The Trump administration’s Indo-Pacific Vision is not an alternative to Chinese and other development initiatives in the Asia Pacific. It is a geopolitical play that is likely to benefit mainly advanced economies. What the Asia Pacific needs is a sustainable, long-term plan for accelerated economic development – not new geopolitical divisions.
On July 30, U.S. Secretary of State Mike Pompeo gave a highly-anticipated speech on “America’s Indo-Pacific Economic Vision”:
The Indo-Pacific, which stretches from the United States west coast to the west coast of India, is a subject of great importance to American foreign policy. This region is one of the greatest engines … of the future global economy, and it already is today. And the American people and the whole world have a stake in the Indo-Pacific’s peace and prosperity. It’s why the Indo-Pacific must be free and open.
In his speech, Pompeo announced $113 million in new U.S. initiatives to “support foundational areas of the future: digital economy, energy, and infrastructure.” As he put it, the funds represent a “down payment on a new era in U.S. economic commitment to peace and prosperity in the Indo-Pacific region.”
While bypassing the specifics of where the money would come from, these remarks were designed to inspire comparisons with the postwar Marshall Plan and China’s One Belt One Road (OBOR) initiative. However, the scale of the U.S.’ Indo-Pacific Economic Vision pales in comparison with the OBOR, which involves far greater cumulative investments. There are also valid concerns about U.S. financing capacity in the foreseeable future – not just in Asia, but at home.
Financing Challenges
All Trump initiatives are overshadowed by America’s massive twin deficit. The federal budget deficit for fiscal 2019 is almost $1 trillion. Despite Trump’s trade wars, the trade deficit increased by more than 12% in 2017 to $570 billion, the largest deficit since 2008.
