Ann Wagner Leads House Foreign Affairs Committee Hearing On China’s Belt And Road Initiative
committee on Foreign Affairs will come to order the purpose of this hearing is to discuss the US International International Development Finance corporations DFCS efforts to outcompete China China’s belt and Road initiative and discuss the DFCS upcoming reauthorization I will now recognize myself for an opening statement the Middle East is on the brink of full-scale War as Iran and its proxies continue to attack Israel we are witnessing the largest land invasion in Europe since World War 2 by Vladimir Putin and chairman she’s China is deliberately testing us resolve as they look to invade Taiwan and spread their malign influence around the world we are living in danger times and the world is indeed on fire these dictators including North Korea are working together to attack us interests and this Unholy Alliance threatens to undermind the global balance of power Western values and Democratic Norms America’s soft power is key to preventing the spread of authoritarianism development Finance Corporation or DFC plays a crucial role in countering China’s predatory development programs including the Belton Road the Belton Road initiative is nothing less than a tool of economic coercion employing debt trap diplomacy I’ll call it to ins snare Nations and place them under the ccp’s influence I’m proud to have been a strong supporter of the 2018 build act which established the DFC and gave it a counter China focus in addition to its development mandate cross the developing World China seeks to supplant the United States at any cost Africa is Ground Zero for the Chinese Communist party or CCP they are building hard infrastructure including airports roads Bridges sea ports and Railways to extend their influence and financial hold over these nations keep in mind many are dual use projects and can in fact be used by their military but it’s not just Africa look look at the Solomon Islands which have now signed a security pact with China and their influence in the western hemisphere is rapidly growing look no farther than China’s International Deep Space ground station in Argentina or how the CCP are the largest investors in Peru’s mining sector and have just just constructed a super Port we can’t win the game if we are not on the field competing and that is where the DFC power lies the DFC is on the ground advancing America’s interests with a mission to help developing nations achieve self-reliance however imposing Progressive ideologies and calling it Aid will not win hearts and minds or improve the development outcomes we seek while we work to mark up a bipartisan reauthorization of the DFC next month it is imperative to highlight the priorities that will build trust with our partners not alienate them the DFC empowers the us to do both to advance our strategic interests but also work with our partners to succeed and Thrive and a critical component of this bipartisan bamal legislation will be an equity solution the United States must ensure that our International Development efforts are well coordinated efficiently implemented and aligned with the needs of our partners the DFC unleashes the power of the US private sector and uses its innovative and enterprising Spirit to tackle some of the most acute development challenges our partners face it exemplifies American values advances US foreign policy interests and provides a return to American taxpayers through loan repayments and increased economic opportunities around the world I want to thank our witness and uh and and the employees of the the DFC for their important work ensuring that the United States Remains the partner of choice for the developing world the chair now recognizes the ranking member the gentle lady from North Carolina Mrs Manning for an opening stating thank you madam chair I’d like to start by thanking our witness Scott Nathan for joining us today this is an important conversation and your testimony today will help guide this committee’s efforts as we look to DFC reauthorization hopefully as soon as this year the development Finance corpor operation has been one of our most important development Innovations of the last decade representing a concerted effort by Congress and the executive branch to promote and catalyze inclusive and sustainable economic growth around the world particularly where it’s most urgently needed this is an investment not a handout in fiscal year 22 DFC received 76 million in annual approach Appropriations and returned 359 million based on fees and Investments which shows that DFC is working just as Congress intended and the return on our investment is not only financial us development assistance is critical for advancing US foreign policy objectives especially in terms of our strategic competition with the People’s Republic of China it’s no secret the Beijing uses its Financial diplomacy and the Belton Road initiative to extract n natural resources and to harm the environment lower labor standards and gain influence for political leverage around the world many nations face a real infrastructure and development Gap according to the World Bank developing countries need to spend about 4.5% of GDP annually to fund basic improvements in energy transport digital and other sectors crying a foul isn’t enough if China is the only game in town if we want to compete the United States must offer a credible alternative one that does not come with strings attached but offers Innovative transparent and values driven Investments DFC is one of our key tools for demonstrating that the United United States is that reliable alternative however we can’t outcompete China if we are not redoubling our investments in US development assistance despite DFC budget paling in comparison to Bri Republican proposed budget cuts last fiscal year would have dramatically slashed our development and diplomatic spending that’s not competing that’s throwing in the towel nor should we look at DFC solely through the lens of competition with China a shortsighted focus on com f a shortsighted focus compromises DFC ability to leverage financing and harms us credibility we cannot be seen as a reliable partner if our motivations are viewed only through the prism of some great power competition or if we only show up when we need something we must make clear that the United States recognizes there is a mutual benefit to investing in partner Nations and that our interest is primarily born of cooperation not geopolitics us Investments demonstrate us Global Leadership as we look to DFCS reauthorization this year we need to make sure that development remains squarely at the center of its mandate we also need to make make sure DFC can make Equity Investments taking an equity stake in projects and not just offering Finance in the form of a loan this is key to getting more projects off the ground DFC has been hampered by the budgetary treatment of equity which forces the DFC to reduce its top line on a dollar Ford dooll basis these Investments should be calculated with the understanding that as I previously noted they will eventually return money to the US Treasury we also need to double down on private sector participation in DFC the US government resources to leverage greater private capital in DFCS PR is DFC principal mechanism and I look forward to hearing from our witness today on how we can help spur robust private sector engagement on behalf of ranking member Meeks I thank chairman McCall and his staff for working in a bipartisan fashion as we approach DFC reauthorization promoting economic growth and sustainable development is in all of our shared interests it’s a win for our partnering Nations it’s a win for us I look forward to seeing DFC properly resourced in fiscal year 25 and I hope to see it swiftly reauthorized by both the house and the Senate thank you gent lady yields back I would remind other members of the committee that they um can submit an opening statement for the record we are pleased to have with us uh the chief executive officer of the US International Development Finance Corporation Mr Scott Nathan thank you for being here with us today your full statement will be made part of the record sir and I’ll ask you to keep your spoken remarks to five minutes in order to allow time for member questions I now recognize Mr Nathan for his opening statement well thank you very much Vice chair Wagner um congresswoman Manning um thank you I also want to thank chairman McCall and ranking member Meeks as well as all the members of this committee for giving me the opportunity to discuss what DFC is doing to help meet the challenge of strategic competition particularly from the PRC in the developing world I want to thank Congress and especially this committee for its continued support of DF C since Congress established EFC we you’ve used the tools you provided us to deliver on the Bild Dax mandate to increase development and strategic impact of our investments around the world DFC financing for the private sector enables reliable access to energy and supports highquality infrastructure including safe and secure digital connectivity we’re investing to strengthen health and Food Systems while also supporting the small businesses that are vital to generating jobs and opportunity unlike the development approach of the PRC or other strategic competitors DFCS efforts are directed towards supporting private entities mobilizing private capital and building resilient market economies we’re Guided by the belief that developing a robust private sector is the best way to alleviate poverty over the long term and strengthen the economic and strategic positions of our partners around the world we need to show up and offer our partners a choice based on our values and on private Enterprise so they don’t feel trapped into accepting the offerings of our strategic competitors or authoritarian governments too much debt and projects that aren’t needed or of poor quality in the nearly five years since Congress created it DFC has made great progress in this regard last year DFC committed a record 9.3 billion across 100 32 transactions nearly double our fiscal year 2020 total by mobilizing additional private Capital our investments are making an impact driving Economic Development where it’s needed most and advancing us strategic interests we’re investing to build roads ports airports and other large-scale infrastructure projects in the developing world for example we’ve committed $553 million to support the construction of a new shipping container terminal and Sri Lanka a critical trans shipment point for the Indian subcontinent to promote the free flow of goods across key trade routes across the indos Pacific and provide Economic Development to Sri Lanka DFC is also promoting energy security by helping to diversify Eastern European energy supplies with large-scale projects in Poland mova Bulgaria Georgia and Greece all these projects have helped the region shift away from dependence on Russian gas we’re focused on securing the critical inputs and Supply chains of the industries of the future investing 150 million in graphite production in mosm Beque 50 million for Rare Earth oxides in southern Africa and almost a billion dollars for multiple solar panel manufacturing facilities in India to ensure that no one country or company has a choke hold on price and availability wherever we go DFC Works to ensure our projects meet the needs of local communities from $20 million commitment to Cold Storage in Africa to our $33 million loan to build grain silos in India we met our $1 billion food security objective in FY 23 years ahead of schedule and have since doubled our goal we’re investing to improve Public Health through improvements to local Health infrastructure and at the same time we’re taking steps to boost pandemic preparedness and we remain committed to helping small businesses get the access to Capital they need to thrive with a focus on ensuring that underrepresented groups benefit from our financing DFC has active projects in 112 countries but our primary focus is the world world’s poorest countries last year nearly three qus of our projects were in low or lower middle inome countries at DFC we see the growing importance of the indopacific and have tripled our portfolio in the region in the last three years this includes over $44 billion do in commitments in India but also substantial increases in Nepal Sri Lanka Indonesia and others Africa however remains DFC largest market with over 11 billion dollar in commitments DFC has successfully differentiated itself from the predatory practices of the PRC and other competitors and we’re continually on the look out for further opportunities to work with the private sector in the dozens of countries where we work on the the continent in the Western Hemisphere DFC sees great potential for partnership and in Europe we’ve continued to respond to Russia’s war against Ukraine to maximize impact DFC often partners with our peer development Finance institutions and just recently we’ve reaffirmed our commitments with our counterparts in South Korea Japan and Taiwan I’m proud of this track track record but I know that DFC can do much more a high priority finally for DFC is working with Congress to PA pass a reauthorization bill for the agency and we see this as an opportunity to reaffirm the goals of the build act and make improvements we’re eager to work with Congress to chart the best path forward for DFC I look forward to your questions I uh thank you Mr Nathan for your testimony and certainly for um your service and your time today I now will recognize myself for five minutes of questioning American development agencies work with our partners to achieve self-reliance that mission respects