Via Center for a New American Security, a detailed report on how the West can counter China’s BRI:

BRI allows Beijing to claim it is offering a model for development that does not require countries to move toward liberal democratic governance standards.

While countries were initially eager to sign up for the initiative and take advantage of what China was offering, more recently the sheen has come off BRI projects as they face mounting obstacles, including cost and time overruns, low quality results, lack of proper feasibility studies, politicization and corruption, and an influx of Chinese workers in countries that struggle to provide jobs to the local population.

The heavy debt burdens associated with BRI projects also have come into focus, particularly in the case of Sri Lanka, where the country’s leaders in 2017 were forced to lease a major port to China for 99 years in exchange for $1 billion in debt relief. While Sri Lanka’s recent economic crisis has been fueled by decades of economic mismanagement and more recently economic shocks from COVID-19 and Russia’s war in Ukraine, several questionable BRI investments in recent years are also viewed as contributing to Colombo’s current economic woes. China has repeatedly offered Sri Lanka credit for various projects at increasingly high interest rates, even when it was clear the Sri Lankan government would be unable to pay back the loans. Similarly, the China-Pakistan Economic Corridor (CPEC) appears to have exacerbated Pakistan’s economic problems. Beijing is now Islamabad’s largest creditor, with Pakistan owing 27 percent of its total external debt of $90 billion to China. CPEC has not achieved the grand vision laid out seven years ago of helping to industrialize Pakistan and turn it into a manufacturing hub, demonstrating BRI’s limits in bringing substantial economic change to recipient countries.

In Europe, BRI has evolved as Europeans have changed their view of China from being a partner to a competitor and even a “systemic rival.” While there are varying views of China throughout Europe, Beijing’s refusal to condemn Russia’s recent invasion of Ukraine has the potential to further harden European views on China. Key BRI projects have stalled in the Baltic States and countries such as Romania due to concerns over Beijing’s behavior and the potential risks associated with Chinese investment. However, BRI projects have retained strong commitment in European countries that are less inclined to take a harsh view of China, such as Greece, Serbia, and Hungary.

While countries were initially eager to sign up for the initiative and take advantage of what China was offering, more recently the sheen has come off BRI projects as they face mounting obstacles.

The United States and Europe have launched initiatives that seek to address the challenges from BRI and offer alternative infrastructure financing, such as the Partnership for Global Infrastructure and Investment (PGII) and the Global Gateway initiative. While the United States and the European Union (EU) on their own would not be able to match the scale of China’s global infrastructure investments, together they can at least provide an alternative source of financing. To avoid overstretching resources, the EU should prioritize investing in infrastructure in its immediate neighborhood, such as the western Balkan states, where China has attempted to gain influence in recent years. For the United States, the priority should be on the Indo-Pacific countries that are central to strategic competition with China. While these areas should be prioritized, the United States and Europe should also continue cooperating on investment and infrastructure efforts throughout the Global South, especially in Africa.

Given the uncertain future of BRI, researchers at the Center for a New American Security (CNAS) identified the major drivers likely to influence the direction of the program and examined their numerous permutations. The authors selected three scenarios and focused on how conditions of each scenario would play out in Europe and the Indo-Pacific. For each scenario, the report identifies the risks and implications for the United States and its allies. The scenarios are designed to prepare policymakers and planners for the possible futures they could face, including key challenges and opportunities that may arise in the years to come.

Lastly, this paper identifies additional policy steps that will prepare the transatlantic allies to both compete with China’s investments and increase their own resilience. More specifically, the paper recommends the transatlantic partners:

Understand Shared Vulnerabilities

• Map existing BRI projects in key regions to evaluate where U.S. and EU strategic interests may be at highest risk. In addition, they should assess future infrastructure needs in key regions and states that could present opportunities for U.S. or European investment.
• Wargame critical vulnerabilities. The United States must work with its allies and partners to “wargame” China’s economic tools of coercion, including examining security risks

Compete against BRI in the Informational Domain and Multilateral Arenas

• Enhance strategic communications campaigns. To push back on Chinese misinformation and to ensure countries are aware of the potential downsides of BRI investment, the United States and Europe must step up their strategic public communications campaigns. In addition to highlighting the advantages associated with U.S. and European investment, Washington and Brussels must emphasize that expedience and initial low sticker price often translate to poor-quality projects that are unsustainable over time.
• Encourage the creation of a global consortium to partner with and support local journalists and research organizations conducting fact-based inquiries into BRI projects around the world. Efforts could include a comprehensive public database that provides examples of both successful BRI projects and those that display patterns of problems.

