Development Finance Corporation’s first overseas office sparks controversy
A controversy has erupted in Washington over a Trump-era plan to establish the first overseas office of the US International Development Finance Corporation (DFC), covering all of Southeast Europe, in Belgrade, Serbia. Signals that the Biden administration was taking a second look at this initiative — mainly focused on promoting the Trump-era Kosovo-Serbia economic dialogue — and rushed to approval in the final hours of the Trump administration in the style of a last-day-in-office presidential pardon, triggered alarm bells from some of the initiative’s politically connected supporters — largely but not exclusively in the powerful Greek American community.
Ironically, most of the Washington groups engaged in the defense of the DFC Belgrade office initiative have little or nothing invested in the success of the Kosovo-Serbia dialogue. Instead they jumped into the fray for one reason, believing that the DFC office itself was also a symbol of the so-far unrealized US commitment to use federal funds to support Greece’s extensive infrastructure and energy privatization/development projects and accordingly assist Greek economic development, something that US legislation on development financing partially restricts because Greece is an EU member state with a high per capita income level, and already has adequate access to EU financing.
The DFC is new in name only
Another unusual aspect of the developing debate is the relative lack of knowledge shown by many of the participants, who appear to believe that the DFC is some new federal agency with an all-new set of financial tools and capabilities and not just a re-imagination of its predecessor organization, the Overseas Private Investment Corporation (OPIC), which is the case of the DFC. OPIC has done investment and insurance projects in Southeast Europe for many years.
Trump signed the legislation authorizing the reorganization of the Overseas Private Investment Corporation into the DFC in October 2018. It took over a year for OPIC’s reorganization to be completed, and DFC formally began operations in January 2020, after absorbing USAID’s Development Credit Authority into its existing structure.
The plan to create the DFC was seen as the biggest change in US development policy in the last 15 years, and the newly rebranded organization was thought of, and sold as, a tool to partially counter China’s heavily funded One Belt One Road (OBOR) initiative. In Washington, there was strong bipartisan support for the policy changes Trump proposed. The DFC was to be authorized to provide up to $60 billion in insurance, loans, and loan guarantees for projects mainly in developing countries, with the focus on infrastructure; but that massive funding stream has not materialized. Much of the funding will come from the fees DFC charges for services provided.
DFC into the Balkan fray
There is a strong Trump legacy that explains the DFC’s moves to open its first overseas office anywhere in the world in Belgrade. First of all, at the helm of the DFC, Trump nominated Adam Boehler, who was incidentally a college roommate of son-in-law Jared Kushner. Boehler was thrust into supporting US policy in the region because the agreements the US had mediated over 2020 between Kosovo and Serbia all aimed to improve bilateral economic cooperation and transport infrastructure with US financing where possible.
When the so-called “Washington Agreement” was signed in the White House in September 2020, Boehler and Kushner were important players in the signing ceremony; shortly thereafter Boehler was in Belgrade and Pristina signing vaguely worded cooperation agreements, enabling President Trump to claim a small foreign policy victory for his re-election campaign which many observers at the time believed was the principal motivating force.
Boehler also participated in a rushed ceremony to open the DFC’s at-that-point-unstaffed Belgrade office and some documentation for that office was reportedly approved during Trump’s last day in office. Some EU sources claimed in September that the Trump Kosovo-Serbia negotiating team was working so fast to get documents ready for a Trump signature that it agreed to finance projects the EU was already planning to handle.
It is unclear when the extra responsibilities for the rest of Southeastern Europe were added to the Belgrade office’s list of projects and responsibilities, but high-level interest from Greek officials in the DFC’s work, most likely a result of information provided by the US Embassy in Athens, was enough to add Greece to the list. Boehler visited Greece as well and developed a good rapport with senior officials there, even though the DFC’s primary mandate is supposed to be targeted towards projects in low income and developing countries where Chinese project financing is often provided on a “take it or leave it” basis with no other options available.
Rumors have been circulating in Washington in recent weeks that the DFC Belgrade office might not be a priority for the Biden administration and accordingly not get fully staffed up, triggering more concern and reaction from the Greek American Washington-based organizations than from others across the region who would be expected to show concern. Reports have also surfaced that a good number of DFC officials believe the organization should focus its resources on lower-income countries, not those in Eastern Europe or EU members.
However, it is completely normal in the Washington context for such ethnic lobby groups to take issue with US government staffing decisions, although usually, the focus is on the provision of consular services (visas and passport services) for groups of Americans abroad and not economic policy.
As is often the case, once any kind of media release from these ethnic lobby groups is published, the Washington Greek media corps will lock onto the message. In the DFC case, they rebroadcast it to Greece as evidence that the US commitment to Greece was somehow faltering, with local Greek correspondents quickly bombarding the DFC’s Washington media office with questions and on Twitter.
Never allowing a signal of a “wavering US commitment” in the Greek media to go unchallenged, a senior level phone call was arranged on February 24 between the new DFC CEO and the Greek Minister of Development for damage limitation purposes. DFC issued the following statement:
“U.S. International Development Finance Corporation (DFC) Chief Operating Officer David Marchick today spoke by phone with Greek Minister for Development and Investment Adonis Georgiadis. Mr. Marchick and Minister Georgiadis discussed new opportunities to expand DFC’s work in Greece under the Biden administration. This engagement reflects the strength of U.S.-Greece relations and the importance of further deepening our countries’ partnership. DFC is strongly committed to advancing strategic investments and supporting development and economic growth in the Aegean, especially reinforcing energy independence and sustainability in Greece while the region faces increasing geopolitical competition.”
