China Buys Friends With Ports and Roads. Now the U.S. Is Trying to Compete.

ELEFSINA, Greece—An aging shipyard here has a new suitor sizing it up for investment: the U.S. government.

To counter China’s rising global economic influence, Washington has taken a new direction with foreign assistance. Rather than just lend money or promote trade, as in recent decades, the U.S. is now investing dollars overseas to advance American national-security interests. It wants ports, cellular networks and other strategic assets to stay in friendly hands.

At the forefront of this effort is an agency Congress overhauled in 2019, the International Development Finance Corp., or DFC.

“It’s a very significant investment tool that we have to compete” against China, said Rep. Michael McCaul, the top Republican on the House Foreign Affairs Committee.

The Trump administration was quick to use the DFC, discussing purchasing the shipyard with Greek officials and offering loans to get Ethiopia to shun 5G cellular equipment from China’s Huawei Technologies Co.

The Biden administration wants to go further, to offset Beijing’s vaccine diplomacy and other efforts. The Group of Seven wealthy democracies last month announced a new initiative, called Build Back Better World, that they promised would unleash hundreds of billions of dollars for projects in needier countries. It was designed as an explicit alternative to Chinese infrastructure offerings.

President Joe Biden and G-7 leaders arrive for a photograph during a June meeting where they announced the Build Back Better World initiative.


jack hill/Agence France-Presse/Getty Images

U.S. officials say the DFC is the initiative’s most powerful tool. Its $60 billion investment cap exceeds the combined resources of its counterparts in the other six nations. “We’re going to invest more this year than any time in the agency’s history, which reflects the president’s vision,” Chief Operating Officer

David Marchick


U.S. leaders say the DFC offers financing with fewer strings attached compared with Beijing, whose loans can come with high interest rates, hard collateral such as ports and requirements to use Chinese suppliers. The DFC aims to spur private-sector investment, and not just for American companies.

The goal of the DFC and its G-7 counterparts is “to offer a better product than the opaque, extractive and coercive terms” of Chinese-backed projects, said deputy national security adviser Daleep Singh, the White House official working closely with the DFC.

China’s new aggressiveness on the world stage has refocused Washington’s foreign-assistance game. The DFC resulted from a bipartisan effort rare today, broadly supported in Congress and by both the Trump and Biden administrations.

Foreign assistance in developing countries is inherently risky, and the DFC could yet back out of the Greek and Ethiopian projects after each hit hurdles. Congress is still debating which countries should qualify for funding. The DFC was briefly pulled into a messy effort last summer to fund Covid-19 pharmaceutical-chemical production at Eastman Kodak Co., but has otherwise focused overseas.

The DFC is the latest incarnation of postwar American foreign assistance, which included the Marshall Plan that helped rebuild Europe and the U.S. Agency for International Development, which provides economic and disaster assistance to developing countries. Washington launched the programs to strengthen ties with allies, halt communism’s spread and open markets for U.S. companies.

The once-bustling Elefsina shipyard, founded in 1968, now sits largely idle.


Myrto Papadopoulos for The Wall Street Journal

After the Soviet Union collapsed, the aid mission broadened, with initiatives such as the President’s Emergency Plan for AIDS Relief launched in 2003 by President

George W. Bush

to improve healthcare in sub-Saharan Africa. Some congressional critics say U.S. aid lost focus. It sharpened again with China’s Belt and Road initiative. First pitched in 2013 as an effort to build a modern version of ancient Silk Road trading routes, the initiative includes a global network of ports, railways and other projects largely built by Chinese companies and using at least $400 billion in funding from government-run banks.

Sen. Chris Coons (D., Del.) saw Beijing’s soft power win friends. As a member of a foreign-relations subcommittee focused on Africa, he visited a Benin hospital where the U.S. funded medicine and training.

“But if you were the Beninois walking into the hospital, you wouldn’t know that,” Mr. Coons said. A sign in Chinese outside made it clear that a Chinese company had refurbished the hospital.

Such experiences, and word from African leaders about Chinese infrastructure pitches, persuaded him to champion legislation offering a U.S. alternative to Belt and Road. It won bipartisan support. Democrats wanted to strengthen U.S. foreign-assistance programs. Republicans in Congress and the Trump administration saw a chance to take on Beijing.

Congress passed the BUILD Act, led by Sens. Coons and

Bob Corker

(R., Tenn.), in 2018. The law transformed an existing assistance agency, the Overseas Private Investment Corp., into the DFC.