the the dignity I think of developing countries and acknowledges that they deserve the power to create a better future for their people it also starkly contrasts with China’s plan to gain influence over our partners through exploitative and coercive investment developing countries want and and need us to offer an alternative to Chinese Capital but excessive red tape and confusing standards disincentivize our partners to work with us leaving them vulnerable to China’s exploitation if we are to remain the partner of choice across the developing World our programming must be efficient effective targeted and responsive in 2018 Congress created the development Finance Corporation the DFC to better counter China’s predatory investment initiatives in the developing world including the Belton Road initiative it has become clear however that the DFC is failing to compete with China in terms of approving projects and getting money uh out the door quickly DFC projects can take up to two years to be approved and even longer for financing to be dispersed Mr Nathan speed is of the essence for our partners how are you working to to speed up this process uh as we approach the DFCS reauthorization what reforms should Congress consider to resolve bottlenecks thank you very much for the question I completely agree with you that we need to be faster more responsive we’re taking the demand signal from the private sector that’s led to success so far we’ve more than doubled the amount of activity we do in uh single year uh over the course of just four years at DFC but we need to do more some of that means we need more resources to make sure that we have the teams to originate deals uh process deals monitor them on an ongoing basis and we’ve done that by building our team it’s why we’re uh putting in front of U Congress a request for just over a billion dollars uh of appropriation for fiscal year 25 so that we can continue to build our team and reforms and in terms of reforms one of the things that we’ve accomplished over the last year is a realignment of the way our deal teams were arranged previously they were arranged by deal size or product type that made doing proactive Outreach and business development and developing strategies in each different economic sector uh more challenging uh we went through that process and we continue to work to make sure that we’re being as responsive as possible to the private sector partners that we work with last week I joined my fellow co-chairs of the Pacific island caucus for a Roundtable with Pacific island ambassadors and as we discussed there the Pacific Islands are in dire need of investment for projects and infrastructure and China is actively working to fold these strategically important Nations into the belon road initiative Mr Nathan how is the DFC working with the private sector to fund Pacific island projects is there sufficient interest from private sector Partners to meet the demand for projects in the region so uh the Pacific island nations are a priority for us we were able to do a deal last year by supporting an Australian company that purchased the Telecom Assets in Papua New guine and five other Pacific island nations we worked with our Japanese counterparts uh on that uh project as well was a good example of cooperation between Australia Japan and the United States but we need to do more the challenge in these countries are twofold these are very small economies often State dominated so finding private Partners to work with is challenging and secondly uh we’re often restricted from working in certain countries because of their income classification level many small island nations because of the way that the calculation works are classified as high income countries and as a result we’re not eligible to work there in my limited time I I wanted to say that over a third of China Belton road infrastructure projects have encountered major implementation problems such as corruption and Scandals labor violations and environmental hazards I want to know how are you exposing the pitfalls of working with China versus the United States and are these arguments effective in convincing developing countries to reject exploitative belt and road projects and work with the United States instead and please give us a specific example perhaps in writing given the fact my my time’s about over just then briefly I’ll I’ll comment U that we get a very strong demand signal when I Travel Leaders in Africa Latin America the indopacific are interested in diversifying their economic relationships are interested in working with us companies and are interested in receiving Finance uh from DFC they appreciate the high standards uh and the appropriateness for local laws and conditions we don’t bring in our own workers we use local workers in the projects that we work on and we’re focused on quality and standards well my time has expired and if you could give me some specific examples in writing uh M Nathan I would greatly appreciate it I am now pleased to recognize Miss Manning for five minutes of questioning thank you madam chair and thank you again Mr Nathan for being with us today I am very concerned about our adver adversaries attempts to dominate the next generation of critical technology as you know China Chinese state owned and back companies like Huawei and ZTE construct 5G towers and deploy Leo satellites in many countries which pose risks to our sensitive data and threatens our security that’s why I introduced a bipartisan bill with my friend congresswoman young Kim the securing global telecommunications act which would require a comprehensive strategy for securing global telec Communications infrastructure worldwide incorporating mobile networks data centers and emerging emerging Technologies like Leo satellites and 6G so Mr Nathan can you share more about how DFC currently works with our allies and our partners to help Finance secure networks and trusted telecommunications vendors well I completely agree with you that finding safe secure um platforms for digital upgrades is a key element of of our strategy uh I mentioned one of our projects in the Pacific with in Papo New Guinea and five Pacific island nations that was working with Japan and Australia to secure those assets of critical strategic importance to the Australians and we wanted to support that effort in Africa uh We’ve made a 300 million doll loan to Africa data centers which does Landing stations from subsea cables and then data centers they’ve been building out throughout the continent with the support of our finance this is critical to make sure that’s on an open architecture secure platform we’re also working with cellular telephone companies it’s important in order to lay the groundwork for 5G and even the 6G upgrades that you mentioned to make sure that we have uh Partners in place for two and 3G who can make sure to then build on that when they upgrade that you we’re talking about uh in some of the countries where we work where they’re still in 2 and 3G so it’s important to be able to establish those relationships now so that the upgrade can be on the kind of Technology platforms that you mentioned that are safe and secure thank you um the chips and science Act is already helping onshore semiconductor manufacturing and helping to bolster our supply chain but to maximize its impact we also need to harness better human capital and and access to critical minerals what is DFC role in strengthening Supply chains and securing raw materials we need to be able to compete with China making sure that we have uh secured the inputs that will go into the industries of the future where the economic competition of the future will be is a is a key priority for DFC last year and I mentioned this in my testimony uh we were able to do several deals to help secure critical minerals in mosm Beque we made $150 million loan for the production of graphite we support through our Equity investment a company called techmet uh the United States owns 15% of this company and it is developing uh both sources and processing for critical minerals in a uh Western facing uh high standard way there’s a project for nickel and Cobalt that we help Finance in Brazil there’s a rare earth oxides uh uh uh investment that they have made in southern Africa and there’s more in the pipeline these are efforts that are uh very critical for us to make sure that the the inputs of these industries of the future are safe and secure and uh are not being manipulated thank you and I note of all the regions in which DFC is active the Mina region Middle East and North Africa makes up the smallest share of DFCS Investments I’d love to hear about what opportunity might exist to grow this portion of the portfolio and how we can leverage DFC to strengthen very important goals in that area like Regional normalization yeah so uh I’m glad you mentioned that part of our overseas expansion plan is to have uh DFC employee in Morocco uh specifically to address the goal that you mentioned it helps uh with deal sourcing relationship building Business Development um do supporting uh particularly crossb Investments it would be great if we were able to find an Israeli company that was working say on an infrastructure project for water in Morocco uh we’ve been having conversations uh like that and I think it would support the goals that you mentioned what are the biggest hurdles to oh I’m I’m sorry my time is expiring I yield back certainly submit uh questions thank you for the witness to uh respond in in writing thank you the chair now recognizes the gentleman from New Jersey Mr Smith for five minutes thank you madam chair thank you Mr Dayan for your testimony and Leadership I have a couple questions one is on Cobalt I um I’ve ched two Congressional hearings on uh the mining of cobalt out of the Dr Congo uh where 25 to 40,000 uh young people are exploited child labor is absolutely rampant uh and about 200,000 adults all under the pretty much all under the Chinese uh dictatorships uh uh Direction all of it is sent as you probably know to PRC where it is processed and um you know we’re trying to say you know if you want to drive an EV fine but don’t do it on the backs of slave labor and child labor and I I understand that uh but I haven’t been able to confirm it and hopefully you could say one way or the other in 2022 a proposal was put to the DFC with regards to processing Cobalt in tan from the DRC or elsewhere in Africa So to avoid again it going to the PRC and they also gives them the monopolization of that that commodity as well um can you confirm that there was such a proposal and was it rejected uh is it being looked at now uh we can get back to you on that I’m unfamiliar with the proposal that you mentioned we did do a cobal and nickel deal in Brazil however right but no I’m talking about China you know just yeah uh could you get back to us on that yeah for sure and I should maybe just to um give context we are very focused um on finding ways that we can help secure supplies of critical minerals mining deals as you point out are challenging however particularly in some of the markets where we operate from a standards point of view labor standards environmental standards social displacement standards right these are we can’t compromise our standards while trying to find the opportunities to secure the materials that you’re you’re mentioning right but in a way we have no idea once it’s sent to the China 100% agree with that who has access to those I just had a hearing last week on the China commission which I chair about these the so-called uh Auditors who go over there and they come back with these bogus uh positive assessments about the the labor lack of Labor which is lack of Labor rights uh and it’s one big F falsehood I mean um so obviously anyone trying to say what’s happening in the de Congo more so once it goes to China they’re not going to have any clue as to what’s really going on inside that that processing plant let me just ask you turn to Horn of Africa another be our country the Djibouti is among the countries most um uh indebted to the PRC and hosts a people’s Liberation Army base there as we all know at the end of April a Tor MP Tom Clon who like me is sanctioned by China um was detained for more than 7 hours at the airport in jibou and then expelled from the country he had entered jibuti from Somali land a de facto independent country with close unofficial ties with Taiwan which therefore has been targeted by the CCP and was probably an exacerbating Factor significant lithium deposits have recently been discovered in Somali land which I understand a Taiwanese firm is interested investing in Li is another metal as of course we all know uh that’s needed for Ev batteries given among other things that the DFC is partnering with taiwan’s development Finance Corporation the need to provide a counter example to China’s owner debt trap uh policy in the Horn of Africa the importance of encouraging countries to cooperate with Taiwan and the Strategic location in Somalia especially with an excellent port in berbera uh would DFC consider investing in a project to extract and process lithium from Somali land perhaps in partnership with Taiwan we would certainly be opening to talking o open to talking to whatever private sector developer is uh interested in that project or similar projects uh elsewhere as you point out we have recently signed a compact with our counterpart in Taiwan um it’s important that we work together to find ways to cooperate uh we find those kind of Partnerships can be very fruitful uh in working with like-minded development Finance institutions where we share similar goals uh to find uh interesting projects around the world thank you one last brief question what if anything is DFC doing to