Remarks by APNSA Jake Sullivan at the DFC 5th Anniversary Conference

U.S. International Development Finance CorporationWashington, D.C. 1:01 P.M. EST MR. SULLIVAN: Well, good afternoon. And thank you so much for that introduction, Scott. And thank you especially for your leadership here at DFC over these last years, a sentiment that I know President Biden shares deeply. Simply put, no one has played a more important role in this institution's growth and development than you, and no one could have brought greater creativity, savvy, or tenacity to the task. Trust me, I have seen Scott in full warrior mode on behalf of DFC in the Situation Room, taking on other agencies with other ideas, and he’s constantly delivering to make sure that DFC, in turn, delivers on its mission. I also know, from personal experience myself, that leaders are only as capable as their teams, and the team at DFC is second to none. And I want to salute everybody here in the audience, who either is current or past member of the DFC team, for all that you have done to build this into the impactful organization that it is today. If your first five years have proven anything, it is your impact globally will only compound exponentially in the years to come. So, thanks to you all, and thank you for letting me be here to mark this occasion with you. As many of you know, last week, President Biden traveled to Lobito, Angola. Scott was there, of course. Just a few years ago, that was an area completely devoid of any American investment. But not anymore. During his visit, the President saw a rail car that will travel on Africa's first transcontinental railroad, grain silos that will help transform the region from food importers to food exporters, and businesses that are investing in everything from clean energy to 5G all across the region. These are transformational projects, generational projects, projects that would have been unthinkable just five years ago but are already having an impact, and it's because of the work that we've all done together to reimagine investment and development around the world in the face of profound and accelerating global change. When President Biden came to office, our nation faced several converging challenges: a pandemic that had shaken the world, a worsening climate crisis, vulnerable supply chains, rapid technological change, and geopolitical competition from a pacing competitor in the PRC. So, as these challenges were all coming to a head, we were entering this new era of geopolitics, one defined by strategic competition. Ad hoc investments, grants, and loans were not going to cut it. The old way of doing business was not going to cut it. And it was not just that we weren't punching above our weight. It's that, in many cases, when you looked at the full kind of capacity that the U.S. could bring to the table and the gap in what we were, in fact, bringing to the table across all of the tools of our national power, we were ceding the field. So it was imperative that we needed to step back, look at the bigger picture, and present a positive-sum vision for growth and development globally, one calibrated to new geopolitical realities and one matched to the scope of the transformational challenges we faced. So, the first question we faced was: Okay, how do we do that? How can we mobilize capital at scale for nations around the world, and how can we get our global partners to join us? And here, having a bipartisan effort like the DFC, built in the previous administration under President Trump, handed off to President Biden, but still in its early stages, this was going to be a critical piece of the puzzle but one piece of a larger puzzle that was going to require a whole set of tools to be able to effectively mobilize capital in the service of our national interest and in the service of the global common interest. So the President, at the first G7 that he went to in Cornwall, England, launched the Partnership for Global Infrastructure and Investment, or PGI. In true government fashion, we give our best initiatives the most memorable acronyms, PGI. (Laughter.) At its core, the aim of PGI was to redefine the traditional Western value proposition to the developing world to say, “Okay, we hear you when it comes to the priorities you have in order to deliver for your citizens.” And at the top of that list, for country after country in regions of the world on different continents, the answer consistently came back: infrastructure. Physical infrastructure, energy infrastructure, digital infrastructure, health infrastructure, but the basic building blocks of growth and dynamism that could deliver for these countries. And there was a massive gap. And the country that was most active in actually trying to deliver for countries around the world with respect to infrastructure was the PRC, through its Belt and Road Initiative. And we were not playing at the level or with the intensity that we had to play. So, we looked at this and we said: Somehow, given this need across the world, we need to turn billions into trillions of dollars of investment with solutions that those countries helped fashion on their own but with capital enabled by the United States and our partners in the G7 and other likeminded countries. We layered on top of that the idea of catalyzing and concentrating investment in key corridors so that we were leveraging our investment to the maximum, not just spreading it thin across the board. And through these corridors, including in Africa and Asia, PGI is designed to help close that infrastructure gap in developing countries, and I'm very proud of the progress that we've made so far. Over the last two years, the U.S. has mobilized over $80 billion in investments through the DFC and other tools to build out these corridors, like the Lobito Corridor that President Biden visited last week. This approach is about strengthening countries’ economic growth. It's also about strengthening America's supply chains and global trusted technology vendors. And it's about diplomacy. It's about strengthening our critical partnerships in critical regions. And as the people in this room know better than anyone, this is not spending huge amounts of public dollars. It's about taking public dollars and public tools to mobilize private dollars. And, frankly, the response we have seen from the private sector over the past four years has been increasing enthusiasm, increasing buy-in for the vision that we are all working towards. Take our climate goals, for example. In year one, President Biden set an audacious target to quadruple U.S. international finance for climate to $11 billion every year. When we set that target, we knew that the DFC was going to be central to achieving it, but we didn't quite realize the extent to which the DFC would create the backbone for our investment portfolio in energy security and supply chain resilience. And as a result of the heroic work that so many of the people in this room did, we've been able to massively accelerate the speed and scale of the clean energy transition to help meet the moment on climate. We also recognize that how we invest is just as important as how much we invest, which leads to my next point. Throughout every PGI investment and every project and everything that the DFC is doing, we’ve focused on quality, not just quantity. As everyone here knows well, that's going to make our investments more sustainable over the long run, and it is what sets the United States apart from our competitors. And I want to be clear: We're not forcing nations around the world to choose between us and China, or any other nation for that matter, but we are making sure that there is an option that is high standard and credible and more attractive