In an effort to counter China’s Belt and Road Initiative, the U.S. has launched several initiatives aimed at enhancing its own strategic and economic objectives related to international infrastructure and development. The BUILD Act of 2018 led to the establishment of the U.S. Development Finance Corporation (DFC) in 2019, which has had a modest impact on funding infrastructure projects. However, U.S. firms still encounter significant barriers when attempting to engage in the global infrastructure landscape, hindering their participation and undermining broader American interests abroad.
Key challenges include corruption, reputational risks, insufficient returns, workforce issues, strategic planning, and supply chain complexities. These obstacles limit the ability of U.S. companies to effectively compete in infrastructure projects, especially against more aggressive Chinese counterparts. The landscape has shifted dramatically, as demonstrated by the recent announcement that China Communications Construction Company (CCCC) will partner with the Georgian government to develop Anaklia, its first deep-sea port on the Black Sea, despite earlier U.S. involvement through the New Jersey-based Conti Group.
Conti and other American firms were initially selected for the project in 2016 but withdrew following a series of criminal investigations into Georgian partners, leading to the cancellation of the U.S. consortium’s agreement with the government. This scenario illustrates the precarious nature of navigating the intricate business and judicial environments abroad, rife with corruption.
Corruption remains a significant barrier for U.S. firms, particularly in public procurement processes, which are notorious for inefficiencies and vulnerabilities. According to the IMF, there is an approximate global efficiency gap of 30% in infrastructure spending relative to the resulting quality and coverage. U.S. firms, representing only 6.1% of the international construction market in 2022, lag behind European and Chinese competitors, primarily due to this corruption barrier, as highlighted in an OECD survey of infrastructure investors.
With Chinese firms steadily strengthening their foothold in emerging markets and developing economies (EMDEs), it’s crucial for the U.S. to bolster its efforts against global corruption. Policies aimed at modernizing and resourcing U.S. initiatives in combating corruption have been introduced, but they are not enough. Initiatives like the State Department’s “Galvanizing the Private Sector as Partners in Corruption” should be expanded to equip U.S. businesses with the tools needed to navigate these complex challenges effectively.
Investing in internationally significant ports and maritime infrastructure not only benefits the U.S. strategically but also supports global economic relationships essential for trade. The ability to engage in infrastructure development is critical for the U.S. to partner with other nations on sustainable growth and climate initiatives.
In summary, as U.S. companies continue to face significant hurdles in participating in global infrastructure projects due to corruption and inefficiencies, it becomes imperative for U.S. policy to evolve further. Strengthened support systems and resources can empower U.S. firms to engage successfully in the international arena. Consequently, broader investments in infrastructure that align with U.S. economic and strategic interests are not only beneficial but necessary for enhancing global partnerships and achieving sustainability goals.
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