Can Ukraine’s infrastructure survive the winter?

“The scale of the destruction makes quick repairs impossible. Replacement parts are not often readily available. Energy infrastructure also remains vulnerable: A lot of it is big and out in the open; once hit by a missile and fixed, it can be hit again. “It’s not possible to repair quickly after it’s been damaged,” said Volodymyr Shulmeister, founder of the Infrastructure Council NGO and former first deputy minister of infrastructure of Ukraine from 2014 to 2015. “There were some spare parts, some electric power stations has been repaired, but there will be new problems coming from the air.”
That is on top of all the other destruction Ukraine accumulated in months and months of war: houses and apartment buildings, bridges, roads, railways. There is always collateral damage in conflict, but Russia’s attacks on non-military critical and energy infrastructure are intentional. “This is not a new tactic for Russia,” said John Spencer, a retired Army officer and chair of urban warfare studies at the Madison Policy Forum. “If you think about what they did in Chechnya, and in Syria, to basically bring the civilian population to such despair that they’re willing to capitulate.”

Moscow’s targeting of infrastructure, which some have argued amounts to war crimes, is an effort to undermine Ukraine’s economy and deprive people of essential services — heat, water, electricity — as winter approaches. Russia is struggling against Ukraine’s counteroffensive in the east and south, and so Moscow is trying to extend the war and spread out that pain across Ukraine, not just in war zones. All of it will make Ukraine even more reliant on aid from the West, which is dealing with its own inflation and energy crises. “Russians are actually now acting very cruel, but also in a very well-thought-through way,” said Andriy Kobolyev, former chief executive officer of Ukraine’s largest national oil and gas company Naftogaz.

In areas closer to the fighting, the infrastructure destruction is even more extreme, but also harder to fully assess. Zelenskyy accused Russian troops of destroying “all the critical infrastructure: communications, water, heat, electricity,” before retreating from Kherson last week. In Mykolaiv, in southern Ukraine, Russia cut off the city’s water supply months ago; salt water had run through the taps for months, and potable water is now just being restored. Zelenskyy said in early November, before the latest round of air strikes, that Russian attacks damaged about 40 percent of Ukraine’s energy infrastructure; precise data on how badly and where is hard to get, in part because Ukraine is closely guarding that information as a matter of national security.”

Biden has ambitious infrastructure goals. Made-in-America rules could slow them.

“The $1 trillion infrastructure law passed last year expanded Buy America rules, which require state and local agencies to buy certain materials made in the United States for federally funded infrastructure projects. Rules that iron, steel, and manufactured products be made in America have been in place for decades, but they’ve traditionally applied to transportation and water-related projects, such as highways, rail, and public transit.
The Infrastructure Investment and Jobs Act’s new rules broadened the scope of goods that have to be produced in the United States by creating a new category for “construction materials.” It also expanded the types of infrastructure projects subject to the requirements to permanently include housing, broadband, and new programs for electric vehicle charging projects for the first time.”

“many state and local officials across the country say the new rules could delay much-needed infrastructure projects and significantly drive up costs amid the fastest inflation in 40 years. Some say they’re already struggling to deal with supply-chain disruptions that have emerged during the pandemic and worry that material shortages could worsen if they’re limited to domestic manufacturers. Higher costs could also lead to fewer projects and soften the impact of the package”

How are floods and droughts happening at the same time?

“The short answer for why these seemingly opposite things are happening at once is that climate change is making our atmosphere thirstier. Or, in more scientific terms, as the Earth warms, its atmosphere can hold more water vapor. This happens at an exponential rate: The back-of-the-napkin math is that the atmosphere can store about 7 percent more water per degree Celsius of warming, and we’re currently at about 1.2°C above pre-industrial temperatures. The result is an atmosphere that takes longer to get saturated with water, which means fewer rainstorms, but when they do occur, those storms dump more water at once, resulting in floods.

Paradoxically, our changing atmosphere is also a perfect recipe for drought. Higher temperatures mean water evaporates faster, and when it falls, it’s less likely to fall as the snow that has historically fed many of the American West’s rivers and streams. The rain isn’t very helpful either, since lifting a drought requires a combination of snowfall and long, sustained rainy seasons instead of short, extreme bursts.

“Water infrastructure in the West is built around snowpack,” said Noah Diffenbaugh, a climate scientist at Stanford University. “It doesn’t need to be stored in a reservoir if it’s being stored in the snowpack.” Reservoirs have limited capacity, Diffenbaugh pointed out, so if an extreme rainstorm filled a reservoir beyond capacity, that water — which otherwise might have fallen as snow, or over a longer period of time — would have to be released.