promote American infrastructure projects through the lens of safe and Fair Labor sorry I American infrastructure projects yes that that might have a foreign component to it to ensure that those products or that which feeds into the infrastructure steel whatever it might be is is free of okay out of time yeah well we’re very interested in finding high quality high standard infrastructure projects in all the markets where we work any you can elaborate on I would ask you to do it in writing gentlemen time has expired chair now recognized is a gentleman from California Mr barah for five minutes thank you madam chairwoman and thank you Mr Nathan for being here um you touched on the the port project that DFC is investing in Sri Lanka and you know if we turn the clock back to 2014 when um you know the the PRC came out with their signature project in the Belton Road um initiative um building a new Port City in in in Sri Lanka we’ve seen the debt that Sri Lanka’s incurred um you know what I have in front of me is 1.4 billion in debt which I think is actually grown um much much further beyond that um and progress in that Port has been slow you know I was in Sri Lanka in um early 2020 you know before everything shut down on the pandemic and and certainly saw some of the pressures um directly on their economy and then subsequently we’ve seen the the economic challenge that Sri Lanka’s faced in terms of trying to restructure debt and the like contrast that with um the DFC has announced 553 million investment in the nearby West Container Terminal which you reference in in your opening comments um could you you know um contrast these two projects and how does the development of the West Container Terminal um enhance Sri Lanka’s um status and contribute to to its GDP uh thanks very much uh for the question so as you mentioned uh the port of hambantota uh which was developed by China Merchant um with Chinese financing uh when Sri Lanka fell into macroeconomic trouble that status of that Port was changed to a 99-year lease uh and there was a great deal of controversy surrounding that unlike that project uh the project in the Western Container Terminal of the port of Columbo that we’ve supported with the $553 million of financing supports a private developer from India along with a developer from Sri Lanka the biggest conglomerate in Sri Lanka to develop that Port it’s currently on time uh it’s actually ahead of schedule uh and on budget when this port is completed it will uh be able to handle over 3 million teu a year if you look on the map where Sri Lanka is located between the Straits of Mala and the Suz Canal the Strategic position of Sri Lanka is incredibly important for the free flow of trade and goods uh which is clearly in the Strategic interest of the United States and our allies and partners uh it’s of great importance to India as well because India lacks a deep water port for uh Container Terminal so Sri Lanka the majority the vast majority of the shipping that goes through through Sri Lanka is for transhipment to the Indian subcontinent uh this creates uh strategic vulnerability and is very important uh to India so we’re able to support Indian efforts by developing this port and finally this port will create a huge amount of economic activity and jobs in Sri Lanka high quality jobs for people there to help stabilize uh the economy and support economic growth for the long term which is clearly in our interest great um and that is um very much in contrast with the hota port that that and the the problems that that Port created so that is a warning sign and you know as we talk to smaller countries around the world where um we’ve seen other countries get into a debt trap as well just to be very careful and look at all your options um switching you know more recently in August 2023 um during the Camp David um Summit with the United States Japan and Korea um I believe there was a trilateral mou signed between um the DFC as well as the the Japan Bank of international cooperation and the Korea export import Bank can you touch touch on how we collaborate with some of our partner and like valued um allies in the world to to leverage each country’s development capabilities yeah I mean I think one of the goals that Congress had in the build Act was to put the DFC in a better position than its predecessor to be a good partner to like-minded development Finance institutions it enables us to um share deal flow to help leverage our due diligence efforts uh to work together for uh greater impact so the trilateral partnership you mentioned between Kim jck and DFC uh is important because of the relationship we have with those two strategic Partners but also it will help promote uh work where we’re really interested in increasing our gain the Indo Pacific we have similar partnership with Australia uh one with Singapore one with Taiwan these are these are critical great my time has expired the gentleman yields back and the chair now recognizes the gentleman from Pennsylvania Mr Perry for five minutes thank you madam chairman uh Mr Nathan thanks for being here uh President Biden his anti- reliable fuel agenda in my opinion has led to a spiked energy price across much of the develop developing African countries Farmers can’t afford lowcost fertilizer and countries that are endowed with great natural resour sources are not encouraged to use them but rather forced to adopt far-reaching green energy projects I don’t know if you realize it or not that these countries could likely help themselves climb out of poverty by providing their citizens with already existing clean affordable and readily available Fuel and I think that prcc is an opportunity here where we refuse to uh your agency chooses to do one of two things it seems to me they make one-sided green deals with these countries which send them to permanent state of poverty and a long-term dependency on foreign aid handouts likely from us or you allow the PRC to close all energy development deals related to diesel coal and petroleum because we don’t engage in them that having been said in FY 23 or 24 were any of the DFC funds used to contribute to the so-called Palestinian economy um would you like me to address the first point or about well you can sure go ahead yeah because uh in the in the last year we did a fertilizer deal in Nigeria for the production of fertilizer called indamo which I think is very important for meeting the local needs through the production of fertilizer um in West Africa and uh just last month the our board approved a $412 million deal in Sierra owned for gas fired uh Power Generation that will be critical for providing reliable access to a country that has amongst the lowest electricity penetration rate uh in the world I think that’s awesome and what I’d like to do since you offered it is see of the Billion Dollar Plus budget that you have the percentage of your budget used for uh for traditional energy sources and traditional fertilizer sources but that having been said do you have an answer to the other question regarding your FY 23 and 24 spending yes so um I believe under the needy Middle East partnership for peace act we have uh provided $3.5 million to uh projects in the West Bank um under that $50 million a year program we also have previously had uh some projects uh with financial institutions that provide Finance to small business uh in the West Bank uh and we continue to look at Future projects but um that’s the extent of of are you familiar with the uh Ritz leasing project initi an initiative to support EV transport and related charging infrastructure in the West Bank yes so that’s a $10 million project that hasn’t yet dispersed uh but yes so are so many of us myself included would consider this in support to some extent of the terrorist organization known as Hamas and other terrorist organizations including Islamic Jihad that operate in and around in governance in the West Bank and Gaza that having been said can you remind me how does funding EV charging stations in the West Bank or Gaza help your organization combat the Belt Road initiative so the purpose of the um the Investments under the mea law under the needo mea law is to provide Economic Opportunity to keep people from uh to keep people employed and to promote economic growth and stability in the West Bank particularly given the financial trouble but they’re running it through your organization and it’s I I thought your organization in large part was meant to combat the prc’s belt and Road initiative is that a competitive location for the United States you know the Mandate that Congress gave us under the build Act was to do Economic Development and Advance the Strategic and foreign policy interest of the United States so I think doing Economic Development uh in the West Bank in this circumstance uh fulfills our mandate I also want to address the point that you raised about uh terrorist groups it’s incredibly important for us to make sure that our partner are vetted that we do know your customer uh kind of analysis and that uh vetting takes place to make sure that our counterparts uh don’t have anything to do with what you mentioned I hope that’s true Madam chair my time’s expired I you the chair now recognizes the gentleman from Texas C Mr Castro for five minutes uh thank thank you Mr Nathan thank you so much for your work at the DFC and for your work um promoting the United States and development around the world this question concerns how you coordinate with other US government agencies such as uh usaid usaid often identifies particularly promising ways to conduct development assistance such as through programs like development Innovation Ventures and the office of the chief economists uh so when usaid identifies such an effective approach to development assistance does DFC have established mechanisms to invest in those approaches so we work very closely with usaid uh we work closely with um Aid missions on the ground who are often the source of deal flow uh particularly for some of our smaller transactions that uh address uh small business um we have our mission transaction unit uh which is the sort of financing window for uh us Aid projects that’s within in uh DFC uh usaid is the vice chair of our board the administrative power is the vice chair of our board and uh I think we have an extremely productive working relationship uh so have you engaged in joint projects with them such as where DF DFC supports the project through loans loan guarantees or equity and usaid provides Grant assistance through a blended Finance approach absolutely and it’s not only that we’ve worked on those projects together they’re often sourced by USA ID Personnel oh very good uh in the last year how kind of Switching gears but in the last year how much of DC’s financing went to countries in upper middle income countries uh we can get you the exact number I think it was about uh 25% of overall projects committed and about I have it here 43.2% of the total dollars and I ask the question because people often make the claim that the DFC finds it difficult to work in upper middle inome countries and that we must make it easier for the DFC to work in these countries and I just want to push back against that a bit it seems it’s easy enough for the DFC to work in these countries and it’s important that the DFC prioritizes low and lower middle- inome countries where the needs are most dire yeah so what I would say about that is last year 75% of our overall projects by number were in lowincome and lower middle- inome countries but those deals are are often smaller in size so when you begin to look at by dollar amount the dollar amount comes down as a proportion and when you work in Upper middle- inome countries which tend to have access to large Capital markets and are not necessarily in need of Finance from the US government how do you take into consideration the potential for the project to mobilize private Capital towards development goals well that’s an important criteria actually in all of our projects to make sure that mobilization of private Capital uh is is conducted through the work that we do with the private companies that we support and you of course the DNC is first and foremost the US International Development institution and the build Act of 2018 is clear about the DFC development mandate as we consider the reauthorization of the build act which expires next year I believe that it’s essential that we defend and strengthen the agency’s development mandate I fear that if this agency simply becomes a bank to execute the foreign policy priorities of the United States uh the bipartisan Coalition that supports the DFC will Splinter and so how are you ensuring that the DFC remains first and foremost an International Development organization well if you look across our 132 transactions last year there’s a wide range of projects from some of the projects we’ve just been discussing the large scale infrastructure highly strategic projects which also have huge development impact to uh a large number of projects that are under $10 million which have a significant impact for small holder Farmers or small business people uh that make a difference in terms of generating employment and making economic impact I think we can have the broad approach across the whole portfolio one doesn’t take away uh from the other and I’d finally say that good development good development policy is good foreign and national security policy it serves the interest of the United States to see the our allies and partners have economic growth and stability as a result sure thank you and then there is one one issue I’d like to raise to the committee on this topic uh when the DFC was created the build Act of 2018 created a dedicated Office of the Inspector General for