The head of the United States’ new development bank has put other powers on notice that he will not allow them to have undue influence in markets around the world as America shores up its leading economic and trade positions.
The US International Development Finance Corporation, which officially started operations this year, has been set up by Congress in a bipartisan effort to support American foreign policy through lending and investment. The DFC is the successor to the Overseas Private Investment Corporation and has double the portfolio capacity at $60 billion.
"Let me be clear about our motivation and our foreign policy … I don't want any one country to have undue influence on another country, particularly a nefarious one. I want to empower the sovereign nature of a country and I want free, open markets. We want rule of law," Adam Boehler, the DFC's chief executive told The National in Abu Dhabi where he was attending the Milken Institute Middle East and Africa Summit.
“That is not the view of others and that is what we protect against”.
He believes a regional and multilateral approach can help in countries, which have a complicated or awkward stance to US involvement, such as Iraq in the wake of the air strike that killed Iranian Quds Force commander Qassem Suleimani in Baghdad last month. Iraq's Parliament has said it wants US – and all foreign – forces to leave.
“This is not an Iraq-US issue. This is, ‘how do we collaborate in areas like this as allies to make a significant difference?’ We need to stabilise and protect against the alternative” which in the case of Iraq is Iranian influence, he said.
This week, a $700 million budget was proposed for the DFC by President Donald Trump’s administration for the fiscal year 2021 compared with $150 million the previous year.
The message from Congress is “never lose your focus on development and the importance of development but you need to advance our US foreign policy”, he said.
“We are playing offence. I am not playing defence to China, I am not playing defence to Russia, I am not playing defence to Iran.
“It means being strategic, it means putting a lot of dollars to work in certain places that drives development.”
Mr Boehler is a relative outsider to the traditional development finance community, with his roots in venture capital before running a successful healthcare company. He also had early experience working in South Africa with the government there.
“I am not advancing non-transparent things. I am not advancing cash payments under the table. I am not advancing things that hurt the environment," he said.
"I am not going to take over any body's port or sovereign infrastructure," he said referring to Sri Lanka leasing China its Hambantota hub in a deal that has been used to criticise Beijing's development approach.
According to Mr Boehler, the DFC will create “a free and open and transparent market” where private capital can follow in its wake.
“One of the things we focused on is boots on the ground. In Africa, in Latin America, in Asia-Pacific we need to, one, work better with our embassies [and] USAID but also to have deal folks on the ground.”
After Mr Boehler took on the chief executive role in October, he oversaw $430 million in deals to insure an Egypt-Israel gas pipeline project, which is “very in line” with what the DFC’s aims to do.
“That particular deal – what I loved about it – it was taking existing infrastructure that was already there and making it operational. You had a line between Israel and Egypt that wasn’t being used and so you didn’t even need to build and then you could drive gas there.
“The second thing is, you are talking about getting and investing in a place that is going to lower electricity prices for the average person in Egypt. Getting dollars directly to somebody on the street is very important.”
Going forward, he said, there will be a “real focus in Europe and Eurasia” around enabling energy independence and infrastructure.
On Tuesday, the DFC and the Abu Dhabi Fund for Development announced they would collaborate in financing private sector investments internationally with a focus on projects having a "transformative impact on communities" in developing countries.
Technology such as fifth-generation mobile communications will also provide development opportunities, Mr Boehler said. Who builds 5G networks around the world has been a contentious issue between the US and China with industry leader Huawei accused of being a potential security risk by Washington. The US has warned countries including its allies not to use Huawei with mixed results partly because of the limited choice of companies to work with. Mr Boehler believes the DFC can and should help find alternatives for these countries.
“If you think about enabling people … rapid communication technology … advances development,” he said.
