President Obama has insisted since his first term that the US is now a Pacific power, seeking deeper ties with the region’s fast-growing markets while keeping a wary eye on the balance of power with China. But if you examine his trip to the region right after his re-election, what America’s “pivot to Asia” provides is an opportunity for the Obama team to do abroad what it can’t do at home—finance investments that benefit US jobs.
Much has been made of the administration’s focus on manufacturing and exports over the past four years. Labor unions have been celebrating a mild resurgence in the sector. Inconvenient skeptics have noted that manufacturing is probably not the center of the future US economy. But it is a lot easier for an American president to unilaterally boost exports than to boost the domestic economy.
The White House’s top take-away from the trip, the “US-Asia Pacific Comprehensive Partnership for A Sustainable Energy Future,” is essentially a plan for the US to finance at least $6 billion in energy-related exports to Asian countries, with a particular emphasis on clean (or at least less dirty) energy. The bulk of the money will come from the US Export-Import Bank, a government-owned company that finances US exporters. The White House has said the bank will provide $5 billion in export credit over the next four years.
It turns out that this claim is a bit exaggerated. There isn’t a new program as such, and the $5 billion number is just a descriptive figure, according to Phil Cogan, the Ex-Im Bank’s spokesman. The bank makes loans based on demand, Cogan says, and there’s nothing stopping it from making $5 billion (or $10 billion) in loans to Pacific countries already.
So what’s changed? Well, with the White House making the region a priority, the bank will increase its marketing efforts in places like Indonesia. It has already done a fair bit of work there: In 2010 it set up a $1 billion credit line that helped Indonesian companies buy 30 Boeing aircraft over the coming years. The export credit it authorized in Indonesia last year alone came to $550 million. For this year the total is only $19.2 million; now, the White House wants the bank to redouble its efforts.
Indonesia is a big target for US exporters—it is fast-growing, democratic, diverse and boasts the world’s fourth-largest population. As recently as 2000 the US was the largest exporter to the country after Japan, but countries like China, Thailand and South Korea have since usurped it. That’s one reason why a so-called “US-Asia Pacific Comprehensive Partnership” was in fact concluded only with Indonesia and the tiny-but-rich state of Brunei.
The other reason for the partnership is to open new markets for sustainable-energy companies in the US. Doing this through a foreign filter seems to be the only politically viable option these days. A $1 billion-a-year tax rebate keeping the wind-power industry alive is likely to end this year, and the administration was forced to shut down its $35 billion cleantech loan program—though its failure rate was an enviable 4% or less—because of the political row around firms like the solar-cell company Solyndra, which went bust last year, swallowing up most of a $535 million government loan guarantee.
Indeed, the Ex-Im Bank is “probably the largest financer of renewable energy in India,” Cogan notes. The enhanced soft power that comes from that kind of foreign investment in India and Indonesia may very well help the US in the forthcoming “Pacific century.” But the export boost will be useful for right now.