White House sees new $ 150 million loan in Ecuador as a way to compete with China
The Biden administration this week announced a $ 150 million loan to support women-owned businesses in Ecuador, a move the White House sees as a model for the kind of projects the United States plans to support then. they are launching a new initiative to compete with China Belt and Road Global Investment and Lending Program.
The US loan goes to Banco de la Producción, which officials say will ultimately be used to help fund women-owned and run businesses in Ecuador.
“We are focused on projects that exemplify our values,” Deputy National Security Advisor Daleep Singh said. “So women-owned businesses in the developing world need help, and we are going to provide that help.”
Singh spoke with NPR after returning from a trip to Ecuador, Colombia and Panama to discuss potential investment opportunities with their presidents and prime ministers.
At the Group of Seven summit in June, President Biden convinced members of the group to join the new initiative, dubbed Build Back Better World, to counter China’s growing influence by funding major infrastructure projects in the world.
China has made large loans across Latin America
China has long been willing and able to deliver cash quickly to developing countries in ways that the United States has not.
Leaders in Latin America and other parts of the developing world have taken out big loans from China to build roads, telecommunications equipment and energy systems.
The US $ 150 million loan, for example, is quite small compared to the more than US $ 18 billion that China has already provided in loans to Ecuador since 2005, according to data compiled by the ‘Inter-American Dialogue and the Global Development Policy Center at Boston University. .
In total, the Development Bank of China and the Import-Export Bank of China have granted more than $ 137 billion in loans to countries in Latin America and the Caribbean since 2005, according to the data.
But the United States and others argue that the loans often come with questionable financial terms that can leave countries with debilitating debt.
“China tends to extend the terms of its loans, rather than cancel debt repayment, which creates long-term financial dependencies,” according to a January report from the Congressional Research Service.
Singh says the US-led alternative will demonstrate how democracies are “still the best way to get results” at home and abroad.
Biden’s call to invest “the right way”
US and G7 projects will focus on climate, health and safety, and gender equality.
In his speech last week at the United Nations General Assembly in New York, Biden pledged to use American resources to invest “in the right way.”
“For example,” he said, “there is a huge need for infrastructure in developing countries, but infrastructure that is poor quality or that fuels corruption or exacerbates environmental degradation can end up. contribute to greater challenges for countries over time ”.
The US-backed loan of $ 150 million was made through the International Development Finance Corporation, whose mission is to provide loans to projects abroad.
Singh said it was one of the few funding mechanisms the United States plans to use to fund new projects when the initiative officially launches early next year.
The project was announced in Quito, the capital of Ecuador, where Singh and other U.S. leaders met with President Guillermo Lasso and key ministers.
Singh has also traveled to Panama and Colombia to research potential projects. In Colombia, for example, he spoke with President Iván Duque Marquez and members of his cabinet about efforts to increase vaccine production capacity. They reviewed the regulatory climate and the necessary infrastructure support Colombia would need, Singh said.
“President Duque is keen to leave a legacy during his last year in office, such as a vaccine manufacturing presence in Latin America,” Singh said. “And I think with our tools and our experience and our desire to diversify medical supply chains globally, there is a very real possibility that a project like this could come to fruition.”
The first trip was to Latin America, but Singh said the administration was also looking for projects in Africa, Asia and other parts of the developing world.