PARALLEL PATHS, DIVERGENT DESTINIES: Building a US Presence in the Belt and Road Dominated Latin American Infrastructure Market

Abstract

In November of 2017, Panama became the first Latin American nation to sign on to China’s Belt and Road Initiative (BRI). By 2022, ⅔ of the region had followed suit, with China’s LAC (Latin America and the Caribbean) FDI (foreign direct investment) stock increasing by 188% in the same years. In response to this encroachment into the Western Hemisphere, the US passed the BUILD act of 2018 which created the Development Finance Corporation (DFC) as an alternative to the BRI. However, the DFC has consistently failed to achieve its development goals as the Belt and Road continues to thrive in a traditionally American sphere of influence. This thesis explores how the BRI has proliferated throughout Latin America in such a short timeframe. It begins by laying out a history of US - Latin American relations, highlighting how the US’s unilateral action in Latin America’s politics, yet near absence in its economies, provided the perfect hole for the Belt and Road to fill. This history is followed by an analysis of the financial tools employed by the BRI globally, focusing specifically on China’s leverage of hidden debt for geopolitical or economic concessions. The discussion then moves on to the Belt and Road’s plans for Latin America, emphasizing China’s hunger for extractive exports, clean energy monopolies, and dual use assets. Finally, a strategy to counter the BRI is laid out, consisting of a DFC-led, collaborative finance platform aimed at mobilizing private investment through risk mitigation mechanisms.