Washington provides an alternative to state-led financing from Beijing and Moscow.
(This is an article published in the Financial Times by Dan Brouillette, the US secretary of energy and Adam Boehler , CEO of the US International Development Finance Corporation.)
Access to affordable, reliable energy is critical to secure the strength and prosperity of any nation. In the US, a period of unprecedented oil and gas discovery and production has delivered on the long-held national goal of energy security. However, America’s new position as a net energy exporter not only strengthens our national security but enables us to support the energy security of allies around the world.
America’s European allies today face a vastly different energy outlook — one that leaves them more vulnerable to supply disruptions, price swings and energy dependence. Europe imports 90 per cent of its oil and 70 per cent of the natural gas it consumes and this state of dependence is likely to grow in the coming years owing to a rising population and policies seeking to replace coal-fired energy production with natural gas and renewables.
An effective solution will require increased investment in energy and the other critical infrastructure necessary for modern economies. But all investment is not created equal and investment that results in heavy debt or neglects international standards on transparency and rule of law can weaken a nation’s sovereignty. State-led investments from autocratic regimes have in recent years weakened the sovereignty of many countries, spanning Sri Lanka to Angola, by causing them to cede control of key ports, technology or natural resources.
The world is continuing to learn hard lessons from the economic predation of autocratic nations, such as China. And yet significant threats remain, as Beijing pushes its massive state-directed investments in capitals around the world. Given the many strings that come with such initiatives, this influx of investment threatens to erode bedrock foundations of good governance, liberal markets and the national heritage of countries, beginning with critical infrastructure and irreplaceable resources.
While these autocratic nations claim they are merely supplying legitimate infrastructure demands, the reality is they are exporting their own economic imbalances — such as industrial overcapacity and excess labour — and, in some cases, have converted their loan portfolio and economic inroads into military access, technology theft or diplomatic influence.
Equally concerning, Russia is using energy to bend other nations to its geopolitical will, particularly in Europe. In Europe, as much as anywhere in the world, energy security is national security — and energy security depends on energy diversity. The fact remains that many European countries remain dependent on Russian gas to meet their growing energy demands. This energy dependence remains as Russia continuously disregards international rules and norms, such as recognising the sovereignty of its commercial partners, including Ukraine, Poland and Georgia.
This year, the US International Development Finance Corporation was launched. DFC modernises and expands our nation’s development finance tools. DFC was created through bipartisan legislation that highlighted development finance as a critical tool of American foreign policy.
The agency offers a strong alternative to state-directed financing models by emphasising private-sector development leading to financially sustainable projects that respect transparency, sovereignty, high standards and rule of law. Congress recently directed DFC to invest in energy projects that can ensure Europe and Eurasia are energy-independent and secure.
The US Department of Energy has created new efforts such as the Partnership for Transatlantic Energy Cooperation to support the Three Seas Initiative — a forum set up by Poland and Croatia to promote central European integration — by developing new and improved tools for nations to protect their citizens from abdicating control of their critical infrastructure and diversifying their energy supply, an effort that further bolsters our collective security.