the DFC unfortunately unlike almost all us other inspectors General the DFC Office of the Inspector General was not provided law enforcement Authority through statute or delegation of authority from the attorney general uh this has seriously affected the oig’s efforts to conduct necessary oversight over the DFC and its activities over the years and for the last two congresses I’ve introduced the enhancing development Finance Corporation oversight act with Mr Fitzpatrick to extend such law enforcement authority to the office of the Inspector General I hope that the chairman and the committee will work with me to Advance this legislation I you back Gan yields back I’m sure we’ be taking that up during reauthorization next year Mr Castro chair now recognize the gentlemen from Florida Mr Mast for five minutes thank you chairwoman just simple question what countries are are your highest priority to work in you know we don’t have a single country like that but um we’re making a large effort to increase our efforts in the Indo Pacific uh I mentioned that our total exposure in the indopacific has tripled in the last two years I think that’s a um an area of high strategic uh and developmental importance but at the same time uh you know we’re looking to strengthen countries uh that have democracies that can show that their governments are delivering for their people through making sure that there’s a strong level of economic activity in those countries that’s uh several countries in subsaharan Africa uh we recently did a deal in Malawi that served which that subsaharan Africa Malawi is the country I just mentioned that where we recently did an energy deal that showed that they were delivering we’re looking at uh quite a few projects I last year we did uh deals in 26 countries in Africa so in the Pacific which ones in the Pacific so I mentioned Sri Lanka that was an important uh deal that we did last year India is our largest exposure uh in the Indo Pacific we would like to do more in the Philippines and Indonesia uh we continue to try to build out our deal flow in Vietnam what do you assess India most needs from America you know so um the area that we have had the greatest success recently in India is in supply chain diversity I ification there’s an enormous uh demand in India for energy diversification for solar panels so we’ve done two deals uh close to a billion dollars for solar panel Manufacturing in India when you say there’s enormous demand who asks for it who comes to you and says hey DFC we really think uh we need America to provide this who makes that request to you so it’s it’s two sources one is when we meet with uh government offic officials and diplomatic officials they’re looking for diversification of relationships they don’t want to be dependent on one country uh for their source of Finance but the primary demand signal that we get for our projects is from the private sector from companies we’re only funding private entities to begin with so if we don’t get applications from companies if we don’t have deal flow where we’ve developed through our proactive Business Development or through our in agency partners or through other means of developing deal flow uh there’s really nothing for us to do we need to have prospects with private companies that are looking for financing in order to fill whatever financing Gap that they have and you spoke a little earlier about know your customer know your client um do you think of that in kind of the strict banking sense of that term in knowing who you’re investing with what is their credit worthiness uh you know what are the current outlays of of debt to income that they currently have to make sure that you’re investing in companies that are going to be solvent in 6 months 12 months however many quarters down the road absolutely there’s two two components to that first is financial viability we’re absolutely doing the financial analysis and due diligence necessary to make sure the projects are commercial and viable in that sense but the know your customer anti-money laundering counterparty vetting work that we do I would say goes beyond uh what happens in a commercial context it’s very similar but we also have access to all the resources of the United States government uh including terrorist watch lists uh the the ofac lists at at treasury we need to be able to make take advantage of all of the resources the United States government to make sure that we know as much as possible about our counter our counterparties uh in the private sector it’s really an advantage of being part of the US government we cooperate also with our counterparties to uh uh other dfis to make sure that we know as much as possible give me a couple of uh your biggest success stories of of companies could be in subsaharan Africa could be in the Pacific give me a couple of the biggest failures so um in terms of successes in the last year uh I’m very proud of the graphite deal that we mentioned that’s a new Direction those are challenging deals to do um I’m very proud of in Ecuador we were able to provide $50 million for the buildout of a of a port called Porto bouevard um there’s a very high development and strategic importance in that deal uh the deal I mentioned in Sri Lanka is is a great example of that any failing companies you know I’m I’m fortunate that in the two years that I’ve been in this role I can’t think of any material failur failures but we’ll get back to you in writing on that if uh if you’d like I would appreciate it if you do thank you uh chair recognizes um Congressman uh Stanton Stanton from St you’re not speak sorry uh Mr Nathan I just got put back in my chair and I can’t hear who the next uh member is anyway thank you very much Mr chairman thank you ranking member for holding this important hearing Mr Nathan thank you for being here today I am enthusiastic about the development Finance corporation’s investments in projects that promote US foreign policy interest improve National Security and provide development assistance to countries that need it I’m a member of the Western Hemisphere subcommittee and a representative of the border state of Arizona I see opportunity for DFC to pursue each of its missions in Latin America more than it currently does while DFC mostly invests in lower and middle income countries many Latin American countries are classified as upper income or even upper income uh countries by the World Bank Upper uh upper middle income or upper income this classification limits DFCS investment ability even if development projects could help the low-income populations in those countries and help address root causes of migration Mr Nathan how do you how do income category limit DFC ability to invest in Latin America and the Caribbean especially since countries may be classified as upper middle income without accounting for High Cost of Living or severe wealth stratification uh you’re you’re exactly right so Latin America is a high priority for us it’s currently about one quarter of our portfolio overall we did more than a billion dollars of activity there last year but this issue related to income classification is a challenge uh the majority of countries in Latin America and the Caribbean are upper middle inome or high income and in high income countries we can’t work at all an example of that is Panama uh that’s a country where we would like to be able to pursue deals but we can’t because of the income classification in our reauthorization we’re hoping that this issue will be addressed to my knowledge we’re the only development Finance institution that uses the World Bank income classification categories the World Bank doesn’t even use them as the the way to determine lending eligibility they have a more multifactored approach we would like to use that approach which I think will broaden out and increase our ability to do projects in Latin America the Caribbean the Pacific island nations I think it’s a great Point particularly with regard to semiconductor um National Security is definitely involved in near Shoring of the semiconductor industry and we could use your resources your expertise in that arena in central Latin America in 2019 Congress expanded DFC mandate through the European energy security and diversification act allowing DFC to invest in energy projects in Upper income countries in Eastern Europe it looks like this has led to many of DFCS largest projects and has seemingly created alternatives to Russian energy in that part of the world Mr Nathan was Congress expansion of DC mandate helpful in furthering DFC ability to improve National Security for example would you consider DFC investments in Eastern Europe a successful expansion of your work I would uh it was also very timely given February 24th 2022 and Russia’s outrageous aggression against Ukraine uh the pressure that that put on uh Central Europe to diversify very rapidly their energy sources in order to not go cold not go dark uh in in the next year uh that enabled us to really help whether it was with uh the hedging issues in Poland for the purchases of LNG uh whether it was Moldova a country that’s under great threat from uh what’s happening in Ukraine uh we were able to provide $400 million of political Risk insurance to help them diversify from gazprom we also had projects in Romania Greece uh and elsewhere so this I think it was a great success I agree with you and I think that could be a possible model to look at in your reauthorization as it as we look at upper middle- inome countries and Central Latin America for purposes of near Shoring a near Shoring strategy as a way to help us win the competition with uh China um it’s important that DFC has the flexibility to invest in Latin America in order to counter China investments in that region we need to play to our strength to deliver financially and environmentally sustainable development that lifts up communities and facilitat trade Investments with the US what are some strategies that have worked in gaining a Competitive Edge over PRC linked entities in the investment and financing space um so we’re very focused on high standards I think that’s a good contrast uh we’re very focused on the private sector particularly as you mentioned in the in financing space helping small and medium Enterprises in the last year I believe our financing uh helped 500,000 small businesses around the world that kind of support for entrepreneurship uh and the private sector the power of the private sector is just a sharp contrast to what our strategic competitors do I really appreciate look forward of that reauthorization coming up soon I yield back Jan yields I now um acknowledge myself for five minutes um first let we say you have a a big job I think to counter primarily our adversaries um and um I know in 2018 we passed the build act development Finance Corporation with an eye towards countering the belts and Road initiative primarily and um Equity as you know um sir has been a an issue uh since the Inception of when the build Act was passed om has basically said in the equity deal that the DFC does is considered a loss treating equity on a dollar Ford dooll basis our intent back then was that be treated on a Net Present Value basis not dollar for dollar we were never we couldn’t resolve this in the last Administration although I tried with Mick Mulaney at om was very stubborn about it although a dear friend um but in fact last month administrator power told us that a compromise is still being worked with om uh I’m not so sure uh do you believe that it is possible to work with the OM to get uh to treat equity on a Net Present Value well I believe that om supports the proposal to create an equity fix um there’s always a question around exactly the details of the proposal and what the language should be for that um but om the whole administration supports an equity fix I think it requires an act of Congress however and uh I know there’s been some legislation proposed uh it whether it gets addressed separately before reauthorization or in reauthorization I think this is just critical if you look at our $9.3 billion of activity of deals last year 500 million of it roughly was Equity that cost 5 $0000 million of appropriation as if it were a grant right the other 8.8 billion of transactions required only 110 million of appropriation there’s a great bang for the buck for the US taxpayer in that somewhere in between dollar for dooll and the kind of high leverage ratio on the rest of our portfolio has got to be the solution that will give us uh a lot more opportunity to make a difference with Equity early in Project to have influence to be more forward leaning on risk and uh really make the kind of impact that Congress intended I I completely agree and I think that would you and I’ve talked about this I mean I think it’s a fix it’s necessary to if you factor in the return on the investment and that’s not how the current process is being scored by OMB uh we will continue to try to work with them um and you and the administration uh we are considering an idea of setting up a separate corporate capital account for Equity not tied to the DFCS maximum contingent liability uh that would potentially allow more Equity deals to be pursued um do you have any thoughts on on that idea that would actually circumvent both the OM and also the budget committees if they were not willing to come to the fix well we’re very interested in working with you and your team as closely as possible to make this happen it’s long overdue to to have uh a fix the idea that somehow we’re going to lose 100 cents of every dollar that we’re currently investing not saying that DFC is going to be the best Equity investor ever but there’s no way that we’re going to lose 100 cents on every dollar and that’s the way it’s