Is there a Multilateralism that the US could Like?

Among the first acts on trade by the new US
Administration was to withdraw from the Trans-Pacific Partnership multilateral
trade pact. 
Trump’s opposition to TPP was well-known, but less
appreciated by his critics, is that the two leading Democrat candidates for the
presidency in 2016 were also opposed.   

Trump may not accept the Obama
Administration’s pivot to Asia, but he does seem to recognize the need preserve
the US presence and provide a counter-weight to the rise of China.
 
Moreover, it seems clear that it cannot be unilateral and successful.  Although
Trump talks the language of the post-WWI “America First,” he is not
the isolationist that is often depicted.  

With the Australian Prime Minister visiting
the US, it may not be surprising that cooperation is being discussed.
 
Prime Minister Turnbull has suggested that Australian’s A$2.53 trillion pension
savings fund (the 4th largest such pool of retirement savings in the world),
which invests infrastructure could be interested in providing some funding for
Trump’s new initiative.

There is a ten-year old regional security
group dubbed the “Quad.” 
It is composed of Australia,
India, Japan and the US.  A discussion has reportedly begun that
reanimates the alliance to include an economic function.  The preliminary
discussion is about launching an infrastructure initiative that offers an
alternative to China’s One Belt One Road.  Officials have been careful to
stress it is not a rival to China but an alternative.  Semantics. 

China’s Xi announced the 1B1R initiative in
2013.
  Last May, $124 bln was committed to the initiative.  It
has captured the imagination of many.  One US investment bank predicted it
would draw $1.3 trillion in investments over the next decade.  

The size of the Quad’s initiative is not known. 
It is still in the early stages.  But it will not have to begin from
scratch.  With considerable less fanfare, Japan is already engaged in a
substantial infrastructure initiative in Asia.  Japan funds more
infrastructure projects in Philippines, Myanmar, Singapore, Thailand, and
Vietnam over China.  China leads in Cambodia, Laos, Malaysia.  BMI
Research estimates that since 2000, Japan’s regional infrastructure investment
of around $230 bln has outstripped China’s $155 bln investment, counting
completed and ongoing projects.  

For China, the 1B1R initiative seems to serve
at least two purposes.
  First, it is about projecting its power and
influence.  Second, it is about absorbing its surplus capacity in various
industries.  Traditionally, the US financed global infrastructure to
export its savings, extend its influence, and build markets abroad.  For
Japan, it seems only marginally interested in expanding its influence, but
seems more interested in using is savings and spare capacity.   

However, China appears clumsier on the world
stage.
  Its loans are often collateralized with strategically
important assets and projected-related loans are at market rates without
transparency or environmental and social impact assessments. At the year, Sri
Lanka, for example, surrendered the strategically important Hambantota Port
because it was unable to service its debt to China.  China has secured a
Hong Kong-esque arrangement, where it has secured Hambantota with a 99-year
lease by forgiving $1.1 bln of Sri Lanka’s debt.  

Similarly, China lent billions of dollars to
Djibouti and established its first foreign military base there last year, which
incidentally is a few miles from the US naval base, which is the only permanent
US military facility in Africa.
  Due to its debt to China, Djibouti’s
was forced to lease land to its creditor.  Several other countries, including,
Turkmenistan, Argentina, Namibia, and Laos, have also fallen into China’s debt
trap.  Now Kenya may be forced into a situation like Sri Lanka and may
have to grant China a concession for its Mombasa port.  

Disclaimer

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email