Explainer: B3W vs BRI in Latin America

In 2013, Chinese President Xi Jinping inaugurated the Belt and Road Initiative, using a name that harkens back to the famed Silk Road. Like the historic trade route, the BRI was originally intended to serve as a transcontinental network linking China to countries in Eurasia and Africa.

China expanded the BRI to Latin America and the Caribbean in 2017, when it inked a memorandum of understanding with Panama. Now, 19 Latin American countries are official participants. Some of the biggest countries in the region—Argentina, Brazil, Colombia, and Mexico— are not members but have left the door open to joining in the future and increased their bilateral trade investments with China.

President Joe Biden introduced B3W with support from the leaders of the G7 nations-Canada, France, Germany, Italy, Japan, and the United Kingdom-during the group's June 2021 summit. B3W's main goal includes narrowing the more than $40 trillion gap in infrastructure investment needed by 2035 in the developing world. Financial allocations detailing how the B3W will close this economic gap are not yet outlined, but the funding of the initiative will be sourced from each of the G7 members' own development institutions and banks, bilateral and multilateral tools, private capital, and other international institutions.

As the initiative's leader, Washington committed to mobilizing finances from sources such as the U.S. Development Finance Corporation (DFC), USAID, and the U.S. Export-Import Bank. The initiative will be organized by four areas of focus: climate, health, digital technology, and equality with an emphasis on gender.

U.S. officials chose Latin America for the first listening tour—a three-part trip dedicated to potential project development and negotiations with each country's officials, "given the proximity to the United States and our core interest there," said the delegation's leader, U.S. Deputy National Security Advisor for International Economics Daleep Singh.

Colombia

On the first stop in Colombia, the delegation met with President Iván Duque to discuss sustainability and Venezuelan migration. The U.S. delegation committed to two $8 million loan portfolios addressing these issues, alongside a similar investment dedicated to the agricultural sector. During the visit, previous DFC investments on reforestation were also discussed, with projects set to be launched in January 2022.

Colombia is not an official member of the Belt and Road Initiative, but its cooperation with China is picking up. Though Washington remains Bogotá's top trade partner overall, Beijing overtook the United States as the top import origin for Colombia, thanks to a 33 percent boost in imports from China during the first six months of the year. On the infrastructure side, in October 2019, two Chinese companies won a $3.9 billion bid to build the 9-million-strong city's long-awaited metro system. Development began in 2020, and the metro is scheduled to begin operations in 2028.

Ecuador

The U.S. delegation made its second stop in Ecuador, where they met with President Guillermo Lasso and key ministers, along with leaders of the country's private and civil society sectors. There, they announced a $150 million loan dedicated to sustainable, women-owned businesses. Additionally, the DFC allocated financing to support more sustainable projects and pandemic recovery.

As far as Quito-Beijing relations go, Ecuador committed to participating in the BRI in 2018. Some of the first projects aided northern areas of the country affected by a 2016 earthquake, with a $21 million loan for the reconstruction of the Eloy Alfaro Airport and multiple damaged bridges. Other projects included the construction of a highway using a loan of $148 million from the Export-Import Bank of China

By the end of 2018, Ecuador found itself $19 billion in debt to China for development projects. But, with some of the debt payable in oil, fluctuating oil prices led Quito to defer nearly $900 million in repayments to the Export-Import Bank of China and China Development Bank.

In January 2021, the DFC agreed to finance Ecuadoran infrastructure projects with as much as $2.8 billion, which could be used to "refinance predatory Chinese debt."

Panama

At the end of the tour, the U.S. delegation met President Laurentino Cortizo. In Panama, the nascent B3W project emphasized water access, digital inclusion, and transparency as priorities. While few specifics were released, infrastructural needs to promote a carbon-negative goal for the Panama Canal were also discussed. In April, the Canal Authority committed to becoming carbon neutral by 2030.

Panama was the first country in Latin America to formally join the BRI, and it did so in 2017, five months after the country switched its diplomatic ties from Taiwan to China. A year later, the two countries signed 19 bilateral agreements, including plans to establish a new Latin American headquarters for the China Development Bank in the country, banking, energy, and infrastructure.

Some projects have been canceled or downsized, such as a high-speed train stretching from Panama City to David, a city bordering Costa Rica. Another plan included construction of a set of transnational electricity lines, but the Panamanian energy authority canceled the project in May 2020 in light of the pandemic.

Meanwhile, the digital sector has offered a space for expansion, given that Beijing telecom giant Huawei uses Panama as a regional distribution center. Huawei is also designing a so-called digital free-trade zone, involving a $38 million endeavor that entails a warehouse outside of Panama City with involvement from nearly 100 companies in product distribution, as well as cloud computing services.

Sophia Mancilla contributed to this article.