Beijing conducts a study on the strength of the Latin American development bank

The Latin American development bank has become the last battleground struggle for global influence Between the US and China, the chief warned that the donor had helped increase Beijing’s presence in the region.

Mauricio Claver-Carone, recently installed head American Development Bank, said Washington had given China permission to obtain economic finance in Latin America by subcontracting lenders over the years and turning a blind eye to how Beijing used membership in the organization to gain disproportionate proportions of contracts.

“For decades, the U.S., across the political spectrum, has underestimated the IDB,” Claver-Caron said in an interview with the Financial Times. “As a result, China has filled this financial gap for its own benefit. Fortunately, that lesson has been learned now. ”

The IDB, founded in 1959, is one of the oldest development banks in the world and a significant driving force in Latin America, lending nearly $ 13 billion last year. China is one of 48 members of the Washington-based organization and joined in 2009, giving it the right to bid for projects funded by the lender.

Claver-Carone, a former Trump administration official, became one last year the first American to run the bank after an aggressive campaign backed by Donald Trump and against Joe Biden. Since then, the U.S. has pushed for a capital increase to offset China’s influence in Latin America.

The US has long been concerned about China’s path to Latin America, but the countries have not had a better offer

In support of his argument, Claver-Caron noted that figures that showed a large share of IDB-funded contracts over the past decade, despite being the smallest shareholder in the bank, showed figures with a 0.004 percent stake.

Chinese engineering and construction companies won $ 1.7 billion in IDB-funded contracts between 2010 and 2020, according to bank data, the fourth largest recipient of agreements behind Brazil, Argentina and Peru.

At the same time, US companies – the largest shareholder in IDB had a 30 per cent stake – won $ 249 million in contracts, as they point out. China it has used its small shareholding to expand its presence in Latin America.

Attention to the IDB and China has provided billions of dollars in direct loans to countries in the region to finance infrastructure projects. increased study Above its economic impact in Latin America, Africa and Asia.

Claver-Caron’s push for a capital increase is backed by some old 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 economic gain and said that less than half of the IDB’s basic funding had been given “raised serious questions about the way China has maneuvered.

The Senate is discussing a package of Chinese bills that would encourage the study of China’s economic practices in Latin America, including allowing U.S. intelligence agencies to examine how decisions are affecting Beijing in organizations like the IDB, the World Bank and the IMF.

The legislation under consideration would allow the BID administration to request a capital increase for US-funded IDBs.

One person who reported on the discussion said that the Biden administration is open-minded about open capital until the end of the BID study commissioned this year.

Some lawmakers, including Senate Democratic Committee Chairman Patrick Leahy, are opposed to the rise. Others say the U.S. needs to do more to address the impact of Beijing.

“While Beijing continues to exploit its weak nation’s debt through diplomacy, we need to be vigilant and protect the interests of multilateral organizations like the IDB,” Republican intelligence chief executive Marco Rubio told FT.

Mark Lopes, who served as a U.S. representative on the IDB committee from 2015 to 2018, said Washington must take the blame for allowing China to become a major driver of investment in Latin America.

Lopes added: “The US has seen with great concern the path that China has taken in Latin America, but the countries have not had a better offer. The US has historically underestimated the IDB.”

Continue Demetri Sevastopulo On Twitter

Trade secrets

The FT has updated its Trade Secrets, which is a must-read daily brief on the changing face of international trade and globalization.

Register here to understand which countries, companies and technologies make up the new global economy.