Introduction

This book has described how our efforts to establish an infrastructure bank to promote reinvestment in American domestic infrastructure through public-private partnerships (P3s) is based explicitly on a model that has been the cornerstone of our foreign commercial policy for the last several decades. In the policy debates, we have painted this model as an unqualified success. In doing so, we have focused on two aspects of this model. First, an infrastructure bank has the ability to leverage sizable amounts of private capital to invest in much-needed projects, filling the gap between what government can afford and what our society needs. Second, a bank has the appeal of making decisions about which infrastructure projects are best for society based on the merits of the projects rather than on politics. Although these are both essential and laudable goals for a bank, as this book has explained, the track record of international banks in both these areas has been mixed.

The leveraging function of banks has often obscured liabilities of projects and resulted in hidden costs and nonassessed risks being passed on to public institutions. As a result, in using companies to advance public interest goals, we have often geared our accountability mechanisms more toward ensuring private firm profitability than the stated purpose of the projects. This policy distortion has often meant that international infrastructure banks and P3s have been frequently critiqued as promoting projects that advance insider dealings that undermine merit-based decision-making.