accounted for now that makes no sense uh whatsoever so we need to find a pathway to fix this and fix it as soon as possible and I think it’s key uh will give you a lot more power and and um you know Investments I think and you’ll have more private investors coming to you absolutely as a result of that so well I look forward to working with you on that and I appreciate the work you’re doing thank you uh chair recognizes uh Mr Amo thank you Mr chairman uh thank you Mr Nathan for being here uh the US International uh development Finance corporation’s annual report details the ongoing work to support Ukraine’s economic resilience as it defends itself from Russia’s unlawful Invasion this report recognizes our government’s commitment to using every available economic tool to attract private capital and support small and mediumsized businesses in Ukraine uh you yourself Mr Nathan have traveled to Ukraine uh several times since the Russian invasion to work with the local business Community I uh want to express my appreciation for your work uh to uh ensure that the $1.1 billion invested by the DFC is used effectively as effectively as possible to support Ukraine’s economy but I’m also sure uh you would agree that more must be done to support our Ally and help them prepare for the post-war recovery the recently enacted Ukraine Security Supplemental Appropriations act that I proudly voted for authorizes the DFC to use funds for economic support for Ukraine I know you spoke a little bit about the energy sector now but I’d love to hear a little bit about how uh the DFC plans uh on using the funds provided by Congress to increase private investments in Ukraine and bolster Ukraine’s economy well you’re exactly right this is a high priority for us and it’s we’re not waiting for some future date of reconstruction or recovery we’re focused now on helping the private sector it helps keep people employed it means businesses are paying taxes there it helps produce the material necessary for the war that uh the ukrainians are fighting for their survival and Independence um we’re doing this through support for some financial institutions some existing and some new clients for us uh by providing financial assistance to banks that can then on lend to their customers this keeps uh economic activity today going which helps lessen the need for future recovery efforts we’re also focused on the Agri business sector this is a very important element of Ukraine’s economy and it has implications developmentally for the world in terms of supplying uh the food necessary to provide food security throughout the globe so this is uh for example we made a $250 million deal with a chicken processing company called MHP which is the largest chicken processor in Europe and is uh very important for providing um food Security in both Ukraine and Beyond uh and we’re looking at many other deals using our risk mitigation tools like political Risk insurance to help support uh the agricultural sector we’re also looking um uh to provide political Risk insurance to help for example we did worked on a clinic called superhumans which is helping for amputees who are wounded in the in the War uh and our political Risk insurance helps the investment that’s going into building this uh Clinic we have other insurance deals that can help build the economic infrastructure of Ukraine by making sure there’s Insurance available for businesses that are looking to invest and grow so I could go on but this is a huge area of priority for us and uh a personal commitment uh from me as well thank you for those efforts I want to shift gears slightly and and try to squeeze another question in but um we know that uh the people Republic of China belt and Road initiative is you know operating in Mass uh uh economic coersion uh and we know its impact on the African continent uh and it’s really really you know uh been such a big presence in nearly every country in Africa uh receiving loans under this initiative you know for example in in the country where my dad was born in Ghana the Bel and Road initiative has already provided about $2 billion in coercive loans for infrastructure projects and now China is uh Ghana’s largest creditor and public opinion in Ghana is turning on the belon road initiative uh I’d be interested in how uh the DFC uh can work to support countries like Ghana some you know models of of uh of governance uh to help end their Reliance on uh the loans from the belt and Road initiative well we need to keep upping our game last year we did 46 transactions in Africa for over2 billion doar in value and I’m confident that this year we’re going to do even more we have some great projects in the works um in Africa there is a strong demand signal for higher quality more appropriate more respectful uh financing and project development through throughout Africa when I meet with African leaders they’re looking to diversify their relationships have new Partnerships extend friendship Beyond uh what they have now but it’s incumbent on us to show up that that’s what the DFC is all about that’s what this Administration is making great efforts to make sure that our African Partners know that we’re interested in not just helping them but working with them and partnering with them through business I think that’s the best way to do that uh and that’s what DFC is all about thank you and I yield back Neil’s chair recognizes Miss Kim thank you chairman for holding today’s hearing on development Finance Corporation U thank you Mr Nathan for joining us good to see you again yeah nice to see you you know insuring the uh us can effectively counter the ccps M influence abroad in especially the developing countries is a very very high priority for me and I view uh DFC as the uh selft power tool to do just that uh so in our you know meetings and our correspondents and conversations before I’ve expressed my uh appreciation for the work that you’re doing however the uh the reality today is that we have a very large national debt and budget deficit so I believe we need to be creative in development programming uh to ensure the sus sustainability of our development initiative and to effectively compete with the CCP in that space we need to work more closely with private sector which we know private public sector partnership would be the key for the success of uh DFC and DFC is critical tool for accomplishing that um one of the most effective ways to counter belt and Road initiative is to highlight the difference in quality between the ccp’s poorly built and exploit projects and higher quality guarantees that us investment brings um so could you tell me how DFC can ensure that its Investments are marketed as part of the wider US Government efforts in the uh host country yes thank you for the question and for our previous conversations as well um I think it’s important that we uh be proud of what we’re offering not step back from high standards uh not step back from uh the nature and the values of what we’re projecting through what what we offer um by being respectful for local laws and conditions by employing people locally rather than bringing in workers by thinking about long-term value value as opposed to short-term wins by finding private sector partners and funding projects that are commercially viable and financially sustainable I think we’re strongly differentiating ourselves and I think we’re beginning to make a difference along with our partners in the G7 and other like-minded uh allies and partners we need to make sure to work together to really make clear that we’re offering an alternative so how will the increased number of of overseas DFC officers helped Market the corporations Investments and projects uh on the on the ground yeah so it turns out that the DFC is massively underrepresented abroad most development Finance institutions have somewhere between 15 and 30 or even more percent of their uh staff overseas we have 1% we have six uh Direct Tires uh we’re expanding that and we’re working with uh you and your colleagues uh to do that but we need to double or triple that to get to 3% um and these people disproportionately carry their weight in business development by having local relationships contacts on the ground and doing business development they really help fill our deal Pipeline and as you point out they then also because of their local presence and relationships can be part of the overall effort of giving visibility and publicity to the work we do of course we work with local EMB with our embassies and other uh parts of the inter agency to help do this but there’s really no substitute for having our own employees do thank you you know so can you talk about the efforts or additional efforts we are taking to help countries who are dependent on China’s belt and Road initiative and can you give some examples of some of the projects that make countries less reliant on uh Chinese infrastructure projects yeah so I mentioned the project in Sri Lanka I think there’s direct contrast there in the port of Columbo the project that we’ve financed through the private sector with an Indian and Sri Lankan company is immediately adjacent to China maritimes port and I think our Port is going to be highly competitive with them but there are other projects where we’ve directly encountered potential Chinese competition uh for example uh in Rio de Janeiro in Brazil uh we made a $267 million loan for a project called smart Rio which was competing against two different Chinese competitors for the tender it helps manage lighting and sewer systems and water in Rio those kind of infrastructure projects are incredibly important in Turkey we provided financing for a polypropylene plant last year called Chan uh this project had not only a potential Chinese competitor but also a Russian competitor and we were very pleased to be able to support the private sector company that developed that with us financing thank you very much my time’s up so I back thank you yields chair recognizes Mr phis mccornack thank you Mr chairman Mr Nathan last December President Biden hosted nearly 50 African leaders for a three-day Summit in Washington during the meeting the administration committed to investing at least 55 billion in Africa over the next three years including private sector initiatives or more than 15 billion by September 30th of 2023 subsaharan Africa accounted for 10.5 billion of DFCS 41.4 billion in activity portfolio that’s a great step forward and I commend you guys on that but when it comes to one of the most important issues on the administration’s agenda climate change and the transition to a green economy Africa is missing as a result the United States is forgoing an opportunity to one deep in commercial ties with the continent two partner with African nations to strengthen Supply and production chains and three help Africa diversify away from its Reliance on China for more than 50% of its 26 critical minerals this message is implicit in the inflation reduction act which was signed into law last August one of the actors one of the act’s key Provisions is a tax credit that is available to American consumers who purchase electric vehicles whose battery contain a certain percentage of critical minerals that have been extracted or processed cessed in the United States or in any country with which the United States have free trade agreements here’s my question many African countries are rich of critical minerals do you believe we should extend these tax incentives to companies sourcing their minerals from any African nations you know that’s uh pretty far off my remit as a develop as the leader of a development Finance institution what I will say is we’re working on critical minerals whether those tax incentives uh exist exist or not and trying to make sure whether it’s in mosm Beek or in South Africa or elsewhere in southern Africa that we’re doing what we can to help support the um um development and even processing of uh critical minerals I did want to mention also you mentioned the Africa leader Summit we were proud to be able to announce 360 million $369 million of projects as part of that and subsequently uh we’ve done another2 billion dollar uh of projects in Africa across 46 uh different transactions but we need to do more and it’s a big Focus for us the overseas presence that we’re trying to build includes many potential new offices in frankophone Africa in West Africa in uh East Africa in order to increase the ability of DFC to fill our project Pipeline with great potential deals well since Africa is such a huge continent there’s so many different countes countes do you believe that we should focus on the beneficiaries of the African growth and opportunity act I’m sorry do you believe that we should focus on the beneficiaries of the African growth and opportunity act since there is no FTA yeah I mean again we work across the whole continent and issues related to whether there’s free trade agreements or tax incentives are the kind of thing that I leave to my colleagues at the treasury Department and elsewhere none whether whether those issues are resolved or not we will continue to work to find Opportunities to fill the financing Gap to make sure that we’re looking for infrastructure energy Health Care uh Agra business support for small business kind of projects throughout the whole of Africa in order to make as much development and strategic impact as we can thank you I yield back J yields I just want to make a comment I think you must be somewhere in the right place because they’re saying you’re not you’re not investing in green energy enough and we argue that you’re not investing in fossil fuels enough in Africa so you must be doing something right I think uh chair recognizes Mr Kane uh thank you Mr chairman um Mr Nathan as