B3W vs BRI

Can the US B3W initiative compete with China's BRI in Latin America?

Throughout the last decade, US influence in Latin America has significantly waned while Chinese economic links in the region have been growing. The US administration of President Joe Biden aims to reverse this trend by launching an international trade and public works programme to compete with China’s Belt and Road initiative (“BRI”). Thus, the White House will send Daleep Singh, a US Deputy National Security Advisor for international economics, to scout for projects in Colombia, Ecuador and Panama. 

The initiative, known as Build Back Better for the World (“B3W”), has its origin in the G7 meeting early in the year. The G7 members estimate that there are more than USD 40 trillion in infrastructure needs worldwide through to 2035. However, the US has not defined the exact figure that it expects to invest for specific projects in Latin America, which will be unveiled in January 2022. As a marker, in 2019, Chinese companies invested USD 12.8 billion in the region, mainly concentrated into regional infrastructure such as ports, roads, dams and railways.

A senior researcher at the University of Rio de Janeiro commented, “Biden’s announcement shows despair at the decline of US power and influence in the region. More was expected from Biden but he continues with Trump’s desperate policy, they don’t understand that while sticks worked in the past, Latin America is now looking for carrots.”

“Biden’s announcement shows despair at the decline of US power and influence in the region […] they don’t understand that while sticks worked in the past, Latin America is now looking for carrots.”

Senior researcher, University of Rio de Janeiro, Brazil

Surprisingly, a US-focused port executive agreed, “For the first time, the US is at a disadvantage in Latin America and the outlook is very complicated for them under the current conditions. Firstly, the US doesn’t have a good reputation in the region at present, secondly, China is the largest trading partner for most countries in the region and finally, China has already invested large sums in the development of Latin American infrastructure.”

Despite its growth, China’s influence in the region appears to be slowing down. During the pandemic, and for the first time in 15 years, Chinese development banks did not make any new loans to Latin American countries amid the COVID-19 pandemic. Thus, if the US provides the necessary foreign investment to fill the void, it can help the region to recover pre-pandemic economic activity while addressing democratic issues and fighting corruption. Furthermore, Chinese investments have often neglected environmental and labour policies, which hinders the region’s integration into the international community, limiting its development potential. 

US investments in the region will focus on climate, health, digital technology and gender equality. B3W will take a multinational and multidimensional approach to investment in Latin American countries, as opposed to the ‘America Crece’ (America Grows) 2018 investment initiative launched by US President Donald Trump which mostly offered bilateral investments in the region through the US Agency for International Development (“USAID”) and the US International Finance Development Corporation. By collaborating with Western powers and regional allies in the Americas, Biden is committing to change Trump’s view of Latin America, which was limited to a prism of competition with China.

Our academic source in Brazil was sceptical, “The announced plan is just a copy of China’s strategy, with the difference being the US doesn’t know how to create win-win partnerships. But where will the US get the money for this? US public debt is USD 23 trillion and its own infrastructure is old and needs modernisation. Putting money aside, the US also has a huge challenge of building trust, it is currently not seen as a partner of the region – not even Chile or Peru are close to the US anymore. Only Colombia, which is why China has not named Colombia as a strategic partner.”

“Putting money aside, the US also has a huge challenge of building trust, it is currently not seen as a partner of the region – not even Chile or Peru are close to the US anymore.”

Senior researcher, University of Rio de Janeiro, Brazil

The port executive concluded, “I find it hard to believe that the US will be able to compete with China in Latin America. At the moment, 14 countries have signed up to the US plan but the Belt and Road initiative has 19. Beyond that, actions speak louder than words, China has been active in the region for some time now, the US is just starting and we will all be watching to see how much actually materialises.”

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