Slashing DFC will promote Energy Dominance... for China and Russia
Cutting a tiny powerful agency has only downsides.
Yesterday up to a quarter of staff at the US Development Finance Corporation (DFC) were told they’re being fired. This might seem like just one more way the administration is cutting the federal workforce headcount. But it’s utterly stupid given virtually every other White House goal.
A few facts:
DFC was created by the first Trump Admin with a $60 billion credit limit to project US influence by catalyzing private investment. It was literally the biggest thing that Trump did to try to counter China’s Belt Road Initiative.
DFC has a total of 697 staff. Any short-term cost savings are miniscule.
DFC is net positive for the US budget. That’s because it makes money for the Treasury on nearly all of its investments. So cutting staff means fewer deals and thus smaller profits.
On budget grounds, cuts do not make sense. What about for national security?
DFC should be much bigger, not smaller.
Here’s why:
We cannot possibly be Energy Dominant without a robust agency like DFC. The admin expects US energy technology to project US power. While the private sector can do a lot, US investment is not yet pouring into most emerging markets for a host of reasons related to market risk. That’s precisely what DFC was created to solve. Talking about creating energy dominance without any actual tools just won’t work.
Nuclear, gas, geothermal, and other energy technology companies will need a level playing field. US startups operating in these fields cannot offer similar terms on their projects when competitors have help from their agencies but American firms do not.
Shrinking DFC will only help China and Russia expand their market share. These two countries get energy deals done by using state-owned energy companies using state-owned banks pushed by their diplomatic & natsec agencies. That’s not the American way. We prefer private companies to lead and to allow market competition. Yet with a weakened DFC, the US is effectively telling our allies that we aren’t interested and they should just go ahead and do deals with our strategic competitors.
I don’t get it.
An algorithm cannot negotiate energy deals
Those in the White House supposedly planning to turn DFC into a major force of US global influence, need to speak up and not allow the agency to be torn apart.
Congress, which is due to reauthorize DFC later this year, can go further by adding provisions to strengthen the agency by right-sizing it to the mission and tying it directly to other national security objectives. Success requires raising the agency’s credit limit and one more thing to actually make deals happen: people.
No. They just fired everyone they could legally, which is anyone hired within the last year. So dumb. All their best new recruits are lost.
The idea that these are DEI hires is absurd. The agency just went thru a major reorganization and was directed by congress (via growing mandates) to staff up. That plan is now out the window. Just plain stupid. And for what?
I’d like to think the new DFC will make a decision on a legitimate uranium production facility in Africa that has been held up for a year for no good reason that I can see.