you know natural gas plays a large role in Ukraine’s energy sector has the DFC provided support to Ukraine’s national gas production and pipeline infrastructure uh so far we’ve not had opportunities uh to to do so uh the other area that we’d be very interested in energy in Ukraine is helping with the nuclear sector given uh that’s really one of Ukraine’s strong competitive advantages so uh going to your point we’re having both nuclear and natural gas what are the next steps that you may be able to do and to provide that type of assistance in a predictable way well you know we are in uh discussions with the electric utility of U of Ukraine to see if there’s ways that we can help them of course the challenge for us is that we’re looking for private sector Partners the utility is a state-owned partner but there’s often opportunities to develop power generation projects where the state-owned utility is an off-taker and we wouldn’t have to face them directly but we’ve been working closely with them because uh Ukraine is in the position where it should be a natural energy exporter to Europe uh in fact on February 24th 2022 right before the Russian the fullscale invasion they tested their ability to export to Romania electricity and um there’s no reason why when the situation stabilizes and there’s economic recovery in Ukraine that they shouldn’t be a net exporter of electricity to Europe no we we agree on on on that assessment um have you seen China inserting itself into Ukraine’s recovery and reconstruction efforts I haven’t seen that so far uh I’ve been in a number of conversations where the issue has been raised with Ukrainian government officials I think there’s a sense that uh on the part of the ukrainians that um they know who their friends U have been during this conflict and they won’t soon forget that so you are have been crystal clear in the in the dangers posed by potential Chinese influence in Ukraine’s future to to themselves yeah this is this is nature of that type of partnership yeah I mean I think the de the demand signal is there for us business for European business high standards respectful um and high quality uh projects technology and equipment thank you uh Mr Nathan does DFC have the resources that needs to compete better against State subsidized Chinese firms broadly speaking well you know I think head-to-head competition in that way is pretty difficult for us because um we’re not going to cut Corners we’re going to be respectful of local laws and conditions we’re keeping to high standards and we’re looking for commercial viability in the projects that we do if we’re facing competition that uh is not as concerned about any of those issues it’s it’s difficult to compete directly the thing that we need is Partners who recognize the long-term value proposition of what we offer and the competitive nature of That So speaking of Partners uh would the DFC benefit from greater participation from the state department where specifically the active participation of the chief of mission in a country that the DFC seeks to operate in you know we benefit from that right now it’s very um clear that what DFC has to offer is in demand by our embassies and the ambassadors in place they understand that the value proposition of what we bring to the table is something that helps in the bilateral relationship that they’re responsible for managing so we by and large get very strong support from uh Chiefs of mission from their staffs from us Aid missions on the ground and we work very closely with the state department back here in Washington DC secretary of state is the chair of the DFC board um and we work closely with the state department on issues around certification when we uh are going to make transactions in Upper middle- inome countries the state department is responsible for that certification we were closely on vetting and other issues in the analysis that leads up to our uh deal decision making and when you’re as you’re going through this process is there anything that Congress can do to improve that functionality as your through your own experience broadly well I look forward to discussions with you in this committee on reauthorization because I think there’s quite a bit we can do to improve on the very good work that the bill act did uh whether that’s in relation to increasing the overall portfolio size at the pace of activity we’re going um we’re we’re doing right now we’re going to hit the $60 billion total maximum contingent liability total portfolio cap uh quite soon and I think it would be important to raise that to hundred billion dollar or more there’s also issues related to our tools I think Congress whether it’s Equity or political Risk insurance or loan guarantee Authority I think Congress intended for us to have broadly uh available tools and there are some current restrictions on them that we’d like to see fixed there’s also a number of other issues related to our Workforce and ability to retain and attract uh Talent um that’s important um the use of fees uh in in our Appropriations bill for this year we were able to use fees for transaction specific costs we’d like to see that made permanent I think that’d be very helpful from the point of view of making us more efficient and effective for taxpayers thank thank you for those recommendations and uh appreciate all your hard work thank you very much I Y back Jan Ys I just want to add that risk insurance and Loan guarantees are things that your office has provided to us to U enhance this bill that we’re working on so thank you uh chair recognizes Mr Sherman been around here a long time I once uh was chair of the subcommittee no longer really exists that reauthorized opic back when you had a un fortunate name congratulations on a better name that doesn’t confuse you with an oral cartel uh back then we got at least uh as part of the reauthorization assurances from your board and your predecessors predecessors predecessor on a couple of issues one of those was that you would not have as a private sector partner in your deals any organization that was violating our sanctions on Iran or that had um a subsidiary affiliate that was violating our sanctions on Iran does that continue to be your policy yes you know when we do our know your customer and vetting of counterparts uh that is something that is considered uh through the the process and that’s something that we need to cooperate with uh our colleagues in the intelligence Community to make sure that we have the most up-to-date information possible do you require a statement from your borrower or private partner that neither they nor any of their Affiliated corporations uh is violating our sanctions on Iran you know I don’t know if that’s let me ask it this way uh will you in the future have a form where they say that they’re not violating and none of their corporate Affiliates yeah we’ll definitely look into that uh I look since you’re asking Congress to reauthorize you I hope you can give us a definitive answer that says that you will make sure that none of the corporate Affiliates because I don’t want to see a circumstance where you have a parent company with several subsidiaries and one is benefiting from your program and the other is violating our sanctions on Iran I completely understand that and that’s why even more than asking than putting language into a contract around that we need to do the work to make sure that we and corporate I hope you would supplement uh your answer in writing with something that’s definitive non wable another uh thing that uh probably concerns fewer of my colleagues than myself but certainly concerns me is to not have it was a policy that you would not fund a pipeline or a railroad that was deliberately evading Armenia that is to say was going around Armenia from Azan through Georgia when the natural way to build it would be through AR uh through Armenia uh can I be sure that you’re not going to be funding and I realize some of this has already been built so I’m not asking you about things that have already happened uh that you’ll not be finding a funding a uh a screw Armenia pipeline or railroad I can’t imagine we would ever do that so yes thank you okay uh you know the hearing of the the um uh the theme of this hearing is somehow that we’re responding to China we your organization ex existed back before we made the mistake of giving China most favored nation status and back when China was a pygmy economically uh you’re because you’re doing a lot of good things that we would want to do whether China was doing things or not um have you continued to make money for the US Treasury um so across our portfolio uh for sure that we’re making money the financials that you’ll see in our annual report for last year reflect some restatements based on the change of yield curve I don’t want to get too technical about this but the way the annual profitability profit and loss of the DFC portfolio uh is taken into account higher interest rates cause a restatement downward of the 20-year Legacy portfolio we have so last year from that point of view we did not make money but what I think matters is the Investments that we’re making continue to pay us back continue to pay their interest so you’re now evaluating Investments on today’s interest rates yes exactly okay and finally I know we’ve urged you to cooperate with the Taiwan International uh corporation uh cooperation Development Fund uh as they try in some small way to uh um win over uh those that would otherwise side with China are you continue are um are do you have anou with that Taiwan agency and uh is it working yeah I have good news on that front we just signed a compact uh with them uh in fact my colleague who um traveled to sign that document is sitting right behind me so um yeah that’s we’re looking for potential ways to cooperate potential deals um in the Indo Pacific and elsewhere that would make a difference uh my time has expired Jo yields chair recognizes Mr mccornick thank you Mr chair and thank you for being here today for your testimony you just mentioned Taiwan and our agreements with them theou uh I think Taiwan is an extremely important uh not Ally I guess partner in uh in the future of AI which I think is going to be transformative to the entire world matter of fact I think they produce about 100% of our AI chips and about 90% of the world’s AI chips uh with Samsung as the other 10% uh interesting enough China recently stated that they’re going to take over Taiwan by 2027 which is worrisome to me and it’s even more worrisome that we haven’t even delivered the things that they bought from us to defend their great nation so I just wanted to point that out for the hearing for the record if you will uh that we’re not doing our part to help these people protect our our assets really um when it comes to investing further you discussed Africa and you discussed some of the um the futures of energy now what’s interesting to me if I’m not misund misunderstanding the DFC decided not to pursue energy and infrastructure infrastructure projects further when it comes to our investment um overseas or am I wrong in in what we’re trying to develop uh energy is one of our five uh primary areas of activity that we’re organized around now when we talk about energy we’re talking about comprehensive or just one particular kind of energy production no we’re looking across the board so whether that’s um geothermal uh as I mentioned a gas project in sier Leone wind solar and it goes beyond that it’s also looking to secure the critical minerals necessary uh for these projects it’s thinking about supply chain diversification and the manufacturing of energy components it’s in India we worked on Smart uh meters in order to increase Energy Efficiency so it’s all kinds of so I love all those things by the way nuclear I should mention as well yeah we we’re under performing on nuclear development in the United States matter of fact Georgia has done well I think we built the first uh nuclear reactors probably in the last 20 30 years uh that’s the only state we’re way behind when France is kicking your butt you know we have a problem um but I will say this 1958 we wrote the book The Ugly American and and it’s kind of one of the things that you’re actually trying to combat is this idea that we’re not in it to help other countries develop in the right way um what I’m worried about is We Stand By and Watch China overdevelop or basically raped Africa in my opinion and our bad partners and and we’re kind of putting all of our eggs in the same basket as them when we talk about energy production a lot of the solar panels I love the fact that we’re going to India to help you know diversify our our our sources um but I do feel like we’re falling way behind in our obtaining those Rare Earth minerals that we need for uh battery production uh where I think China has what 80% of the market if I’m not mistaken uh and they’re expanding that by the way it’s not decreasing it’s increasing in their Market market share they’re using slave labor from the western part of China as you mentioned previously um how do we combat that by at the same time while the way they manipulate the World Trade Organization since 2015 um how do we do that in in with a billion dollars which sounds like a lot of money but as you know that that doesn’t go very far when it compared to what China is investing in this well I completely agree that uh we’re behind but we need to start catching up so you got to start somewhere and so doing deals and critical minerals uh is is very important to us and this is where the equity Tool uh comes to play uh the United States owns 15% of a company called techmet we’ve provided equity in multiple rounds that’s helped them do a project in Brazil on Cobalt and nickel it’s