Hagerty, Menendez, Rubio, Kaine Introduce Bipartisan Bill to Force Transparency on China’s Malign Influence at IDB

July 25, 2023

Reps. Gallagher, Gallego, Gottheimer, and Díaz-Balart are leading effort in House of Representatives

WASHINGTON—United States Senators Bill Hagerty (R-TN), a member of the Senate Foreign Relations Committee, and Bob Menendez (D-NJ), Chairman of the Senate Foreign Relations Committee, along with Senators Marco Rubio (R-FL) and Tim Kaine (D-VA), today introduced the IDB Transparency Act, a bipartisan bill to require the Treasury Department to force transparency on China’s malign influence at the Inter-American Development Bank (IDB) and require U.S. vote and influence at the IDB to counter People’s Republic of China (PRC) influence in the bank. Representatives Mike Gallagher (R-WI-08), Ruben Gallego (R-AZ-03), Josh Gottheimer (D-NJ-05), and Mario Díaz-Balart (R-FL-26) are introducing the companion legislation in the U.S. House of Representatives, along with GOP Conference Chair Elise Stefanik (R-NY-21) and Representatives Jimmy Panetta (D-CA-19), Carlos Gimenez (R-FL-28), Rick Larsen (D-WA-02), and Marc Veasey (D-TX-33).

The IDB—as the most important development institution in the Western Hemisphere that provided over $23 billion in annual financing last year—is vital to the development of Latin America and the Caribbean. The Chinese Communist Party (CCP), however, has used its influence at the bank to coerce nations in the region to abandon Taiwan, even pressuring Paraguay to abandon Taiwan in exchange for vaccines.

“The economic security of the Western Hemisphere is inextricably linked to the economic security of the United States, and it is vital that the United States work to counter the CCP’s efforts to gain a strategic foothold through investments in critical resources and infrastructure,” said Senator Hagerty. “The U.S. is the IDB’s largest shareholder, but the PRC has leveraged the IDB to enhance its growing, nefarious influence in Latin America. I’m pleased to introduce this bipartisan legislation that will help put an end to the CCP’s attempts to use the IDB to advance its goals in Latin America.”

“The IDB is our hemisphere’s preeminent multilateral development bank, and has long provided financing to accelerate inclusive economic growth and build much-needed infrastructure across the region,” said Chairman Menendez. “As the People’s Republic of China continues to use economic tools to advance its coercive economic agenda across the Western Hemisphere, it’s more important than ever that we protect the integrity of the IDB and ensure its critical work can continue unhampered by Beijing’s interference. By strengthening transparency at the IDB and denying support to projects that undermine U.S. national interests or those of our partners, this important bipartisan legislation will bolster our commitment to the IDB while assuring the global community that we’re combatting efforts to exploit multilateral institutions.”

“The U.S. is the IDB’s largest shareholder,” said Senator Rubio. “Yet, China’s genocidal regime continues to enhance and grow its leverage throughout our region, thanks to its debt trap diplomacy and Belt and Road Initiative. We must have a comprehensive action plan to reduce Beijing’s coercive and anti-democratic influence at the IDB.”

“The IDB is vital to bolstering Latin America’s development and prosperity, which benefits the security and economy of the United States,” said Senator Kaine. “It’s critical that we push back on China’s malign influence in the IDB to protect economic growth, national security, and good governance in the region. This bipartisan bill would help us do just that.”

“For too long, the Chinese Communist Party has exploited its presence in the Inter-American Development Bank to advance its own geopolitical, economic, and technological goals,” said Chairman Gallagher. “Latin American citizens deserve to have the IDB serve their economic development, not as a vector of CCP malign influence.”

“Maintaining the United States’ partnership with our Latin American and Caribbean neighbors is critical to our nation’s economy and security,” said Representative Gallego. “We must hold the PRC accountable for using the Inter-American Development Bank as a tool to expand its influence. I’m proud to co-lead this bipartisan legislation so we fully understand the PRC’s destabilizing activities in the Western Hemisphere.”

“We know that the Chinese government views the U.S. as an enemy and we need to be very wary of their hegemonic march,” said Representative Gottheimer. “They’ve spent trillions outside of China to try to gobble up new allies around the world — with no real interest in helping develop countries or strengthen the global economy. I’m proud to help introduce the IDB Transparency Act because we need to take concrete action to protect national security, bolster American competitiveness, safeguard our infrastructure and economy, and fight back against foreign aggression. China is our biggest global threat and we need to treat their nefarious influence and involvement in the IDB seriously.”

“I cosponsored this important, bipartisan bill because it will bring much-needed transparency to the IDB, including a full assessment of the PRC’s undue influence and malign activities within that multilateral institution,” said Representative Díaz-Balart. “The PRC has already spread its damaging influence throughout our hemisphere, and this bill is important to ensuring that the activities of the PRC are thoroughly uncovered, monitored, and diminished. I commend Rep. Gallagher for his leadership in tackling the pervasive threat posed by the PRC, and look forward to continuing to work with him on this critical national security issue.”

China, despite owning less than 0.1 percent of the shares of the IDB, has consistently ranked among the top countries awarded contracts by the IDB, ranking number one in 2019. The CCP’s exploitation of the IDB is part of its broader strategy to assert its influence in the region. Over the last three decades, China’s trade with Latin America has risen from $1.7 billion to $428 billion, eclipsing the United States in most countries.

In specific, the IDB Transparency Act would require a public report from Treasury every two years that includes:

·         The scope and scale of PRC and PRC company influence and involvement in all aspects of the IDB and IDB contracts;

·         A complete list of PRC-funded projects, the extent to which IDB financing has benefitted PRC entities, and a full review of projects involving PRC companies;

·         The extent of PRC tech subject to U.S. export controls involved in IDB projects;

·         Whether the PRC has co-opted the IDB to spread its influence;

·         A list of IDB projects near U.S. military bases in the region; and

·         An action plan for the U.S. to reduce Chinese influence at the IDB.

The bill would also require the use of the United States voice, vote, and influence at the IDB in order to:

·         Facilitate greater transparency at the IDB;

·         Reduce PRC and PRC company influence in IDB deliberations and activities;

·         Vote against PRC-funded projects or projects involving PRC companies that threaten U.S. national interests; and

·         Block new share sales to the PRC.

Full text of the legislation can be found here.