Financing the Future: How Public and Private Capital Can Win the Eurasian Investment Race

The most common objection to ambitious American engagement in Eurasia is financial. China spent an estimated $1 trillion on BRI projects in a decade. The United States, it is argued, cannot match that kind of state-driven capital deployment and therefore cannot compete on infrastructure. This objection misunderstands both the nature of the competition and the actual financing tools the United States has available.

China's BRI capital came primarily in the form of sovereign loans from Chinese state banks, loans that recipient countries must repay, often at interest rates that are higher than concessional, frequently tied to procurement from Chinese firms, and sometimes secured against strategic assets when repayment becomes difficult. This model has a specific appeal: it moves quickly, does not impose governance conditions, and delivers visible infrastructure that governments can claim as achievements. But it creates specific liabilities that compound over time: debt distress, sovereignty concerns, and political backlash when the terms become apparent to publics who did not fully understand what their governments had signed. Sri Lanka, Zambia, Pakistan, and others provide documented case studies.

The American model is structurally different and ultimately more sustainable, but it needs to be deployed at a greater scale and with greater urgency to compete, and closing the gap between pledge and deployment has been the chronic failure of American development finance strategy.

The PGII Commitment and the Execution Challenge

The Partnership for Global Infrastructure and Investment represents the G7's commitment to mobilize $600 billion in infrastructure investment by 2027. The critical word is "mobilize.” PGII does not plan to deploy government capital equal to that total. It plans to use government financing tools to catalyze private investment that would otherwise not flow to developing-market infrastructure. This is the right model. Using public capital to derisk private investment, rather than competing with private capital through direct government lending, is both more fiscally sustainable and more likely to produce infrastructure projects that are commercially viable in the long run.

The challenge is execution speed. Private capital does not flow to developing markets because the risks, political, currency, regulatory, and legal, are too high relative to available returns. Reducing those risks efficiently requires institutional capacity, deal-making expertise, and streamlined processes that government bureaucracies do not naturally develop. Getting from pledge to deployed capital faster requires deliberate institutional investment in the agencies that move money: the DFC, Ex-Im, USAID's Development Finance function, and MCC.

The Development Finance Corporation

The Development Finance Corporation is the primary vehicle for catalyzing private investment in Eurasia. Created by the BUILD Act in 2018 with a $60 billion portfolio limit, DFC can provide debt financing, equity investments, political risk insurance, and technical assistance for private sector projects in developing countries. Its recent co-financing of mining and processing infrastructure in Central Asia represents exactly the kind of deployment the strategy requires.

But DFC's current capital limit and operational capacity need significant expansion if it is to operate at the scale Eurasian competition demands. The legislative case for increasing DFC's mandate is strong: the return on DFC investment is not just commercial but strategic, and the strategic returns from a more deeply integrated Eurasian partner network are enormous. Congress should treat DFC capitalization as a national security investment, not just a development finance appropriation.

Political Risk Insurance

Political risk insurance is probably the most underappreciated tool in the U.S. financing arsenal. The reason American private capital does not flow into Central Asian mining ventures, Southeast Asian digital infrastructure, or Middle Eastern renewable energy projects at the required scale is not primarily inadequate returns; it is that the risk premium associated with operating in politically uncertain environments makes the risk-adjusted return unattractive compared to alternatives in more stable markets.

DFC insurance covering expropriation risk, currency convertibility, and political violence transforms the risk calculation for private investors in ways that no amount of diplomatic encouragement can match. Expanding access to this insurance, particularly for small and medium enterprises that currently cannot navigate DFC's application process efficiently, would unlock significant private capital sitting on the sidelines. Many American companies have the technology, expertise, and interest to operate in developing Eurasian markets. What they lack is affordable risk mitigation that makes the business case internally defensible.

Blended Finance and the First-Loss Structure

Blended finance structures deserve more systematic deployment. In a blended finance arrangement, concessional public capital, from USAID, MCC, or DFC, absorbs the first-loss tranche of a project, making the remaining investment attractive to commercial investors who would otherwise require returns too high for the project to be viable. A project with a 10 percent expected return that carries 5 percent risk might not attract private investment. If public capital absorbs that 5 percent risk, the same project at the same return becomes commercially attractive to a much broader pool of investors.

This model has worked in clean energy deployment in sub-Saharan Africa and in digital infrastructure projects in Southeast Asia. It should be standardized as a tool across Eurasian infrastructure categories, renewable energy in Central Asia, fiber-optic cable in the Caucasus, 5G in ASEAN, rather than deployed only on a case-by-case basis, where individual project teams reinvent the wheel.

The Export-Import Bank

The Export-Import Bank provides export financing that directly benefits American companies competing for overseas contracts, and it is systematically underused as a competitive tool. American companies frequently lose infrastructure bids in developing markets, not because their technology or execution quality is inferior, but because their financing package is not competitive with what Chinese state banks or European export credit agencies routinely offer as a matter of national policy.

Germany, France, Japan, and South Korea all deploy their export credit agencies aggressively to support their firms in developing markets. The U.S. should do the same. Ensuring that Ex-Im is fully funded, staffed with deal-making capacity, and aggressively using its full authority to support American firms competing for Eurasian infrastructure contracts would immediately improve American firms' competitive position in markets where the financing package is the decisive factor.

MCC and the Governance Premium

The Millennium Challenge Corporation's model, requiring demonstrated governance reform as a precondition for access to capital, should be preserved and its geographic scope expanded. Countries that make the governance commitments MCC requires should be rewarded with access to a larger pipeline of American government and American-mobilized private investment. This creates positive incentives for anti-corruption reforms and rule-of-law improvements that make American investment viable and that serve the long-term interests of the host countries themselves.

The financial case for American engagement in Eurasia is ultimately straightforward: the returns to a Eurasia more economically integrated with the United States are enormous, both commercially and strategically. The capital required to generate those returns is available in private markets. What is needed is the institutional architecture to deploy it efficiently, the political will to sustain deployment over the decade-long time horizon these investments require, and the strategic coherence to ensure that individual financing decisions contribute to a coordinated objective. All of those things are achievable.

The BRI was never primarily about altruism, and neither is this. American engagement in Eurasian infrastructure should be understood as a strategic investment in the conditions that sustain American security and prosperity over the long term. Frame it that way in appropriations debates. Fund it accordingly. The choice is whether to treat it with the seriousness it deserves.