Instead, we see a vicious cycle: As the soil and vegetation in drought-prone regions dry up, they become prone to wildfires and less able to retain water, so when extreme rainstorms roll in, they trigger floods and erosion. The heat makes the water dry up before it has any particular impact on the drought, and the erosion makes the soil even less able to retain water, so the next flood becomes ever so slightly worse. We saw this kind of mid-drought flooding just a week before the floods in the Midwest, when monsoon rains swept through Flagstaff, Arizona.”

California’s Drought Is an Infrastructure Problem

“policymakers spend too much time worrying about how much water Californians use to run their households—and too little time figuring out how to bring more water into our system. The state hasn’t built significant water infrastructure since Didion penned that essay—when the state had

Biden’s latest global infrastructure plan is all about competing with China. That’s a problem.

“Global power is often seen as a zero-sum game, and policymakers in Washington fear that China’s growing influence is coming at the expense of the US. Yet they haven’t offered an alternative to the BRI, instead largely chastising China for its intentions behind it and discouraging countries from joining it.

But that changed at the Group of Seven (G7) Summit last month, when President Joe Biden announced the Partnership for Global Infrastructure and Investment (PGII). With the PGII, G7 governments and private funders aim to invest $600 billion in low- and middle-income countries over the next five years, with $200 billion specifically earmarked from the US.

The motivation isn’t hard to discern: Counter China’s BRI. “Imitation is the sincerest form of flattery,” said Jorge Heine, a professor at Boston University and Chile’s former ambassador to China. “It has finally dawned on Western countries that there is actually a need for infrastructure in countries in Africa, Asia, and Latin America.””

“In his remarks announcing the PGII, Biden stated: “I’m proud to announce the United States will mobilize $200 billion in public and private capital over the next five years.” Despite that promise, however, the real money the US government has committed is far from $200 billion — adding up to about $170 million.

That discrepancy comes in part from how the US plans to finance this agenda. Kenny told me the US and the European Union have been keen to mostly rely on the concept of financial leverage. For example, a government may offer to finance $1 of an infrastructure project with the idea that this will then spur and be matched by $10 of investment from the private sector. “There’s this idea that you get from the millions and billions to these hundreds of billions by leveraging the private sector,” Kenny said. But, he added, “the fact is the record of that has been grim.” Rather than a one-to-10 public-private financing ratio, “we’re seeing a low one-to-one.”

The US is relying on leveraging to fund the PGII for two reasons. One, Congress is unlikely to authorize any more money for this kind of initiative, especially given its failure to pass increased funding for domestic programs (the rebranding of the initiative from “Build Back Better World” was no coincidence). So leveraging private companies “makes small amounts of US government money look bigger,” Kenny said, while enabling the administration to take credit for the whole promised sum.”

“The other reason, according to Kenny, is a deeply embedded ideological belief, stemming back to the Washington Consensus of the late 20th century, that the private sector beats government when it comes to delivering on goods like infrastructure. Reliance on the private sector also has the added benefit of preferring US companies and workers for various development projects, but Kenny added that US policymakers genuinely appear to believe this method makes these projects more affordable to low- and middle-income countries.

This line of reasoning is shaky, though, as public-private partnerships like the ones the PGII proposes are often very complex.”

“China and the BRI have had a different model, which has proven more successful. Kenny told me that China has been more willing to finance infrastructure that will be owned and operated by Global South governments. Fundamentally, this allows projects to be built faster and more cost-effectively as governments are already responsible for most infrastructure (approximately 83 percent of infrastructure investment worldwide is government-financed, per a 2017 study), and they don’t need to bargain and haggle with private companies.”

“One key way for the US and G7 to support the Global South would be to better use existing multilateral institutions like the World Bank and regional development banks like the African Development Bank, especially because, as Kenny told me, the World Bank actually can do the concept of leverage pretty well. While the US is proposing the approach of a “bespoke retailer” that pursues public-private deals one project at a time (each maybe a $100 million investment), the World Bank is like a big “wholesaler” that leverages money from the whole market (in the range of hundreds of billions) to support a range of public sector projects.

“Governments put in a little bit of capital to the World Bank, which then goes out and borrows massive amounts on private markets, issuing bonds at a 10:1 ratio,” Kenny said, meaning that they can get a lot of money for construction and development projects for the Global South. The World Bank also used to be much more engaged in financing hard infrastructure like roads and railways, only for priorities in terms of what is funded to change in recent decades. A massive recapitalization of the World Bank, Kenny said, could be an important place to start.

Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research, also suggested the issuance of “special drawing rights” (SDRs) from the IMF to shore up the central banks of countries in the Global South. SDRs effectively act as “coupons” from the IMF — the closest thing to the world’s central bank — and they function like cash transfers to countries in times of crisis.

SDRs were most recently issued to support countries around the world facing a financial crunch during the Covid-19 pandemic, and were used by low- and middle-income countries to pay for vaccines and other health care needs. However, as the authors of a Brookings Institution analysis of SDRs during the pandemic found, high-income and upper-middle-income countries currently receive the majority of SDRs, so distribution would need to become more equitable.

The US would also be wise to focus on its strong suits. As Kenny wrote in a recent article, the best way the US could help build the human capital of the world by way of providing scholarships and visas for access to its world-leading institutions of higher education, as well as increasing the number of work visas issued. And many of these migrants would end up sending capital back to their home countries in the form of remittances. A 2019 IMF study found that remittance flows total up to greater amounts of cash to low- and middle-income countries (China excluded) than overseas development aid.”

“A final option for the US is to ditch the global competition frame and collaborate with China to invest in the Global South. Baker argued that the “competition basically makes zero sense” due to the global scale of issues like the climate crisis, pandemics, and global development more generally.”

“Fundamentally, the Global South hasn’t necessarily bought into the geopolitical ideological competition of “democracy vs. autocracy” between the US and China. The Global South, as seen in its position toward the Russian war on Ukraine, is increasingly pursuing a strategy of what Heine termed “active nonalignment,” meaning rather than siding with either of the big powers in this supposed “new Cold War,” they’re more narrowly focused on their own economic growth and development.”

Biden’s incredible shrinking infrastructure plan

“The inflation plaguing Joe Biden’s presidency is also shrinking what’s so far been his crowning legislative achievement — the infrastructure bill that Congress enacted just seven months ago.

Democrats have hailed the infrastructure law, with its $550 billion in new road, rail and broadband funding, as a transformative shift for the country. But inflation — which reached a 40-year high of 8.6 percent last month — has already slashed billions from its value, forcing states to cancel or delay projects as costs balloon.”

Do We Really Need 100 Different Federal Programs To Fund Broadband?

“President Joe Biden’s bipartisan infrastructure bill apportioned $1.2 trillion for such projects as roads, bridges, and airports. But it also designated $65 billion “to help ensure that every American has access to reliable high-speed internet” by funding broadband expansion. This included a $45 billion “Internet for All” program, under which Biden pledged to expand broadband access to all Americans by 2030.

But this was not the first tranche of federal funds dedicated to expanding internet access: The 2009 stimulus bill allocated more than $7 billion toward broadband grants for rural areas, and expenditures have grown since. A new report from the Government Accountability Office (GAO) shows that the return on that investment has been underwhelming.

The report, titled “Broadband: National Strategy Needed to Guide Federal Efforts to Reduce Digital Divide,” was released…Based on Biden’s pledge of getting to universal broadband access by the end of the decade, the GAO studied the government’s current broadband programs and expenditures, looking for shortcomings or areas of improvement.

What it found was a jumbled mess.

“Federal broadband efforts are fragmented and overlapping,” with “at least 133” programs “administered by 15 agencies,” the report found. These agencies varied widely, with the three largest being the Federal Communications Commission (FCC), the U.S. Department of Agriculture (USDA), and the National Telecommunications and Information Administration (NTIA), which is part of the Department of Commerce. Between FY 2015 and FY 2020, these programs collectively dispensed at least $44 billion in broadband assistance.

In practice, so many programs from so many agencies all pursuing the same goal leads inevitably to waste. In one case the report cites, “multiple providers received funding from different programs to deploy broadband to the same county in Minnesota.” If the goal of the federal broadband effort is to expand into areas that lack access, then there is no reason to fund multiple providers in the same area.”

“Overall, the report determined, “The U.S. broadband efforts are not guided by a national strategy with clear roles, goals, objectives, and performance measures.””

“A previous GAO report noted that while the federal government invested over $47 billion in rural broadband infrastructure between 2009 and 2017, the broadband industry invested $795 billion over the same period. To the extent that federal funding would ever be necessary, it would be to fill in any gaps the private sector was unable to cover.

“The problem is the Biden administration is prioritizing the government being the provider,” rather than the private sector, says Swarztrauber. “The rhetoric is all about how we should prioritize the local government being the owner and operator of the network.”

