The U.S. International Development Finance Corporation, America’s international investment arm, can be a powerful tool of U.S. foreign policy, advancing our interests while providing an effective counter to insidious, and often coercive, investment by our adversaries.
Authoritarian regimes compete through capital, which frequently becomes coercion. Beijing and Moscow use financing, loans, and technical expertise, paired with political engagement, to twist political outcomes, increase dependency, and secure alliances around the world.
But by prioritizing nimble, targeted engagement in countries especially at risk of authoritarian coercion, the DFC provides potential and current U.S. partners with real alternatives to authoritarian money — countries would much prefer to work with America.
Congress recently reinvested in this vision, boosting the DFC’s portfolio cap by $145 billion in December to $205 billion and expanding flexibility in the agency’s mandate. Created by Congress in 2018 and begun in 2019, the DFC leverages U.S. government financing to mobilize private U.S. dollars for international infrastructure investment.
To be clear, it isn’t traditional foreign assistance. It’s not a grant agency, but an official U.S. government lender and insurer. It provides the institutional framework to make international projects financeable, while bringing U.S. private capital to the table.
In short, it’s a vehicle by which the United States can leverage our competitive advantage in international investment in a smart, targeted way, working with private U.S. financing and technical expertise. It’s a pathway for the United States to again become a partner for countries forced to turn to authoritarian regimes because the United States hasn’t been at the table with offers for investment.
The agency fills financing gaps by assuming high-risk or lower-return projects that the private sector avoids while positioning the United States as the alternative to coercive Chinese and Russian state-backed investments. While the DFC aims for financial sustainability, its primary goal is enhancing U.S. economic and national security by strengthening of geopolitical partnerships that reduce the threat of authoritarian influence, ownership, or management over infrastructure that controls information, transit, or supply chains.
Smart use of DFC tools – like direct loans, loan guarantees, risk insurance, and technical assistance – can leverage U.S. private investment to ensure that American partnership is the first choice for countries around the world. American leadership in this realm also ensures that U.S. values are safeguarded in anti-corruption efforts, protection of labor, and human rights – all facets that authoritarian lenders undermine, dismiss, and ignore.
The recent congressional action will enable the agency to continue to prioritize low- and lower-middle-income countries while also having the ability to invest in upper- and middle-income countries if it’s a U.S. national security or economic priority. Congress also provided additional flexibility for the DFC in direct equity-investments, as well as rightly prioritizing transparency and impact measurement.
The United States should be the first option when sensitive countries consider international engagement: The choice shouldn’t be China or Russia. This is front-line competitive diplomacy that positions the United States as the clear alternative to murky contracts, damning debt leverage, and questionable technology that increases authoritarian state access to a nation’s citizens.
China’s Belt and Road Initiative is the prime example of this. Designed as an amalgam of state financing, political pressure, BRI has resulted in Chinese financing and construction of key infrastructure, including ports, roads, telecommunications and energy projects worth more than $1.3 trillion in 150 countries, including U.S. partners.
About 64% of African countries are burdened with this debt – in or at risk of debt distress – a 2025 ONE Foundation analysis showed. The external debt owed by these African countries is equivalent to almost 27% of their combined GDP.
The empowered DFC is a uniquely American-style alternative to these dark tactics: transparent, private-sector-grounded U.S. investment leading to jobs, infrastructure, and balanced economic partnership. It benefits the United States by prioritizing America’s economic goals, including investment in infrastructure that expands trade and creates American jobs, while helping critical emerging markets that matter for U.S. security. Private U.S. investors gain via assurances in financing and mitigation of political risk that enable them to participate.
The model is designed for success and is a smart investment – alongside powerful programs like the President’s Emergency Plan for AIDS Relief (PEPFAR) and the Millenium Challenge Corporation. These programs serve U.S. interests and are rooted in principles and protocols focused on accountability, transparency, and good governance.
The DFC can now move rapidly, prioritizing countries where our adversaries have made inroads, where democratic space is contested, and where nations’ economic vulnerabilities create openings for authoritarians. The United States should be assertive, and U.S. embassies around the world must actively seek these opportunities early enough to shape projects.