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The new agency opened doors in December 2019, chaired by the secretary of state. The DFC’s investment cap—essentially a credit-card limit—rose to $60 billion, double that of the old agency. And it isn’t required to back projects involving only American companies. That made it easier to target telecommunications projects, considered vital. The U.S. lacks a major international player in the industry.

The DFC receives an annual federal appropriation for administrative and other expenses. The investment fund of the DFC and its predecessor has never turned a fiscal-year loss, but it has no legal requirement to make a profit. Its mandate is to balance returning money to U.S. taxpayers with foreign-policy and national-security goals, which include countering authoritarian governments and promoting economic growth in developing countries.

Early trials

One of the DFC’s first initiatives, announced in late 2019, was agreeing to lend up to $190 million to a Nevada-based company to create the world’s longest subsea fiber-optic cable, between the U.S., Singapore, Indonesia and Palau, offering an alternative to Huawei-built undersea networks.

Adam Boehler,

a Trump administration appointee who served as the DFC’s first chief executive, said it was easy for him to reach leaders of any developing country.

“Countries are more excited to meet the head of DFC than the secretary of state,” Mr. Boehler, who stepped down in January amid the administration transition. “It’s hard money.”

The DFC’s potential quickly emerged in Greece, which was too wealthy to qualify initially for DFC assistance. Chinese shipping giant Cosco in 2016 bought a 51% stake in the Piraeus port outside Athens for the equivalent of more than $310 million, an investment that Chinese President

Xi Jinping

dubbed the “dragon’s head” of the Belt and Road initiative in Europe.

Chinese President Xi Jinping, shown here with Greek Prime Minister Kyriakos Mitsotakis, called a 2016 investment in a port outside Athens by Chinese shipping giant Cosco the “dragon’s head” of the Belt and Road initiative in Europe.


Orestis Panagiotou/Press Pool

Greek satisfaction with the deal soon waned, after China started exerting political pressure to support it in international disputes. Athens residents saw little economic gain from Cosco’s spending inside the vast port facility.

U.S. Ambassador to Greece

Geoffrey Pyatt

saw a role for the DFC in the country, particularly in the Elefsina shipyard a short drive from Piraeus. Greek officials said Chinese buyers might try to snap up the shipyard, but prefer an American investor.

“It’s important for us that the U.S. presence in this area would be a significant one,” said Adonis Georgiadis, Greece’s minister of development and investments, in an interview. He said the government must help Greek shipyards and that “we cannot give everything to China.”

The U.S. ambassador to Greece, Geoffrey Pyatt, center, helped persuade Congress to add that country to the DFC remit.


Elefsis Shipyards

Just as the DFC was opening shop in late 2019, Amb. Pyatt successfully lobbied Congress to add Greece to its remit. He connected Mr. Boehler, Greek officials and Onex SA, a Greek-American industrial group that wanted to buy Elefsina.

Onex Chief Executive Panos Xenokostas said he wants American assistance because Beijing’s subsidies make Chinese companies tough competitors. “The funding for Chinese companies in the shipyard business is massive,” he said in an interview.

Onex last year struck a provisional agreement with the shipyard’s private shareholders, brokered by the government, to buy and modernize the facility. It pledged more than $300 million over 10 years to cover investments and debts. The deal is being reviewed by a Greek court, which could rule on it this fall.

The DFC discussed a long-term loan worth roughly tens of millions of dollars, said former DFC official Caleb McCarry. Current DFC officials say the project remains uncertain because of concerns about its financial feasibility.

A guard walks in the Elefsina shipyard’s empty Floating Dry Dock 3, which is in need of repair.


Myrto Papadopoulos for The Wall Street Journal

A mechanic takes a break outside the control room of the only functioning dry dock.


Myrto Papadopoulos for The Wall Street Journal

Representatives for China’s foreign ministry didn’t respond to a request for comment for this article. Chinese Vice Foreign Minister

Le Yucheng

said earlier this month that the new U.S. push to finance infrastructure projects only proves that China’s Belt and Road initiative “is the right path and the path of the future.”

Another deal that Mr. Boehler, a healthcare entrepreneur and former Health and Human Services Department leader, struck was with Ethiopia. The East African country is important for U.S. efforts against terrorist groups linked to al Qaeda and Islamic State.

