The Latin American development bank has become the last battleground in the fight for global influence between the United States and China, after its leader warned the provider had helped Beijing strengthen its presence in the region.
Mauricio Claver-Carone, the head of the Inter-American Development Bank, said Washington had allowed China to gain an economic foothold in Latin America by underfunding the lender for years and keeping an eye on how Beijing had used its membership in the institution to win a share disproportionate number of contracts.
“For decades, the United States, across the political spectrum, has underestimated the IDB,” Claver-Carone said in an interview with the Financial Times. “As a result, China has filled this financial gap to its advantage. We hope this lesson has been learned.”
The IDB, founded in 1959, is one of the world’s oldest development banks and a major power player in Latin America, earning nearly $ 13 billion in loans last year. China is one of 48 members of the Washington-based institution and joined in 2009, making it eligible to submit a bid for provider-funded projects.
Claver-Carone, a former Trump administration official, last year became the first american to lead the bank after an aggressive campaign backed by Donald Trump and opposed by Joe Biden. He then pushed for the US to support a capital increase for the institution to offset China’s influence in Latin America.
To support his argument, Claver-Carone pointed to figures showing that China had won a large share of IDB-funded contracts over the past decade despite being the bank’s smallest shareholder, with a 0.004 stake percent.
Chinese engineering and construction companies have won $ 1.7 billion in IDB-funded contracts between 2010 and 2020, making them the fourth largest recipient of deals behind Brazil, Argentina and the United States. Peru, according to bank data.
During the same period, U.S. companies – the IDB’s largest shareholder with a 30 percent stake – won $ 249 million contracts, underlined as China has used its small stake to expand its presence in Latin America.
The focus on the IDB and China, which has also made billions of dollars in direct loans to countries in the region to finance infrastructure projects, comes as Beijing faces increased scrutiny on its global economic influence in Latin America, Africa and Asia.
Claver-Carone’s push for a capital increase is supported by some senior Democrats, including Bob Menendez, chairman of the Senate Foreign Relations Committee, but is not universally supported by party lawmakers.
Menendez told the FT that China had “exploited the IDB” for its own economic gain and said that the fact that it contributed less than half of the 1% of the IDB’s core funding raised “serious concerns”. questions about how China has maneuvered to become one of the bank’s main supply partners. ”
The Senate is currently discussing a package of Chinese bills that would increase scrutiny of Chinese economic practices in Latin America, including a provision to ask U.S. intelligence agencies to examine how Beijing influences decisions in institutions. such as the IDB, the World Bank and the IMF.
The legislation in question would also authorize the Biden administration to request a US-funded capital increase for the IDB.
A person briefed on the debate said the Biden administration was keeping an open mind on a capital increase pending the conclusion of an IDB study commissioned earlier this year.
Some lawmakers, including Patrick Leahy, the Democratic leader of the Senate appropriations committee, oppose growth. But others say America must do more to counter Beijing’s influence.
“As Beijing continues to exploit vulnerable nations through debt-trap diplomacy, we must remain vigilant and protect our interests in multilateral institutions such as the IDB,” Marco Rubio, the FT, told first Republican on the Senate intelligence committee.
Mark Lopes, who was the U.S. representative to the IDB council from 2015 to 2018, said Washington had to take some of the blame for allowing China to become an investment player forever. largest in Latin America.
Lopes added: “The US has been watching with concern for a long time about China’s introduction into Latin America, but the countries have not only had a better offer. The US has historically underestimated the IDB.”
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