In the past, such plans consistently lead to higher costs, corrupt bidding processes, and technology inferior to what’s offered by the private sector. But the Biden administration is moving full steam ahead, with NTIA Administrator Alan Davidson saying last month that his agency would “press” states to allow more municipal broadband programs.”

Biden’s Protectionist Regulations Undermine His Own Infrastructure Plans

“The $1.2 trillion infrastructure law signed by President Joe Biden in November expanded requirements that federally funded infrastructure projects purchase American-made goods and materials. Now, new rules from the administration will make it harder to get waivers from those cost-increasing mandates.

For decades, Buy America laws required that grantees receiving federal funds to build roads, bridges, and rail lines purchase domestically produced steel, iron, and manufactured goods—including rolling stock like buses and trains. The Infrastructure Investment and Jobs Act (IIJA) expanded those Buy America requirements to cover copper wiring, plastics, polymers, drywall, and lumber.

These requirements are known to raise costs and can even make some projects totally infeasible. For that reason, grantees have been allowed to request waivers from Buy America laws when they prove unworkable or raise costs too much.

But on Monday, the White House’s Office of Management and Budget (OMB) issued guidance intended to narrow the use of those waivers for the Buy America provisions of the IIJA.

Typically, requests for those waivers are approved or denied by the federal agencies that provide a project’s funding. Monday’s guidance, in keeping with an earlier White House executive order, requires these agencies to consult with OMB’s Made in America Office when considering waivers for grant awards made with IIJA funds. It also gives OMB’s Made in America Office final say over whether these waivers are approved.

The explicit purpose of sending these waivers through OMB is to limit the number and extent of waivers granted.”

Who Will Pay for the Roads?

“For decades, federal highway spending was covered completely by federal gas tax revenue. Fuel taxes are not exactly a user fee, but they do at least charge people who drive for the roads they drive on.

An even more market-oriented solution would involve giving private companies a larger role in building and maintaining highways and city streets while shifting the costs of those projects onto motorists, truckers, and other road users through tolls.

Since 2008, however, a gap between gas tax revenue and mounting federal transportation spending has required a $157 billion infusion from the general fund. Even before the 2021 infrastructure bill was passed, the Congressional Budget Office was projecting that the gap would grow.

The infrastructure package did include a few modest reforms. It created a pilot program to study a mileage-based user fee, and it expanded private activity bonds, which help private companies raise capital for infrastructure projects. But the overall trend is toward more freeloading freeways.”

Why Can’t We Build Anything?

“it’s not true that Washington is actually “sending the money.” Because of Congress’ longstanding inability to perform one of its most basic functions—pass a budget—significant swathes of transportation spending are stalled at 2020 levels. In November, the infrastructure bill did indeed authorize over a trillion in spending. But before all of that money can actually head out the door, there needs to be an appropriations bill in place”

“The U.S. is the sixth-most expensive country in the world to build rapid-rail transit infrastructure like the New York City subway or the Washington, D.C., metro system.
Part of the reason is just plain waste and corruption. The federal infrastructure bill has created massive incentives for rent-seeking while ballooning the municipal lobbying sector. Like contestants on a game show, states and localities are scrambling for dollars, correctly understanding that this might be the only major windfall in this area for a decade or more—again, largely due to Congress’ inability to do its job in a predictable way in concert with a chief executive who can set clear achievable policy priorities.

More than 1,000 municipal entities spent just shy of $50 million on federal lobbyists in the second half of 2021 as the infrastructure bill was finalized and passed, according to data tracked by OpenSecrets. That’s about 7 percent higher than the $46.7 million that municipal entities spent in the same period of 2020, which was hardly a dry spell given the federal pandemic spending that was already underway. That number likely underestimates the real demand, since it doesn’t capture contracts signed right at the end of the year.

In theory, no lobbyist is needed to tap into the new infrastructure money. At the end of January, Mitch Landrieu, a former mayor of New Orleans who is overseeing infrastructure spending for the Biden administration, proudly announced the existence of a 465-page guidebook that explains the different pots of money available to communities, along with a data file that is—get this—searchable!

Despite all this, there’s no reason to think the U.S. is notably worse on these measures than other developed nations. Likewise, while some of the cost is inputs, such as material and labor, they don’t explain the disparity fully. A recent study of the interstate highway system from George Washington University professor Leah Brooks and Yale University professor Zachary Liscow suggests that the X-factor is “citizen voice,” which can take the form of legitimate opposition to eminent domain, or which might be less charitably described as “not in my backyard” obstructionism and environmental regulatory foot dragging.”