Visiting in 2019, Mr. Boehler asked Prime Minister

Abiy Ahmed,

who had just won the Nobel Peace Prize, about infrastructure opportunities. Ethiopia was opening its telecom market, long controlled by a government monopoly with unreliable service, to private wireless carriers.

The country had been using telecom equipment from China’s Huawei and

ZTE Corp.

From 2006 to 2013, the two lent $3.1 billion to Ethiopia for telecom projects, according to the China Africa Research Initiative and Boston University Global Development Policy Center. The U.S. considers Huawei and ZTE spying threats, an allegation the companies deny.

Mr. Boehler learned that a U.K. foreign-aid agency was in talks to finance an Ethiopian bid led by London-based wireless giant

Vodafone Group

PLC. He asked his British counterpart and Vodafone if the DFC could pitch in.

Adam Boehler, left, the DFC’s chief executive under President Donald Trump, during a visit to Kosovo in 2020.


valdrin xhemaj/epa/Shutterstock

Mr. Boehler said Vodafone was considering using Chinese equipment because it costs less than U.S.-approved alternatives from Sweden’s


AB, Finland’s

Nokia Corp.

and South Korea’s

Samsung Electronics Co.

“We’d love to do this, but can you rip out the Huawei equipment?” Mr. Boehler said. Non-Chinese equipment would cost about $400 million more, he said. The DFC agreed to subsidize that by lending up to $500 million at an interest rate below commercial terms.

Vodafone faced only one other bidder for an Ethiopian wireless license: South Africa’s

MTN Group,

a longtime Huawei and ZTE user whose proposal was backed in part by the Chinese government-owned Silk Road Fund, which was designed to help finance Belt and Road projects.

In May, Ethiopia announced only one winner: the U.S.-backed consortium.

The deal might not shut the door on Chinese gear. Vodafone, which isn’t obligated to follow through on the loan, said it is still finalizing which equipment suppliers to use.

And it is unclear whether the U.S. wants to go through with the loan either. Secretary of State

Antony Blinken

has criticized Ethiopia’s government for not allowing humanitarian access to the country’s Tigray region, where he said there were credible reports of human-rights abuses amid a violent conflict.

Ethiopia signs a telecom licensing agreement with a U.S.-backed consortium in June.


eduardo soteras/Agence France-Presse/Getty Images

A DFC spokeswoman said it and other U.S. agencies were monitoring the situation in Tigray “and will carefully consider its impact on any potential financing of the Vodafone consortium.” An Ethiopian government spokeswoman said humanitarian groups have had access to the region for months, and that the government is focused on improving people’s lives through initiatives like the telecom project.

Sen. Coons isn’t surprised the DFC has faced challenges. “Doing development and infrastructure investment in the developing world is inherently risky—that’s the point,” he said.

New administration

The Biden administration considers the DFC one of its most powerful foreign-assistance tools because of its large investment cap and flexibility to offer loans, equity financing, grants and insurance, said Mr. Singh, the deputy national security adviser. He said the White House is focusing the DFC on four areas: health, technology, climate change and gender equality.

In March, after President Biden met with the leaders of Australia, India and Japan as part of an alliance known as the Quad, the White House asked the DFC to collaborate with the allies on a health initiative. The DFC asked the U.S. Embassy in India, one of the world’s biggest vaccine-making countries, to identify pharmaceutical companies it could join with.

Indian health workers administer Covid-19 vaccines in Beawar.


Sumit Saraswat/Zuma Press

That’s how Mahima Datla ended up on a call with Mr. Marchick and other DFC officials. “They said, ‘If you had access to capital, how many more vaccines could you make?’ ” recalled Ms. Datla, managing director of vaccine-manufacturer Biological E Ltd.

Biological E had already agreed to produce at least 600 million doses of

Johnson & Johnson’s

one-shot Covid-19 vaccine, at a pace of 50 million a month. She said a DFC loan would enable her to add a third assembly line to her Hyderabad facility and produce 100 million doses a month.

Ms. Datla and DFC officials agreed to a provisional deal in less than a month and hope to complete it soon. The agreement calls for Biological E to produce at least one billion vaccine doses by the end of 2022.

DFC officials say that while advancing healthcare in the developing world is the main motivation behind the potential investment, providing an alternative to Beijing’s vaccine diplomacy is also a factor.

Write to Stu Woo at and Daniel Michaels at

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Source: WSJ – US News

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