The U.S. International Development Finance Corporation recently approved a $300 million investment in the Three Seas Initiative Investment Fund.
That welcome Dec. 10 announcement partially fulfills a U.S. pledge made back in February by Secretary of State Mike Pompeo to invest up to $1 billion in the investment fund to finance energy projects via the corporation.
The Three Seas Initiative is a valuable project to strengthen trade, infrastructure, energy, and political cooperation among countries bordering the Adriatic Sea, the Baltic Sea, and the Black Sea.
A strong, prosperous, and secure Eastern Europe is in America’s interest, and the initiative can play an important role in making this happen.
A vestige legacy of the Cold War is that most infrastructure in the region runs east to west, stymieing greater regional interconnectedness. Developing north-south interconnections, pipelines, roads, rails, and electrical grids will spur economic growth, prosperity, and security.
This north-south corridor in Eastern Europe could one day become the backbone of Europe.
The administration of President Donald Trump has embraced the Three Seas Initiative, doubling down on it as a centerpiece of U.S. engagement in the region with the recent pledge to match 30% of the initiative’s combined contributions up to $1 billion.
The Three Seas Investment Fund is a market-driven investment vehicle created in June 2019 by the Gospodarstwa Krajowego Bank in Poland and the Romanian Export-Import Bank. The fund, according to the Three Seas Initiative, “is a dedicated commercial fund targeting critical infrastructure investment in the region.”
Contributions to the fund currently stand at 1.2 billion euros ($1.47 billion), with Poland pledging $875 million and Slovenia pledging $28 million. Bulgaria, Croatia, Estonia, Hungary, Latvia, Lithuania, and Romania have also contributed.
The U.K.-based international firm Amber Infrastructure Group has also contributed 10 million euros (about $12.2 million) in the Three Seas Initiative Investment Fund.
In 2018, the Three Seas Initiative agreed to 48 priority projects focused in the digital, energy, and transportation sectors. On Dec. 11, the investment fund announced its first investment, acquiring Cargounit, the largest private locomotive-leasing company in central and Eastern Europe.
The Three Seas Initiative allows the U.S. to build strengthened transatlantic business, energy, and geopolitical ties to the central and Eastern European region, while also counterbalancing Chinese and Russian efforts to forge regional inroads.
As such, the U.S. should continue efforts to support the initiative via economic and political support.
One way the U.S. can provide support is by keeping its pledge to match Three Seas Initiative Investment Fund contributions up to $1 billion and encourage every Three Seas Initiative member to contribute to the fund, including encouraging wealthy non-members, such as Germany and the U.K., to make similar, matching contributions to those of the U.S.
Financing the fund could be a more difficult decision for some nations in light of the financial pain brought on by the COVID-19 pandemic. The U.S., however, should remind allies that the investments in the initiative will continue to pay economic and geopolitical dividends long after the pandemic has passed.
Another way for the U.S. to support the Three Seas Initiative is by considering using the Better Utilization of Investments Leading to Development (BUILD) Act of 2018 to allow American funding for Three Seas Initiative projects that help advance U.S. economic, security, and geopolitical interests.
Finally, the U.S. should push for expansion of the Three Seas Initiative, which currently only includes European Union member states.
EU funding is valuable to the Three Seas Initiative. The EU is expected to provide funding for half of the initiative’s 48 priority interconnection projects.
That, however, serves as an artificial constraint to regional cooperation, since so many countries—such as Ukraine, Georgia, Turkey, and much of the western Balkans—are not EU members.
Chinese investments have often focused on those nations that aren’t fully ensconced within the transatlantic community. Broadening the scope of the Three Seas Initiative will help to steel vulnerable nations against undue influence from China.
