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Blue Dot Network initiative by USA to counter China – Should India join it?

Blue Dot Network initiative by USA to counter China – Should India join it?

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  • GS 3 || Economy || Infrastructure || Investment Models

Why in the news?

The US requested India to join the Blue Dot Network, a US-led cooperation with Australia and Japan that promotes private-sector driven infrastructure funding possibilities in response to China’s Belt and Road Initiative, in a letter (BRI).

Present context:

  • The inaugural meeting of the Blue Dot Network’s executive consultation group (ECG) was held recently, signaling a shift towards reviving the two-year-old US-led initiative.
  • Experts argue that India might be interested in joining the Blue Dot network to counter Xi Jinping’s ambitious Belt and Road Initiative (BRI).
  • According to a press release by US State Department, more than 180 representatives participated and discussed “ideas on how the Blue Dot Network (BDN) initiative could help close the global infrastructure gap and create high standard, sustainable infrastructure in emerging markets”.

What is blue dot network?

  • The idea of the BDN took shape under the Trump administration in November 2019.
  • It first came to public light at the Indo-Pacific Business Forum in Bangkok during the 35th ASEAN summit in 2019 hosted by Thailand.
  • US’ International Development Finance Corporation (DFC) along with the Japanese Bank for International Cooperation and Australia’s Department of Foreign Affairs and Trade launched an infrastructure initiative to “boost transparency and sustainability”.
  • Dubbed the “Michelin Star” for infrastructural projects, the Blue Dot Network aims to promote-
  • “High quality, trusted standards for global infrastructure development” by engaging governments, the private sector, and civil society.
  • The participating members will approve such projects that qualify standards of excellence put up by the network keeping in mind global principles.

Certification process:

  • At the core of the project lies the development of a certification mechanism to identify and distinguish “quality infrastructure projects that demonstrate and uphold robust standards for development”.
  • This certificate will act as proof of “quality assurance” and further promote private investments.
  • OECD, an intergovernmental body with 38 member countries, is the technical partner of the BDN.

Can it be a counter to BRI?

  • Since the launch of Chinese President Xi Jinping’s ambitious BRI in 2013, investments related to infrastructure and development have been taking shape as geopolitical gains.
  • Through a US$ 1 trillion-plus transcontinental project, China has made inroads into 138 low and middle-income economies along with bringing 29 international organizations on board.
  • According to the 2020 BRI Investment Report, last year alone, China invested close to US$47 billion around the world, almost 54% lesser than 2019 owing to pandemic-induced challenges.
  • On the other hand, US-led Blue Dot Network aims to cover almost a $2.5-3.5-trillion investment gap in the projects related to the developing economies.
  • The US has been critical of Beijing’s “charm offensive” strategy since its inception and has been proactive in reaching out to friendly states in the Indo-Pacific and beyond.
  • Launched as a part of the Indo-Pacific strategy, the Biden administration looks to engage with the regional allies including India which has rejected China’s BRI and is currently involved in a standoff with its neighbor.
  • The US Senate recently passed industrial policy legislation to enhance the country’s investments in cutting-edge technology and
  • Launched a “supply chain trade strike force” to counter its competitor in trade and investment politics.

Should India be part of BDN?

  • The Blue Dot Network, according to experts, may provide India with a unique chance in the post-Galwan Valley environment.
  • New Delhi, which has mainly positioned itself as an anti-BRI nation, could find the US-led effort appealing and in line with the QUAD idea.
  • India opposes the BRI because it undermines not just other nations’ “sovereignty and territorial integrity,” but also widely accepted standards that maintain “openness” and “equality” in the area.
  • The key characteristic of BDN is that it uses a project-based investment approach rather than the BRI’s country-based involvement, which has resulted in debt traps.

Will joining the network will help India?

  • Project capability efforts will be boosted: A nation that joins the Blue Dot Network as a partner will see an increase in project capability activities.
  • Access to financing institutions: Having access to private and public financing institutions would assist developing nations like India reduce financial risks, allowing them to carry out development initiatives both domestically and globally.
  • Adherence to highest level of global standards: If a country’s infrastructure development projects receive a Blue Dot certification, they will be considered to be conforming to the highest level of global standards.
  • Detailed project standards: The Blue Dot Network will give detailed project standards to nations. Projects, businesses, and governments that fulfill or maintain the criteria can increase public trust in their commitment to good practices.

Conclusion:

  • On June 7, 2021, the Executive Consultation Group for Reviving the Blue Dot Network (BDN) was established in Paris.
  • The first meeting of the BDN executive consultation group is a positive sign in moving forward with the global certification process, and it has the potential to develop into a strategy to counter China’s neocolonial ambitions.
  • The network’s structure will be determined by its expansionary process and the Biden administration’s attempts to keep it from becoming inactive again.

Mains oriented question:

The proposal of the Blue Dot Network is part of the US’s Indo- Pacific Strategy. It aims to counter the China’s Belt and Road Initiative. Illustrate. (200 words)