Both the Indian and foreign media coverage of US President Donald Trump’s India visit went on and on about his mention of Delhi riots and Pakistan – but almost entirely overlooked the reference to the Blue Dot Network, which has given rise to growing unease in Beijing.
The mellifluous language of the joint statement centres on a ‘Comprehensive Global Strategic Partnership’ tick boxing the expected military, space, and energy cooperation, as well as concern about the high debt situation in developing countries and the need for “responsible, transparent and sustainable financing practises”. That’s diplomatic language to refer to the dire situation faced by countries like Sri Lanka and the Maldives due to heavy debts to China.The next few lines refer to the Blue Dot Network as a “a multi-stakeholder initiative that will bring governments, the private sector, and civil society together to promote high-quality trusted standards for global infrastructure development”.
That might seem rather tame, but here’s the carrot. The Asian Development Bank (ADB) expects that infrastructure development needs in the Indo-Pacific alone could be worth about $1.7 trillion per year through 2030. That’s what the Chinese are after. And now it seems, everyone else wants a slice of the pie, and the influence that goes with it.
Blue Dot Network: Making it work
The Blue Dot Network was formally launched three months ago by the US, Australia and Japan – all part of the ‘Quad’ where India is the fourth member – and is an across-the-board certification process for all aspects related to an infrastructure project and centred on transparency and sustainability. To explain that, a little backing up is needed to June 2019, when Department of Defense (DoD) published its ‘Indo-Pacific Strategy Report’. This had some 91 references to China, and one section on the newly set up ‘US International Development Finance Corporation’ (DFC) with the mandate to mobilise private finance for infrastructure investment in small countries.
The DFC doesn’t use taxpayers’ money. Its budget for 2021 is a mere $800 million, and its website notes that “the DFC advances American foreign policy and American commercial competitiveness…. And also helps American businesses gain footholds in many of the world’s fastest-growing markets”. With Congressional support, it has since put together $60 billion of private money. That’s a lot.
The DoD expects this effort will involve ‘regional partners’, quoting PM Narendra Modi among others as those championing free choice in the region. This model is already in action. In November, a US-Japan statement announced a $10 billion investment in LNG, involving expediting private money. Another project deals with ‘smart cities’ in ASEAN countries. In India, it has already invested in education. Yet another provides training to procurement professionals from Maharashtra. That’s just assistance. Now the US would like India to be a partner, and the DFC is going to have a permanent presence in the country.
Partnering in the region
Move on to the January 2020 briefing by officials from the East Asia and Pacific Affairs, and the South and Central Asia desks, just weeks ahead of President Trump’s visit to India. More details emerge on the ‘development’ scaffolding that supports the Asia Pacific security strategy. That included additional US initiatives to provide legal and technical services to help Indo-Pacific countries evaluate contracts and debt sustainability. This unsurprisingly includes a project in Maldives, reeling under Chinese debt, through the United States Agency for International Development (USAID).
This advisory process is interesting to say the least. Earlier, advice from an unnamed group of US experts led to Myanmar renegotiating a deal with China on the deep-water Kyaukpyu port much to Beijing’s annoyance. The US-India joint statement states that the USAID is now to partner with India’s Development Partnership Administration for cooperation in third countries.
Beijing knows the danger
The whole effort is being undertaken by a multitude of US departments with separate budgets, and acronyms. But the objective is clear: to push back on Chinese influence in the region. That is also an objective for India’s security managers, but not one that New Delhi can do much about. Given the reality of proximate Chinese power, officials have preferred to keep the door open on the Belt and Road Initiative (BRI), even while going ahead with as much regional connectivity as possible under a limited budget. Indian enterprise has not stepped up to take the slack either.
In sum, this new initiative delivers on two fronts. First, in pushing back rising Chinese influence; and second, it addresses India’s grouse that the ‘Indo-Pacific’ thrust is far too focussed on security. This initiative is about development, to harness what US officials estimate at about $70 trillion of potential investment waiting in the wings.
There is no doubt that Beijing is well aware of the dangers, with The Global Times dismissing the Blue Dot Network as ‘delusional’ in its ability to oppose the BRI. The US-India joint statement will most certainly be scrutinised closely by Beijing for anti-China content. But even China can hardly oppose a private sector thrust to put a red dot in the neighbourhood, even if there’s a blue one hovering alongside.
The author is former director, National Security Council Secretariat. Views are personal.