Webb: Why Spend Millions in American Tax Dollars to Help Chinese Business Growth in Africa?

Senator Webb called on the Millennium Challenge Corporation (MCC), a U.S. government development organization funded by American tax dollars, to immediately cease action on multi-million dollar development projects awarded to non-U.S. companies in Africa. Highlighting a recent spate of contracts to the Chinese state-owned Sinohydro Corporation, in a letter to David Yohannes, MCC’s CEO, Webb warned, “At a time when our economy is struggling to recover, I am concerned that the funding of Chinese state-owned companies with U.S. taxpayer dollars harms American business, foreign policy and development interests abroad.”

Webb indicated that the contracts include a $71.6 million contract awarded to Sinohydro to build a new airport in Mali, Africa, plus at least three other contracts totaling more than $150 million for infrastructure projects in Mali and Tanzania, Africa.

“I have requested a briefing this week with MCC representatives on the matter of how contracts are awarded to non-U.S. companies,” Webb said today.  Referring to the letter to CEO Daniel Yohannes, Webb commented: “If this situation is unchanged, we risk the entrenchment of Chinese companies in Africa, paid for by American taxpayers. I cannot imagine a more ludicrous scenario at this point in the evolution of our recent foreign policy.” Webb also said that such projects “obviously work to the benefit of the Chinese government’s strategy to expand political influence through business and development ventures.”

Webb instead pressed for the partnering of the MCC with U.S. businesses. “American tax dollars provided for overseas investments should be used to assist U.S. economic recovery, provide American jobs, and strengthen U.S. business ties with developing countries.”  

A full copy of Senator Webb’s letter to the MCC follows.

Daniel W. Yohannes
Chief Executive Officer
Millennium Challenge Corporation
875 Fifteenth Street NW
Washington, DC 20005

Dear Mr. Yohannes:

I am writing to express my concern that the Millennium Challenge Corporation (MCC) is enabling Chinese state-owned enterprises to expand their operations—and Chinese influence—in Africa with tens of millions in American taxpayer dollars.  I was alerted to this problem by a recent Reuters report that Sinohydro Corporation, a Chinese state-owned company, was awarded a $71.6 million contract in Mali to build a new airport for the capital, Bamako.  I have been informed by your staff that in addition to the Bamako airport project, Sinohydro was awarded a contract for the Main Canal Conveyance System in Mali and two contracts for the construction of roads in Tanzania, totaling more than $150 million.

Sinohydro Corporation is one of China’s largest state-owned infrastructure companies, ranking 89th among China’s 500 largest companies and 56th among the 225 largest international contractors in 2009.  Sinohydro is well-known for its work on the Three Gorges Dam in China.  Additionally, it has operations all over the world, including Angola, Burma, Cambodia, Laos, Malaysia, Sudan and Tanzania. Some of these projects include financing from the China Development Bank, China’s state-owned development lending organization.

Many of Sinohydro’s projects have been controversial due to their environmental or human impacts, such as the displacement of thousands of people in Sudan with the construction of the Merowe Dam.  Sinohydro also has been reprimanded by the Chinese government for substandard work and breaches in safety and environmental pollution.

At a time when our economy is struggling to recover, I am concerned that the funding of Chinese state-owned companies with U.S. taxpayer dollars harms American business, foreign policy, and development interests abroad.  If this situation is unchanged, we risk the entrenchment of Chinese companies in Africa at the expense of U.S. companies, which cannot compete because of the cost of establishing new operations in Africa.  Additionally, this action tacitly supports the Chinese government’s “going abroad” strategy to expand political influence through business and development ties. 

I believe that there should be a natural marriage in the partnering of U.S. businesses with U.S.-funded MCC contracts in Africa and other regions. This partnership can aid the U.S. economic recovery, provide American jobs, and strengthen U.S. business ties with developing countries. 

Consequently, I am asking that you immediately cease action on these and any other projects not awarded to U.S. companies.

As Chairman of the East Asian and Pacific Affairs Subcommittee, I intend to conduct vigorous oversight on this issue to ensure that our development assistance properly uses American taxpayer funds to advance U.S. interests abroad and not to enhance the spread of Chinese influence. 

Thank you for your attention to this matter.

Sincerely,

Jim Webb
United States Senator