these grants primarily to smaller countries, in order to strengthen their ties with the United States. Nepal’s accession to the MCC must be seen in this broader context. Although the discovery of uranium in the Upper Mustang region of Nepal in 2014 seems to play an important role in the pressure campaign on this country.
In May 2017, the Nepalese government signed a BRI Framework Agreement, which included an ambitious plan to build a rail link between China and Nepal through the Himalayas; this rail link would allow Nepal to reduce its reliance on Indian overland routes for trade. Various projects began to be discussed and feasibility studies were commissioned under the BRI plan. These projects, of which more details emerged in 2019, were the extension of a power transmission line and the establishment of a technical university in Nepal, and of course, the construction of an extensive network of roads and railways, including the Trans-Himalayan Railway. from Keyrung to Kathmandu.
Read more: Nepal approves US Millennium Challenge Corporation grant amid protests. And after?
Meanwhile, the United States entered the scene with a large-scale effort to denigrate BRI funding in Nepal and to promote the use of MCC money there instead. In September 2017, the government of Nepal signed an agreement with the United States called the Nepal Compact. This agreement, worth $500 million, covers an electricity transmission project and a road maintenance project. At this point, Nepal had access to BRI and MCC funds and neither side seemed to care. This has enabled Nepal to use these two resources to develop much needed infrastructure or, as former Prime Minister Madhav Kumar Nepal told me in 2020, his country could get new loans from the Asian Development Bank.
After the signing of the two agreements, a political dispute erupted in Nepal, which led to the split of the Communist Party of Nepal and the fall of the left-wing government. A major issue on the table was the MCC and its role in the United States’ overall Indo-Pacific strategy, which appears to be targeted against China.
Vijay Prashad is an Indian historian, editor and journalist. He is editor and chief correspondent at Globetrotter. He is editor of LeftWord Books and director of Tricontinental: Institute for Social Research. He is a non-resident senior researcher at the Chongyang Institute of Financial Studies, Renmin University of China. He has written over 20 books, including The Darker Nations and The Poorer Nations. His latest books are Struggle Makes Us Human: Learning from Movements for Socialism and (with Noam Chomsky) The Withdrawal: Iraq, Libya, Afghanistan, and the Fragility of US Power.
This article was produced by Globetrotter.