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By Chris Devonshire-Ellis
The British Foreign Secretary, Liz Truss, announced at the London Stock Exchange last Thursday that the UK would be launching a new initiative to compete with China’s Belt And Road Initiative. Part of this is to rebrand the CDC Group, https://www.cdcgroup.com/en/ which handles UK investment overseas as ‘British International Investment’ – a “finance institution that will invest billions in infrastructure and technology in low and middle income countries across Asia, Africa and the Caribbean.” This will enable the new BII to partner with UK capital markets and sovereign wealth funds to scale up financing and help the private sector move in. The rebranding will commence from April next year.
This is part of the UK’s ‘network of liberty strategy’ which basically calls for British Government funded investment to only be made in democracies, and apparently follows to a large extent the US ‘Summit For Democracy‘ https://www.state.gov/summit-for-democracy/#:~:text=On%20December%209%2D10%2C%202021,by%20democracies%20today%20through%20collective that is linked to Washington’s ‘Build Back Better World’ investment programme.
Ms. Truss stated that “When freedom-loving democracies invest in infrastructure and supply technical expertise, it makes countries freer, wealthier and more secure. Too many countries are loading their balance sheets with unsustainable debt. Reliable and honest sources of finance are needed. Britain and our allies will provide that, with British International Investment a key delivery vehicle. This is a win-win for all. It benefits Britain by creating jobs and opportunities for our people. And it helps grow economies across Asia, Africa and the Caribbean while drawing them closer towards free-market democracies and building a network of liberty across the world.”
She explained more in an interview with the Financial Times, https://www.ft.com/content/93de6cc1-451a-465d-8233-8c9b903cedd4?shareType=nongift saying “We want to build a network of liberty around the world with our friends and partners. That involves closer economic partnerships. It’s a positive agenda. It’s not a confrontational agenda. It’s about giving countries alternatives. The overall ‘build back better world’, which is a number of different countries working together to create reliable, honest investment around the world, is about pulling more countries or more investment into the positive circle of influence.”
It’s unclear exactly how influential this will be. £9 billion doesn’t go far when distributed amongst Africa, Asia, and the Caribbean these days, with Belt and Road standalone projects running into the billions for just one. China for example committed just under US$6.5 billion into ASEAN, and US$2.2 billion into Hong Kong just in Q3 alone this year (See: Asian Investment Research, Chinese outbound investment into Asia here) AIR – November Issue.pdf
But which countries can be expected to be classed as the UK’s ‘friends and partners’? Taking the US lead, which is not unreasonable, then the countries considered democratic friends and are participants in the upcoming ‘Summit For Democracy’ https://www.silkroadbriefing.com/news/2021/11/24/us-summit-for-democracy-guest-list-sets-global-divisions/ are:
Albania, Angola, Antigua and Barbuda, Argentina, Armenia, Australia, Austria, Bahamas, Barbados, Belgium, Belize, Botswana, Brazil, Bulgaria, Cabo Verde, Canada, Chile, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Democratic Republic of Congo, Denmark, Dominica, Dominican Republic, Ecuador, Estonia, Fiji, Finland, France, Georgia, Germany, Ghana, Greece, Grenada, Guyana, Iceland, India, Indonesia, Iraq, Ireland, Israel, Italy, Jamaica, Japan, Kenya, Kiribati, Kosovo, Latvia, Liberia, Lithuania, Luxembourg, Malawi, Malaysia, Maldives, Malta, Marshall Islands, Mauritius, Mexico, Micronesia, Moldova, Mongolia, Montenegro, Namibia, Nauru, Nepal, Netherlands, New Zealand, Niger, Nigeria, North Macedonia, Norway, Pakistan, Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sao Tome and Principe, Senegal, Serbia, Seychelles, Slovakia, Slovenia, Solomon Islands, South Africa, South Korea, Spain, Suriname, Sweden, Switzerland, Taiwan, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu, Ukraine, United Kingdom, Uruguay, Vanuatu, and Zambia.
The countries not included and subsequently part of a US drafted ‘Naughty List’ are as follows:
Afghanistan, Algeria, Andorra, Azerbaijan, Bahrain, Bangladesh, Belarus, Benin, Bhutan, Bolivia, Bosnia Herzegovina, Brunei, Burkina Faso, Burundi, Cote D’Ivorie, Cambodia, Cameroon, Central African Republic, Chad, China, Comoros, Congo, Cuba, Djibouti, Egypt, El Salvador, Equatorial Guinea, Eritrea, ESwatini, Ethiopia, Gabon, Gambia, Guatemala, Guinea, Guinea-Bissau, Haiti, The Holy See, Honduras, Hong Kong, Hungary, Iran, Jordan, Kazakhstan, Kyrgyzstan, Laos, Lebanon, Lesotho, Libya, Liechtenstein, Madagascar, Mali, Mauritania, Monaco, Morocco, Mozambique, Myanmar, Nicaragua, North Korea, Oman, Pakistan, Palestine, Qatar, Russia, Rwanda, San Marino, Saudi Arabia, Sierra Leone, Singapore, Somalia, Sri Lanka, Sudan, Syria, Tajikistan, Tanzania, Thailand, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Venezuela, Vietnam, Yemen, and Zimbabwe.
This then presents something of a conundrum for the UK. Of the above on the ‘Naughty List’, Bangladesh, Brunei, Cameroon, Eswatini, Gambia, Lesotho, Pakistan, Singapore and Sri Lanka are all members of the British Commonwealth of Nations. Meanwhile, as part of the post-Brexit trade strategy, the UK has signed off Trade Agreements with Cameroon, Cote D’Ivorie, Egypt, El Salvador, Guatemala, Honduras, Jordan, Lebanon, Lesotho, Morocco, Mozambique, Nicaragua, Singapore, Tunisia, Turkey, Vietnam, and Zimbabwe, and are continuing negotiations with Algeria. Three of them are CPTPP member states, a trade bloc the UK is trying to join.
In short, the UK, in apparently stating it will lend money to democracies only and following the US lead in identifying who these are, has potentially isolated 24 countries with which London has cordial Commonwealth relations, or have recently signed Trade Agreements with. Ambassadors will be busy fending off questions as to why trade is permitted but investment into their countries is not.
This of course may well be mitigated against if London and the new BII chose to ignore the US position. However, this ill-thought-out investment promotion scheme does appear to have followed the US “Build Back Better World” criteria of preferring a “democracies only” style club that fits with US foreign policy while ignoring the fact that British trade and investment interests are rather different. It has the potential to cause the UKs trade partners some confusion and possibly not a little anger – not good news when attempting to carve a brave new world in international trade. Someone needs to untangle this left hand not knowing what the right hand is doing in British-Global trade.
This article was reproduced with the kind assistance of Chris Devonshire-Ellis. He has 30 years’ experience on the ground in Asia and across the Commonwealth. For assistance and advisory on British business in Asia please contact him at chris@dezshira.com