Enhance Defenses against China’s Economic Influence

• Protect vulnerable European economies. To prevent exploitation of weakened economies in the aftermath of economic challenges such as those brought on by Russia’s war in Ukraine, the EU should establish an infrastructure rapid response fund that could be mobilized to counter potential Belt and Road investments once they reach a high threshold of concern. This fund could be made available to EU member states as well as to EU candidates such as Serbia that are at the highest risk of undue Chinese influence.
• Develop a collective response to economic coercion. The United States should work with its allies and partners to develop a framework for collective economic response in the spirit of NATO’s Article 5. Countries could agree to respond collectively in the event of foreign economic coercion, including through measures such as sanctions.
• Protect green tech supply chains. To mitigate potential harm from a future Chinese effort to weaponize European green technology dependence, the transatlantic partners should work together to forge more resilient supply chains.
• Share legislative best practices. The United States, European Union, and national legislatures should increase dialogue and the sharing of ideas and best practices to update and advance their collective tools to mitigate China’s influence. For instance, the United States could share best practices in the development of its inbound and outbound investment screening mechanisms.
• Secure critical infrastructure on the basis of national security. The European Union should prevent the purchase of 5G telecommunications hardware or services from companies that lack a transparent ownership structure. There should be clear red lines about what constitutes an unacceptable foreign investment in critical infrastructure, including in the energy sector. Similarly, the United State and Europe should begin aligning their risk assessments for 6G technology early to avoid repeating the mistakes from the 5G rollout.
• Continue to increase EU-NATO cooperation. NATO and the EU should continue to enhance consultations on the ways in which Chinese investment could threaten the safety and security of the NATO allies and conduct joint monitoring of specific acquisitions or takeovers—especially ports—and help educate member states on the risks.

Implement Alternatives to BRI

• Facilitate private-sector investment through financial tools that enable companies to enter risky markets, where they can compete more effectively with BRI investments. The United States and Europe should find ways to incentivize companies to take greater risks with international infrastructure investments, particularly in ports, energy, and information and telecommunications.
• Encourage and pressure China to manage debts for struggling economies through coordinated multilateral programs such as the G20’s Common Framework. U.S. and European countries should continue efforts to build a coalition within the G20 and beyond to push for Beijing’s full cooperation with the G20’s Common Framework for debt service suspension and eventual restructuring, which followed the shorter-term Debt Service Suspension Initiative set up in May 2020 to address financial challenges and defer payments early in the pandemic.
• Pool technical capacity in the fields of finance, engineering, and law to offer technical assistance to countries that lack the capacity to evaluate projects or renegotiate the terms with China. The United States has done this in the Maldives and Burma and could carry out similar efforts jointly with European and Indo-Pacific allies in other nations.
• Encourage the World Bank to prioritize infrastructure investment. The World Bank should reinvigorate its infrastructure spending and reduce bureaucracy surrounding the loan process that extends the timelines for completing the financing arrangements.
• Connect Global Gateway with the Partnership for Global Infrastructure and Investment. The U.S. Department of State and European External Action Service should coordinate development finance efforts in the resilience working group of the U.S.-EU Dialogue on China. This working group provides a venue for sustained, institutionalized coordination of the Global Gateway and PGII initiatives. Likewise, the EU-U.S. Trade and Technology Council’s new task force on public financing for secure connectivity and information technology supply chains is an encouraging first step to further institutionalize transatlantic cooperation. However, to be effective, this task force should ensure it has dedicated financing and should link its work with other development finance initiatives, including the Global Gateway and PGII.