China’s ‘One Belt One Road’ programme has amplified the role of logistics infrastructure in power politics. It appears that the US has woken up to this and is offering its own version of logistics driven development.
In a speech on Monday, the US Secretary of State Mike Pompeo stated that “I am here to say emphatically that the Trump administration is expanding our economic engagement in the Indo-Pacific . . . America will be there and American businesses will be there. The American people and the whole world have a stake in Indo-Pacific peace and prosperity. That is why the Indo-Pacific must be free and open.”
The State Department’s PR staff have briefed that this is code for offering nations in the Pacific, particularly India, an alternative to China for the financing and building of logistics infrastructure, as well as digital and energy assets.
The initial funding of US$113m offered by the US was described by Mr Pompeo as a “just a down-payment on a new era”.
One of Mike Pompeo’s points of emphasis was that the US does not resort to secrecy or opaque financing, rather “thanks to [our] history of economic and commercial engagement, America’s relationships throughout the Indo-Pacific today are characterized by mutual trust and respect. American friendship is welcomed, and American businesses are recognized for their ingenuity, reliability, and honesty”.
In what was quite an aggressive speech, this was clearly aimed at accusations against China of less than open conduct in the negotiations around the building of major transport projects such as a Malaysian railway project which the incoming Malaysian Government has viewed as too expensive and insufficiently accountable.
The speech was given as part of a wider conference on India-US relations. India’s infrastructure needs remain very large. Although some progress has been made on new container terminals and airports a huge amount remains to be done. The Indian Government has suggested that the country has what it calls an ‘infrastructure deficit’ requiring a further US$4.5 trillion in investment.
Faced with such a requirement India has felt compelled to take the opportunity that China’s ‘One Belt One Road’ initiative offers and China is eager to enter such a large market. This is despite India and China perceiving each other as ‘strategic rivals’. That said, India is clearly looking for other options and a closer relationship with the US is one of them. For such a relationship to prosper the US will have to provide a lot more than US$113m and India will have to at least attempt to address fundamental weaknesses in its planning system. If this is done, then the opportunity for the creation of very large infrastructure projects appears significant.
Source: Transport Intelligence, July 31, 2018
Author: Thomas Cullen
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