helped for rare uh Earth oxides in southern Africa it’s helped with other projects that they have under development and we would like to do multiple rounds more of financing but that’s expensive in the billion dollars that you mentioned that we have 760 some odd million of that is our program budget equity on a dollar Ford dooll basis comes very dearly and uses up our appropriation very quickly if we had an equity fix we’d be able to do a lot more of these early stage forward forward leaning projects sorry we have to work on your terminology Equity is kind of a dirty word nowadays but the uh just from my perspective um when when I talk about equal opportunities for energy to succeed and and when we look forward by the way I’m always concerned about Brazil and their government has some significant problems in my opinion I have to be careful who we partner with but I also want to make sure we don’t demonize the fossil fuels which I think have been treated incredibly unfairly especially when it comes to carbon emissions and why the Earth is heating I’d love to have that scientific discussion going forward but I’ll table that for another time since we’re almost out of time but uh thank you for your time hopefully we can continue to develop our AI investment too because I think that’s incredibly important thank you with that yield Yi’s chair recognizes Miss Dean thank you Mr chairman and thank you to ranking member Meeks thank you Mr Nathan for your work and your team’s work and your testimony before us today I was interested in what you uh said in your written statement that you’re proud of DFC track record but also that you could do more quote you say the global demand for high quality high standard development Finance far outstrips the supply uh I wanted to focus on that notion of high standard so we can paint have you paint the picture for us can you give me an overview of the environmental and social standards in your investment policies and explain how DFC involvement in a project guarantees the project meets those required standards so we follow the international finance corporations performance standards that’s the kind of industry standard for like-minded development Finance institutions this is important for social displacement considerations important for Labor uh quality and labor respect um it’s important for environmental standards U as well uh so each different project um is analyzed for what sector it’s in and the context in which it’s operating to make sure that we’re meeting those high standards internally at DFC we have a group called our office of development policy which is our biggest uh area in terms of uh total employees it’s actually grown by 50% in the last four years and it’s critical for for us to be able to have people who are expert to do the screening to do the development impact analysis to make sure the standards are met but as important to then follow through once we do the transactions to measure and monitor and continue to work with our our uh Partners to make sure that projects are adhering to those high standards and are making the development impact uh that we expected when we uh entered into the transaction that’s exciting stuff and I’m wondering if you could offer us the contrast how does what you’re doing differ from offerings of competitors as we’ve heard here today uh such as belon Road initiative uh are they finding ways to fill that demand unmet Demand with uh lowquality or low standard uh financing yeah to my knowledge um the kind of competition you’re mentioning doesn’t undergo any of the things I mentioned it uh does not look for uh an analysis of Standards uh often is not really respecting local laws and conditions bringing in outside labor and often the projects are um inappropriate for uh the situation are not financially viable over the long term or have serious quality problems well uh I wanted to just end my uh part of my timing going back to what you said about Ukraine uh again in your testimony that uh the commitments in Ukraine uh by DFC are helping keep the private sector going at this critical moment this these are your words while laying the groundwork for long-term economic recovery I was able to be in Ukraine in keev uh just about two weeks ago now met with the president met with uh military members the appreciation for the pack passage of uh the supplemental passage was so palpable uh you could see it in their faces their eyes uh but we also had the chance to meet with the American Chamber there uh who seems to take the same approach not wait until this war is won and it it must be won by Ukraine uh but to make sure that the economy as much as Canen can be going now in re in order to get ready for the rebuilding uh the opportunity that I hope there is in rebuilding uh for uh DFC but also for uh American companies of course for Ukraine uh can you tell us about your work there yeah and thank you for the opportunity because I’m extremely proud of the DFC team and the work that we’ve done um uh in Ukraine uh I too have um met with the American Chamber of Commerce in Ukraine every time that I’ve been there I’ve been there three times and they’re a great partner in terms of connecting us to businesses advocating for uh the businesses that have applied for financing uh and working with us to help us with our uh Business Development a great example of that um is actually a company led by the chair of the American Chamber of Commerce in Kiev uh a a woman uh owned business called Horizon Capital yes and uh we had the real great honor of signing our $25 million limited partner commitment alongside our DFI Partners uh the ebrd and the IFC as well in President solinsky’s office um uh he W witnessed the signing and this is the kind of project that will support the long-term growth of the Ukrainian economy by going to one of their strengths which is um information technology and that kind of Entrepreneurship uh this is a private Equity Fund that will fund those businesses both in Ukraine and Moldova another country that we’re greatly concerned about and um I’m very proud of our investment uh in in Horizon delighted to hear just a little bit about it and it’s going to take all of us to partner so thank you and I yield back Jo yields chair recognizes Miss R wagin thank you Mr chairman alava good afternoon and uh thank you Mr Nathan for being here I had a couple of other questions but uh you’ve already answered them very well and I thank you for that so how does a DFC plan to expand its indopacific portfolio Beyond India does a new office in the Philippines help with this PRC investment and construction projects frequently are in countries where the DFC is also active do you determine that uh the DFC has become a successful alternative to the belt and Road in initiative and what steps has the DFC taken to provide as the build act clearly states a robust alternative to State directed Investments by authoritarian governments well nowhere is that more important than in the Indo Pacific from uh our point of view last year it was the area of largest activity uh we’re able to do um a little over three billion dollars of investments in the Indo Pacific uh India was part of that but so is Sri Lanka so was Indonesia so was Vietnam uh Etc we would love to do more in the Philippines and that’s why opening an office in Manila is on our to-do list we need to work with Congress to make sure uh that we have both the resources and the approval to do that U but that’s important we have currently four uh employees full-time employees is stationed uh throughout the indopacific uh in Jakarta uh currently in Bangkok um in Singapore and in uh Mumbai uh but we’d like to have more and we’d like to also have some locally employed staff it’s very important for helping to build deal flow um and help find the kind of local contacts and business opportunities they’re key to making the kind of impact that you mentioned that’s so so important and crucial to our mission uh I think you mentioned earlier that the there are some countries you do not work with because of their income classification level uh and and yet China doesn’t let anything like that stop them yeah they work in all countries they’ll take whatever it’s it’s given to them yeah so very interesting thank you Mr chairman I yield back the balance of my time yields chair recognizes a ranking member Mr Meigs thank you Mr chair and I heard unfortunately I missed your questions in regards to um Equity but I just want to let Mr Nathan know that the chairman and I see that exactly alike and want to make sure that we’re helpful there in any which way we can and thank you for all that you’re doing Mr Nathan uh at uh DFC uh my my question to you is that many Caribbean island countries they generally they don’t fall within the world bank’s low or low middle income categories and that’s in part because their small size and few large foreign owned Investments can skew their GDP uh it makes it you know artificially High average residents nevertheless face great challenges in keeping Pace with the uniquely High Cost of Living that the World Bank openly does not account for and these island nations have significant development needs that stem from disaster risk climate impacts and the difficulty of securing necessary infrastructure rure so my question to you is why do so many small island countries fall through the cracks for DFC investment and how are the work how how are you working to expand DFC engagement in the Caribbean and what tools can Congress what tools can we do to help you provide uh to provide them well as you know from our previous uh discussions finding ways to expand our impact in the Caribbean is a big priority for us uh we’re working Within our current authorities to do that I traveled u in December to Dominican Republic and Jamaica um both of which are categorized as upper middle inome countries so that we have a few more challenges in working there but we have been able to do recently some projects in the Dominican Republic we did a $200 million on lending deal there to support small business and we’ve also announced that we’re going to open an office in the Dominican Republic to help Propel our activity throughout the region we’d love to do more in Jamaica as well one of the challenges we do have though is this income classification question uh we if we were able to move more to the World Bank lending categories a number of Caribbean island nations which are not currently eligible to receive uh DFC projects uh would become eligible I think that would be uh Trinidad and Tobago St kits and Nas antia and Barbuda would move from currently not eligible to being eligible it’s true also in Central America Panama would go from not eligible to eligible and some uh nations in South America as well so that would be an important change uh for our ability to make a difference in the Caribbean so is there anything that we can do in Congress that you think we can make it in reauthorization one of the things that we would like to see changed is moving away from the current world Bank income uh classification categories to these World Bank lending categories so those Nation that I mentioned would become eligible and we could work with private sector Partners in those countries as a result of that change whereas today we’re not able to and similarly um you know we just had a meeting with a number of uh uh foreign ministers Prime Ministers ambassadors uh from the Indo Pacific Islands uh and as we’re trying to compete uh there with China and doing there um is the DFC at all prioritizing any of these Pacific Islands so the Pacific island nations are also uh an area of great concern uh there are a lot of challenges in working there uh one is the income classification question a couple of the nations would move from one from ineligible to eligible there’s also the challenge of just the extremely small size of the economies and the fact that they’re dominated by the state sector we do need private sector Partners in these countries to be able to work nonetheless we were successful in Papua New guine and five other Pacific island nations and doing a telecom deal along with our Australian and Japanese counterparts and we have a couple deals in the works in other Pacific island nations we do also have the challenge that some of the countries uh where we would like to work we don’t currently have what’s called an in investment incentive agreement without that we can’t work there and we’ve been trying to uh get for example in the Solomon Islands uh one of these agreements in place is just from a diplomatic point of view quite challenging to do let me ask this also because there some of this you know the concept of additionality yep which is essential to your work uh this means that through its work the DFC must mobilize the private sector uh Capital that would otherwise not be available to finance projects so what challenges has the DFC experienced in mobilizing investor enthusiasm from the private sector side whether it’s the Indo Pacific whether it’s the Caribbean islands or in general yeah you’re exactly right and this speaks to the question about the dominance of the state sector in these small economies if we can’t find a private partner if there’s not an opportunity to support a private business or a private project uh it doesn’t meet the additionality requirement you mentioned so that that is a great challenge we’re trying to be flexible and find as many projects on the edge that we can in order to try to be able to uh make a difference in these countries that really would benefit from increased us involvement and DFC support thank you my time has expired you’re back jent yields chair recognizes um Miss Titus I’m sorry Mr bar he just show up thank you Mr chairman uh Mr