Last November, the United States, Japan, and Australia jointly announced the formation of an alliance called the Blue Dot Network, a plan ostensibly designed to counter China’s multi-trillion-plus dollar Belt and Road Initiative, the huge infrastructure plan that Beijing has championed for more than a decade to cement its global influence.

“The development of critical infrastructure –when it is led by the private sector and supported on terms that are transparent, sustainable, and socially and environmentally responsible – is foundational to widespread economic empowerment,” said US State Department official David Bohigian in announcing the initiative at a Bangkok conference. “Through Blue Dot Network, the United States is proud to join key partners to fully unlock the power of quality infrastructure to foster unprecedented opportunity, progress, and stability.”

Unfortunately, beyond the name and a stated mission to give private investors including pension funds the chance to do well by doing good – investing in the global need for schools, railways, ports, and other infrastructure – the Blue Dot doesn’t seem to exist. Its website, under the US Department of State, is impressive until you click on any of its myriad sections and you only get a list of the operations of the state department. There seems to be no Blue Dot activity, no chairman, no directors, no staff.

“You know, to truly speculate, I think the Japanese and the Australians lined up under pressure to do something nice for the Trump administration, but they haven’t done anything to implement it,” said a Washington, DC source who asked not to be identified. “They’re in a balancing act with the US and China, and they don’t want to piss anybody off.”

The US’s ostensible presence in the network is led by the Development Finance Corporation or DFC, which was cobbled together under the state department from two existing agencies, the Overseas Private Investment Corporation, or OPIC, and the Development Credit Authority, by bipartisan legislation under the cumbersome title of the “Better Utilization of Investments Leading to Developments,” or BUILD Act, sponsored by Washington Democratic Rep Adam Smith and Ted Yoho, a deeply conservative Tea Party congressman from Florida.

No one from either the Blue Dot Network or the Development Finance Corporation returned telephone calls or emails asking for an interview, or from Rep. Smith’s office in either Washington, DC or Seattle.

The Development Finance Corporation earned immediate controversy, however, when Adam S. Boehler, a former college roommate of Presidential son-in-law Jared Kushner, was named chief executive officer, although sources in Washington point out that he does have experience as a development specialist.

On July 22, Eastman Kodak, once the world’s leading photography equipment and film manufacturer, announced the DFC had authorized a US$765 million grant to manufacture products to combat the Covid-19 pandemic, which has taken the lives of 198,000 people in the United States and sickened more than 6.7 million.

Eastman Kodak, according to near-unanimous consensus by analysts, lost its position because it was never able to adapt to the new technology that enabled smartphones to take pictures.

Despite the fact that it has never had anything to do with epidemiology production, the letter of intent signed by Boehler meant Eastman Kodak would receive the second-biggest grant from Operation Warp Speed, the administration’s vaccine effort, after the Gaithersburg, Md. Firm Novavax, which received US$1.6 billion, and more than the third-biggest recipient, Emergent Biosolutions, which received US$628 million, or Moderna, US$486 million, and Johnson & Johnson, which received US$456 million.

Nor, in fact, did the production of a vaccine have anything to do with the DFC’s role of assisting US companies seeking development projects in emerging markets in areas where funding is scarce. According to a Reuters report, Eastman Kodak was “gearing up to produce ingredients for a number of generic drugs, including the antimalarial drug hydroxychloroquine that President Trump has touted in the treatment of coronavirus.” Hydroxychloroquine has since been found to not only have no therapeutic value in treating Covid-19 but potentially could be harmful.

Unfortunately, one day before the Trump administration announced the grant to Eastman Kodak, the Kodak board granted its executive chairman, James Continenza, options for 1.75 million shares “as the result of what a person familiar with the arrangement described as an ‘understanding’ with its board that had previously neither been listed in his employment contract nor made public,” also according to Reuters. That would have meant Continenza would reap the chance to make tens of millions of US dollars.

That seems to have brought the whole thing to a stop, with the DFC announcing that it had only signed a letter of intent with Kodak, not an actual contract. It has been in limbo since. Requests to Eastman Kodak’s publicity directors went unanswered.

The birth of the DFC

OPIC “had the reputation of being a small, relatively-efficient quasi-government agency,” said George Ingram, a Senior Fellow specializing in the global economy and development at the Brookings Institution in Washington, DC in a telephone interview. Nonetheless, it was under fire for years from conservatives who believed it was a welfare program for companies doing business overseas, until Yoho, one of the most dyed-in-the-wool conservatives, was convinced it could become a counterweight to the BRI.

“It is not the answer to the Belt and Road,” said Ingram. “The BRI is the trillions. OPIC was in the billions. It is a false argument which some of us were happy to hold forth so that we could achieve the broader purpose of making the new DFC a more effective agency by giving equity authority via transferring the Development Credit Authority from USAID, grant authority, and give it more flexibility.”

Its new – newly emphatic – role, however, is to counter the Belt and Road via the idea that private investment in roads, bridges, railways, and other infrastructure could supplant conventional government-funded projects in the developing world. Accordingly, the BUILD act doubles the investment cap to US$60 billion for equity financing, technical assistance, and feasibility studies – a long way behind China’s multi-trillion dollar funding.

Unlike OPIC, the DFC will display a “preference” for U.S. investors, rather than a requirement, thereby allowing for partnership opportunities with foreign investors, with a priority for low and lower-middle-income countries.

One of the concepts behind the Blue Dot is to make sure that construction, procurement and digital standards in projects to be funded conform to western, and particularly American standards, meaning western, and particularly American companies have a leg up in the bidding.

But according to Woo Wing Thye, an economics professor at the University of California, Davis, it is likely to be a non-starter, certainly in the first Trump term, and an unlikely success if there is a second one, since like so many of the administration’s gambits it is built on the philosophy of making money for American companies rather than the intrinsic nature of the projects themselves.

The DFC’s current list of projects is relatively minuscule in relation to the enormous spending by the Chinese, for example, the gigantic BRI project in Pakistan which includes the Gwadar deep seaport, which gives China access to the Indian Ocean via a 3,900 km highway from Yunnan Province and which includes a wide range of other infrastructure from electricity generation to airports to oil pipelines to urban public transport. Financed through China’s Ex-Im Bank, its cost has ballooned from US$20 billion to US$82 billion and virtually beggared the Pakistan government.

“The BRI is not constrained by geography or even gravity,” said Jonathan Hillman, a senior fellow at the Washington, DC-based Center for Strategic and International Studies, in a study published in April 2018. “Since its announcement in 2013, [its] vision has stretched into the Arctic, cyberspace, and outer space. Countries have signed onto the BRI in places as far-flung from China as Central America.”

By contrast, the DFC’s biggest project for the current quarter, according to the agency’s website, is US$49 million in funding in Iraq to create an oil production process facility. Another US$40 million project is to rehabilitate a historic building in the historic center of Panama City.

In all, according to the DFC assisted investment of US$3.6 billion in the most recent fiscal quarter, which the agency said is the biggest quarter it’s ever had. As near as can be told, none of that is channeled through the Blue Dot Network, whose name is taken from the title of astronomer Carl Sagan’s book “A Pale Blue Dot”. And at that rate, it is going to take a long time to catch up with China and the Belt and Road Initiative.

This article is among the stories we choose to make widely available. If you wish to get the full Asia Sentinel experience and access more exclusive content, please do subscribe to us.