and impactful than what our competitors might offer. And that means ensuring that our investments meet the very highest standards - for workers, for the environment, for the people that they are meant to serve. It means ensuring that our projects don't produce unsustainable debt for our partners, debt that prevents them from investing in their own development over time. And it means ensuring that the progress we've helped fuel around the world does not inadvertently facilitate corruption. In fact, shortly after he took office, President Biden issued a Presidential Policy Directive that established corruption as a core national security threat, and created the first-ever National Strategy on Countering Corruption. Now, today is - we're celebrating the five-year birthday of the DFC. Today is also International [Anti]-Corruption Day. And I'm exceedingly proud that four years later, we've made good on the President's directive and given this strategy, to counter corruption, meaning and force so that we can mark and celebrate International Anti-Corruption Day today with stronger regulations, closed loopholes, a record of cutting off money launderers, and taking steps to ensure that our own financial system serves as a check rather than an accomplice to corrupt behavior. That goes from implementing the landmark Corporate Transparency Act that we helped pass, to tightening regulations in the real estate sector so criminals cannot use the U.S. real estate sector to launder their own dirty money. We've gone after kleptocrats, criminals, and their cronies who steal from public coffers, including issuing 500 new anti-corruption sanctions. And we're working with partners to enable them to advance protections as well. But we can't let up. Looking ahead, we need to come together on a bipartisan basis to finally pass the ENABLERS Act. We need to encourage our global partners, like the IMF and the World Bank, to strengthen their own anti-corruption efforts. And we need to stay on the balls of our feet, including quickly expanding the investments DFC is making in countries that are experiencing a window of opportunity for governance reform, like we've done so effectively in both Moldova and the Dominican Republic. That is a model for how we can take the fight against corruption, the fight for economic growth, the tools of the DFC, and seize opportunities that lie before us. And we have a proven track record of being able to do just that. And this leads me to the final point I want to discuss today, and that's where we go from here, what we should be focusing on as we head into the next five years. Maybe I shouldn't be the one answering this since I'm leaving, but I will give my advice anyway. And I - because I truly do mean “we.” It's not just about who's sitting in this seat in the U.S. government in a particular administration. It's about the public sector and the private sector. It's about the administration and the Congress. It's about Democrats and Republicans. It's about all of us. And I intend to continue to be a partner to this effort, even from the outside. DFC is a bipartisan priority. It was created, as we've all noted, under the Trump administration. It has been strengthened under the Biden administration. And as we look to DFC’s reauthorization next year, it has to remain a bipartisan priority. And I think we have to work together to implement a few key reforms. First, we've got to modernize DFC’s equity program. As all of you know, appropriation for DFC’s program that invests in companies and projects has to account for each investment, when it's an equity investment, on a dollar-for-dollar basis, like a grant, instead of recognizing the investment’s value, which is an equity stake in an enterprise and will eventually not just be recouped by DFC but in most cases will earn a return. The accounting quirk that we currently have to use - this dollar-for-dollar basis - really limits how much the DFC can invest every year. Changing the equity program to account for future returns up front would enable the DFC to invest more and invest earlier at the same cost to the U.S. taxpayer. That would be a game changer, especially in priority sectors like critical minerals and clean energy, where investment at scale is needed. Second, we've got to increase DFC’s footprint. Right now, the list of countries where DFC can invest is generally limited, as you all know, by a certain income per capita threshold. In some ways, this makes sense. I understand why this got put into place. Low- and middle-income countries need the development support the most. But operating based on income per capita alone doesn't account for other critical factors, like access to finance or vulnerability to shocks. We can solve this by allowing DFC to mirror the World Bank's country of operation model. This would allow the DFC to operate in more countries that need our assistance in more areas. And most importantly, it will ensure that nations don't suddenly get cut off once their income per capita goes just slightly above the threshold. Finally, and maybe most importantly, most fundamentally, we need Congress to reauthorize the DFC on a bipartisan basis. Here in Washington, we do sometimes get stuck thinking in two- or four-year cycles. But to put it simply, our private sector partners want to know that they can count on us in the long term. Our allies who are investing with us, like the G7, want to know that they can count on us in the long term. And nations around the world want to know that they can count on us, the countries that will be taking our investments, in the long term; that big, quality infrastructure projects they choose to undertake with us will actually be completed, whether it takes 5 years or 10 years or 15 years or more for the kinds of generational investments we want to be making. Now, to really do that, you need a permanent reauthorization. That would send a clear signal to all of those audiences: You can count on the United States of America. It would create real market certainty and predictability that positions the private sector to help serve the American national interest while making good returns for their investors. And it would allow the DFC to focus on what matters: mobilizing capital at greater scale, including through the DFC’s enterprise fund authority; taking on smart investment risks to bring forward projects the private sector wouldn't otherwise consider; maximizing cooperation with our other development tools, like the MCC or USTDA or USAID; and expanding collaboration with the MDBs like you've done with the Inter-American Development Bank. Let me close with this: President Biden often says that our world stands at an inflection point, a point where the decisions we make now will determine the course of our future for decades to come. In just five short years, the Development Finance Corporation and the work so many of you have done all around the world, including through these larger initiatives like PGI, has set that course on a better path for our nation and for nations around the world. Now is the time to keep going, to keep growing, to keep coming together across the aisle and around the world. It has been an honor to get to work with you, to be your supporter, to try to be your champion, and also, in the work that I do every day trying to protect America's national security, be the beneficiary of the work you've done to enhance our national security. And I can't wait to see what you will accomplish in the next five years and the five after that and beyond. So, thank you very much for giving me the opportunity. (Applause.) 1:17 P.M. EST The post Remarks by APNSA Jake Sullivan at the DFC 5th Anniversary Conference appeared first on The White House.