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Kristin Jones

At ground level, it seemed to be a happy harmony of Chinese, Western and African interests. After a Chinese construction firm won a contract to build a US-funded and much needed  airport terminal in Mali's capital, officials from all three nations brought their pomp to a groundbreaking ceremony last month. 
The event topped the national news. But what plays well in Bamako can strike an ill chord in Washington. 
Even before the cornerstone was laid, wheels were  in motion in the United States to make sure this kind of deal never  happens again.
Senator Jim Webb, a Democrat from Virginia,  learned in July that the state-owned firm Sinohydro had won the US$71.6 million airport contract. Over the summer, he fired off a couple of angry letters to the CEO of the Millennium Challenge Corporation, the American foreign aid agency that awarded it.
'I am concerned that the funding of Chinese state-owned companies with US taxpayer dollars harms American business, foreign policy, and development interests abroad,' Webb wrote. 
US development assistance should not be used 'to enhance the spread of Chinese influence', he added.
Webb got his way. From  now on,  money from  the corporation will  no longer line  the pockets of Chinese government firms. The agency  announced last week that state-owned businesses would not be eligible to bid on any  future contracts.
The decision does not single out Chinese firms, said Patrick Fine, vice-president for compact operations at  the corporation. Webb's concerns, as well as a separate complaint by a US company, were taken into consideration, he said. But the board wrote the new rule primarily to level the playing field for all competing firms.
The new policy is in line with standards set by the US Agency for International Development, a primary avenue for American aid. As a rule, USAID avoids awarding contracts to state-owned firms, though it sometimes makes exceptions. 'State-owned enterprises have advantages that private firms don't have,' Fine said.
However, some observers paint the decision as purely political, and question a policy that may add costs to crucially important development projects.
'I don't think it's an issue of ownership. I think it's that it's Chinese,' said Martyn Davies, CEO of Johannesburg-based consulting firm Frontier Advisory, which advises Asian firms on access to African markets. 'Increasingly, we're seeing geopolitical frictions between China and the US play out in Africa.' 
The US has often viewed Chinese investment and aid to Africa with scepticism, even rancour. US diplomats, careful to couch criticism of China in other arenas, can sound undiplomatic on this point.
'It would be a good thing if China decided to take its focus on Sub-Saharan African nations in directions that spoke to good governance ... [and] peaceful infrastructure development, as opposed to just getting in and taking out raw materials to fuel the mother ship here,' Jon Huntsman, US ambassador to China, said in a webcast last week. 
Chinese officials have portrayed their actions in African countries as mutually beneficial, pointing out that Chinese aid and investment have built infrastructure in places where it is desperately needed.
The Millennium Challenge Corporation's new policy will not affect existing contracts. A  creation of former US president George W. Bush's era meant to reward good governance with development assistance, the US agency has made several other contracts with Chinese state-owned enterprises, including agreements with Sinohydro to build roads and canals in Tanzania and Mali, and with China Railway Group for highway work in Ghana. All told, Chinese state-owned and private corporations had won contracts totaling US$325 million, Fine said.
In his letters, Webb questioned Sinohydro's environmental and safety record, pointing to previous criticism by the Chinese government and foreign critics. One of the builders of the Three Gorges Dam, the company is also involved in constructing the Merowe Dam in Sudan, a project that is expected to displace thousands of people.
Sinohydro could not be reached for comment, but its executives have said in the past that they are dedicated to sound environmental practices and social responsibility.
Even some critics of Chinese influence in Africa question the wisdom of eliminating potential bidders by rejecting state-owned corporations outright.
'If there are companies that want to develop infrastructure in Africa at a cheaper price, God bless them,' said Joshua Eisenman, senior fellow for China studies at the American Foreign Policy Council, a think tank. 
'If they can make the US taxpayer dollar go further, all the better.'
Ironically, the new policy will not stop US taxpayer money from reaching state-owned firms - Chinese or not - through other avenues.
The World Bank, which receives a chunk of its budget from  Washington, regularly makes deals with state-owned enterprises. Its recent awards include a US$129 million contract with Sinohydro  last year for the construction of the Felou dam in Mali.
The World Bank Group also regularly offers guarantees to state-owned firms for investment in developing countries.
'We think it's critically important to engage the state-owned players in Africa,' Kevin Lu, Asia-Pacific regional director for the World Bank's Multilateral Investment Guarantee Agency, said. 
Lu said he was perplexed by the Millennium Challenge Corporation's policy change.
Chinese state-owned enterprises have played an important role in investing in Africa, Lu said. 'We see it as our job to work with them to make sure the investments ... are made in a responsible way.'
For those directly affected by the airports, roads and canals that are built with foreign aid and investment, questions of environmental safety, corporate influence and official corruption are real, said Joseph Asunka, research associate at the Centre for Democratic Development, a Ghana-based NGO. But these concerns are not the domain of any one actor, he said. 
Private and state-owned firms, local and foreign, can easily evade environmental and social responsibilities without adequate safeguards. 'I think they should have looked at the economics of it rather than the politics alone,' Asunka said.
When it comes to projects as basic as access to foreign and domestic markets, what matters most, he said, is 'getting the biggest bang out of the buck'.



Sino-US storm clouds gather over Africa aid