Nathan good to see you again how you doing uh thanks thanks for your leadership uh uh I had to step out so if I’m asking a question that’s already been been answered just just let me know I I did want to touch on this Equity scoring issue um I’m sure you have addressed this uh but um DFC does have a a great tool that can wield Equity yet it’s been unable to fully unleash the potential of this tool how has the budgetary treatment of equity expenditures impacted the DFC ability to enter into projects that would counter the PRC so I would if we had uh this issue fixed and we had the ability to deploy more Equity Capital uh per year I think we would be able to address the Mandate that Congress has given us more directly we would be able to be more forwardly meaning on risk just by definition Equity would allow us to be earlier in projects and in a capital structure position that is of greater risk than being a senior lender which is normally the case that would allow us to exert influence earlier in projects to take projects that are um more on the edge of making a difference in these countries whether it’s uh infrastructure development energy or the other areas where we work I do think the expected returns of an equity invest investment uh should be reflected in the budgetary cost and we recognize that some DFC Investments by by the very nature of where they’re going can be higher risk but let’s operate in the real world um High income country classification you’ve also addressed this but you know as I travel to places like Panama where China has Investments on both sides of the canal there’s a geost strategic problem with that um there’s immense strategic value to the the United States uh yet because of the World Bank income classification DFC is barred from entering into new projects there panamanians other higher income countries say look we we would prefer to do business with American investors but you’re not here so um can you give examples of China’s belt and Road initiative projects in high income countries and obviously do the Chinese have the same type of restrictions as the DFC when it comes to investments in higher income countries uh the policy directed Banks of China don’t have any such uh restriction and as um the ranking member was also asking about if we were able to change moving away from the World Bank income classifications to World Bank lending categories a country like Panama would move from currently ineligible to eligible under uh the analysis that we’ve done and I think that that would be uh all to the good I I completely agree with you that being able to find highly developmental projects even a country like Panama that’s classified as high income is still a great possibility and would make all the difference strategically as well there’s certainly some soft power uh value to just economic development in distressed parts of the world and it shows that the the United States is a better partner than our adversary in Beijing uh but I think the focus for DFC should be strategic number one strategic how can we displace malign Chinese investment irrespective of the income category of of the target um uh Taiwan uh as co-chair of the Congressional Taiwan caucus I’m cheaply concerned about the ccp’s efforts to economically influence uh taiwan’s diplomatic allies since the DPP came to power in Taiwan in 2016 Taiwan has lost half half of its diplomatic Partners China offers bribes Market access investment to bring countries into its orbit how is DFC working in countries like Paraguay Guatemala palao the Marshall Islands in the Pacific to offer an alternative to PRC financing that may come at the cost of taiwan’s diplomatic relations uh so I you may have been out of the room when we were discussing it but we did recently sign a compact with our counterpart in Taiwan to work together uh to find investment opportunities that we could work on together that’s true in the indopacific or in the Western Hemisphere well sorry to make you repeat that and I no but but but what I wanted to mention was about Guatemala which is an area where we’ve become recently very focused um there’s all sorts of reasons for that including the one that you mentioned uh we’ve done five projects in the last two years over a hundred million to support affordable housing small business uh and we’re looking for more uh I had the chance to meet with the newly uh inaugurated president when I was at the Munich security conference and I think the environment for us there is extremely favorable my time running out thanks for the work on on Taiwan to help its uh uh diplomatic ties uh Subic Bay um we’ve got Cerberus in there buying a shipyard um how can DFC encourage more investment with us and Allied companies in Subic and in the Philippines well in the Philippines is a priority for us we need to up our game there in the Subic Bay uh Redevelopment might provide a good opportunity to do that great I Y thank yous chair recognizes Miss Titus thank you Mr chairman Mr Nathan uh I certainly agree that the DFC is a important part of our International Development strategy and policy and it’s also a good way to try to effectively compete with China I also believe that our policy should be value directed and not just based solely on competition with another nation and I I think you agree with me on that I want to ask you though I hear about the high end the low end the middle end we use one characterization for this country another for something else seems very confusing and the people that I talk to often say they can’t figure it out if they qualify and sometimes they’re not responded to or there’s no followup after meetings so I think it would help to kind of get some handle on how you make these decisions for example you’re supposed to focus on low and lower middle inome countries but you got many projects in high and upper income countries like Mexico Argentina Georgia Oman then there are some lower middle inome countries that I think would be excellent candidates like were mentioned in the island countries and yet you say you won’t work with them and then to add to the confusion you maintain a list and this is on your website that says these are the countries we can’t support and then you list Oman and Singapore as places that you are supporting but they’re both on the list of the countries that you can’t support so you can see why people are not sure how this works or how we can make it work better or how the countries or the companies that might be interested investing can get a better understanding before they go through the process if they meet some of these categories I know the legislation is difficult to deal with because it allows all these waivers but could you help us with that a little bit yeah you know on the um income classification I think it’s pretty straight forward and I apologize if uh our Communications on our website don’t make it appear to be that way Congress has uh within the build act required us to only work in lwi income lower middle income and under certain circumstances upper middle inome countries the only exception to that is in Europe for energy projects under the European energy and security divers diversification act exception I think part of the challenge that um um you may be facing in the information you just laid out is the difference between countries where we’re currently eligible to work versus uh investments in our portfolio from our predecessor agency or from previous years part of the problem with the income classification categories is they change every year on July 1st some countries move from middle income upper middle income to high income and become ineligible some move downwards there’s volatility every year and you can imagine that if we’re in the middle of working on an investment on June 30th that in July 1st the country becomes ineligible we then can’t do it by by law stop we we we’re required to there’s no possibility of a waiver that’s the statutory uh requirement so that I mean was I think a well-intentioned but difficult to administer uh criteria for or how we work we’re very concerned that the World Bank is about to revise its way that it does the income categories and we’ve heard that dozens of countries are going to move into categories in 2025 that could be quite devastating for our work if there are large scale movements uh of these categories that’s why we wanted to go more toward the World Bank lending categories which don’t have the same degree of volatility and take into account many of the things you mentioned which are focusing would be to focus us on the least developed countries in the world is that some reform that we can enact in the uh reauthorization that that would be one of our highest priorities for Congress to address in reauthorization thank you that would be helpful thank you I yeld back J Ys chair recognizes M Comm loger Dev thank you Mr chair uh and thank you to our Witness for being here today uh DFC is probably one of the most important development agencies in our toolbox and it’s essential that we reauthorize the DFC in a timely manner um also your work on the African continent I think offers important uh development options uh for countries that are looking for partners to support their growth uh and want the US to provide a viable alternative so what kinds of projects or in what sect sectors are you seeing the greatest Demand on the continent well it’s really across all sectors there’s enormous appetite for our financing um in in Africa and the many countries in Africa where we work um in infrastructure uh in the last year we’ve done an airport in Sierra Leon uh We’ve we’re working on a railway investment uh we’d be very interested in Port Dev in investments in in Africa um in Health Systems uh there’s a huge opportunity in Africa for local vaccine manufacturing for health clinics for diagnostics for food security uh whether it’s processing better storage uh helping to enable small holder Farmers to disintermediate middlemen and be more productive and of course there’s uh appetite throughout the whole continent for support for small business uh that really that kind of Entrepreneurship and small business requires financing that’s how you um these businesses can get off the ground and make the kind of economic impact that uh is so necessary and so how do you all collaborate with other uh development Finance institutions and multilateral development banks in Africa to increase the scale and reach of your Investments this has been a huge area that we’ve devoted a lot of resources to since DFC launched it was part of the underlying motivation of the build Act was to enable us to be a better partner so we work with uh our G7 Partners uh the partnership for Global infrastructure and investment is a G7 initiative to help pool our Capital make us more efficient and provide the kind of alternative we also work with the European bilateral dfis uh quite a bit um I’ve attended many meetings many of my colleagues have worked closely with them and we’ve brought together uh these groups to think about sharing deal flow due diligence and other ways to make us more efficient it’s also true with the regional multilaterals uh we try to find ways to work with them the interamerican Development Bank is a very important partner for us for us and we’ve recently uh created a platform agreement to share deal flow uh and due diligence and then as we’ve been talking about during this hearing in the Indo Pacific uh relationships a trilateral infrastructure partnership with our colleagues in Australia and Japan a trilateral partnership with our Korean and Japanese counterparts uh we have M with Tai Taiwan with Singapore Etc these are all um part of I think the sort of global environment of our partners realizing the challenge we face and that if we don’t work together we’re going to be worse off yeah is so my understanding is that Guana is uh categorized as high income and so I think that’s right Guana is is and do you see value in I know you’ve talked about restructuring it so that we can have um access to newer and different Partnerships do you I see value in partnering with that country can you talk about some of the opportunities that could be available to us well Guyana would be one of the countries that if we moved from income classification to lending categories would become El eligible because it’s not currently eligible I don’t really know that much about the environment for potential deals there but and I apologize we down to the wire on votes and no more than welcome to keep talking I don’t know I that was the end of my uh line of questioning so I would yield back thank thank you and uh thank you Mr Nathan and uh members may have additional questions for you and writing um we look forward to working with you on this uh legislation and I think it will enhance your ability to do your job and so thanks so much for being here today thanks for the opportunity Mr committee stands adjourned
The House Foreign Affairs Committee holds a hearing on efforts to compete with China’s Belt and Road Initiative.
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5 Comments
Don't understand how the government is so ambitious to relieve poverty throughout the world, but let's veterans and us who weren't born into a well off family suffer. It's sad that in 2024, workers with full-time jobs in the US are still living in poverty.
Boring!
Solomon islands is a strategic launch point to Australia's back door. For China
Bullshit
The US won't be in Ukraine when the war ends, not unless the war mongering Complex takes over the Government in a Coup, then all that will be left is bunker life after the Nuclear Oblitheration. Putin isn't fucking around, he has just as little regard for human life as the Parasitic war mongers.