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‘US asks India to join the Blue Dot Network’

  • Category
    International Relations
  • Published
    2nd Nov, 2020

In a letter, the United States asked India to join the Blue Dot Network, a U.S.-led collaboration with Australia and Japan that supports private-sector

Context

In a letter, the United States asked India to join the Blue Dot Network, a U.S.-led collaboration with Australia and Japan that supports private-sector led infrastructure financing opportunities in response to China’s Belt and Road Initiative (BRI). 

What is the Blue Dot network?

  • Led by the US’s International Development Finance Corporation (DFC), the Blue Dot network was jointly launched in November 2019 on the sidelines of the 35th ASEANSummit in Thailand by the-
    • United States
    • Japan (Japanese Bank for International Cooperation)
    • Australia (Department of Foreign Affairs and Trade)
  • It is meant to be a multi-stakeholder initiative that aims to bring governments, the private sector and civil society together to promote “high quality, trusted standards for global infrastructure development”.
  • Under it, infrastructure projects within the Indian Ocean Region will be certified in keeping with globally-recognised standards that uphold principles of transparency and financial viability.

Which ‘Principles’ are to be followed?

  • The infrastructure projects will have to follow the
    • G-20 principles for Quality Infrastructure Investment,aimed at sustainable lending and borrowing
    • G7 Charlevoix Commitment on Innovative Financing for Development
    • Equator Principles,which mandate financial institutions to assess and manage environmental and social risks in a given projects.
  • Projects that aim to be certified under the Blue Dot Network will have to give an undertaking that they adhere to these principles. The undertaking will then be scrutinised. 

Does it counter China’s Belt and Road Initiative?

  • The Blue Dot network is part of the US’s Indo-Pacific strategy, which is aimed at countering Chinese President Xi Jinping’s ambitious BRI.
  • Prior to 2001, US foreign policy was focussed towards integrating China into its plan, but this changed after China’s emergence as a global superpower.
  • Under Barack Obama, US foreign policy started shifting focus to Asia, where the US wanted to counter China’s growing influence.
  • From the US’s point of view, the Indo-Pacific region is the most economically dynamic and populous part of the world.
  • Further, the US sees China’s infrastructure investments and trade strategies as reinforcing its geopolitical aspirations, including efforts to build and militarise outposts in the South China Sea, which as per the US, restricts the free movement of trade and undermines regional stability.

What is China's Belt and Road Initiative?

  • The project is often described as a 21st century silk road, made up of a “belt” of overland corridors and a maritime “road” of shipping lanes.
  • The Belt and Road Initiative combines two initiatives
  • The (land based) Silk Road Economic Belt, comprising six development corridors, namely:
    • New Eurasian Land Bridge Economic Corridor (NELBEC)
    • China – Mongolia – Russia Economic Corridor (CMREC)
    • China – Central Asia – West Asia Economic Corridor (CCWAEC)
    • China – Indochina Peninsula Economic Corridor (CICPEC
    • Bangladesh – China – India – Myanmar Economic Corridor (BCIMEC)
    • China – Pakistan Economic Corridor (CPEC)
  • The 21st Century Maritime Silk Road
    • The 21st Century Maritime Silk Road connects China to Southeast Asia, Indonesia, India, the Arabian peninsula, Somalia, Egypt and Europeencompassing the South China Sea, Strait of Malacca, Indian Ocean, Gulf of Bengal, Arabian Sea, Persian Gulf and the Red Sea.

Will joining the network will help India?

  • Boost to project capabilities efforts: A country that joins the Blue Dot Network as a partner will boost its project capability efforts.
  • Adhering to highest level of global standards: Further, if the infrastructure development projects of that particular country obtain a Blue Dot certification, they will be seen as adhering to the highest level of global standards.
  • Access to financing institution: Access to private and public financing institutions will help mitigate financing risks, acting as an impetus for developing countries like India to smoothly undertake development projects domestically as well as internationally.
  • Clear project standards: The Blue Dot Network will provide countries with clear project standards. Projects, companies, and governments that meet or uphold the standards can build public confidence in their commitment to good practices.

Conclusion

Given the current circumstances, India needs to continue to infrastructure modernization to address regional inequality issues and create new growth opportunities. Joining the “Blue Dot Network” would enable New Delhi to advance its own “Act East policy” strategy. It will strengthen cooperation between India and its Southeast Asian neighbours. It could create new exchanges with neighbours.

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