Partnership for Global Infrastructure and Investment
On June 26, the G7 countries officially launched the Partnership for Global Infrastructure and Investment (PGII), a joint initiative to fund infrastructure projects in developing countries. In an effort to address the infrastructure gap in the developing world, US President Joe Biden announced that the United States will mobilize $200 billion dollars of investment in global infrastructure projects under this new strategy. The overall investment goal from the G7 countries and the private sector will be $600 billion over the next five years.
The recently announced infrastructure plan Partnership for Global Infrastructure and Investment is meant to bolster the global economy and is supported by a commitment of $600 billion from G-7 nations for the construction of global infrastructure by 2027, and aims to support global energy security via climate-resilient infrastructure and soft infrastructural development in the digital economy, among other things. The PGII will “deliver game-changing projects to close the infrastructure gap in developing countries, strengthen the global economy and supply chains and advance US national security,” says a White House Fact Sheet.
This initiative is, in some ways, a continuation and expansion of the Build Back Better World (B3W) initiative introduced by Biden last year as a strategic alternative to China’s Belt and Road (BRI).
“I want to be clear. This isn’t aid or charity. It’s an investment that will deliver returns for everyone,” Biden said, adding that it would allow countries to “see the concrete benefits of partnering with democracies.”
Technically speaking, it is old wine in a new bottle — just a rebranding and an official launch of what had been rolled out last year at the G7 in the UK as “Build Back Better World” (B3W), which was called Biden’s version of the New Deal and signature domestic policy. The project envisaged mobilizing hundreds of billions of dollars from developed countries over the next several years. It was placed on hold by congressional Republicans. They are concerned that what the administration sold as an initiative to counter Chinese influence is in reality a vaguely defined effort to direct US government funds toward projects ranging from solar panels to gender-equity initiatives.
Little had been heard of Build Back Better World since its launch, while in January the EU launched its own infrastructure fund for developing countries, called the Global Gateway, aiming to mobilise €300bn in investments between 2021 and 2027. At the time, the EU insisted that its fund would work alongside B3W, and not be a rival. The UK, outside the EU, launched its own infrastructure project called the Clean Green Initiative. Japan is planning to raise $65bn over the same period for regional connectivity.
“We collectively have dozens of projects already underway around the globe,” Biden said, arguing that this effort will prove that democracies can deliver, and with fewer strings attached than Chinese-funded infrastructure. “It’s a chance for us to share our positive vision for the future. And let communities around the world see themselves, see for themselves the concrete benefits of partnering with democracies,” he said.
The PGII will be executed across four priority pillars that will define the second half of the 21st century. They are as follows:
1. Tackling the climate crisis and bolstering global energy security through investments in climate-resilient infrastructure, transformational energy technologies, and developing clean energy supply chains across the full integrated lifecycle, from the responsible mining of metals and critical minerals; to low-emissions transportation and hard infrastructure to investing in new global refining, processing and battery manufacturing sites; to deploying proven, as well as innovative, scalable technologies in places that do not yet have access to clean energy.
2. Developing, expanding and deploying secure information and communications technology (ICT) networks and infrastructure to power economic growth and facilitate open digital societies — from working with trusted vendors to provide 5G and 6G digital connectivity, to supporting access to platforms and services that depend upon an open, interoperable, secure and reliable internet and mobile networks with sound cybersecurity.
3. Advancing gender equality and equity — from care infrastructure that increases opportunities for economic participation by women, to improved water and sanitation infrastructure that addresses gender gaps in unpaid work and time use – in order to boost the global economic recovery by ensuring that half the population is not forced to sit on the sidelines.
4. Developing and upgrading the infrastructure of health systems and contributing to global health security through investments in patient-centred health services and the health workforce; vaccine and other essential medical product manufacturing; and disease surveillance and early warning systems, including safe and secure labs. Addressing the current pandemic and preventing and preparing for the next one is crucial to US economic and national security.
Under the PGII, the US will raise US$200 billion in grants, federal funds and private investment by 2027 to help countries in Africa, Asia and Latin America address problems in climate change, healthcare and gender equity as well as digital and physical infrastructure.
The European members of the G7 group will, in turn, mobilise €300 billion (US$314.7 billion) for the global programme over the same period to build a sustainable alternative to the Chinese belt and road scheme. The goal is to eventually raise US$600 billion in total.
Projects cited at the event include a secure sub-sea cable linking Europe and South-east Asia, an industrial mRNA vaccine plant in Senegal, solar projects in Angola, a modular nuclear reactor plant in Romania and a port linking Christmas Island with the rest of the world.
Jake Sullivan, the US National Security Adviser and an important member of the project, said recently that the US-initiated partnership will cover global infrastructure, physical health and digital infrastructure and will provide “an alternative to what the Chinese are offering”.
“We intend for this to be one of the hallmarks of the Biden administration’s foreign policy over the remainder of his tenure,” he said.
The projects to be funded under the G7 initiative fall into four broad categories — clean energy, health systems, information and communications technology, and gender equality. As of now four major investment projects have been announced which include the following:
· $2 billion for a solar project in Angola, including solar mini-grids, home power kits and solar to power telecommunications
· $600 million for a US company to build a submarine telecommunications cable that will connect Singapore to France through Egypt and the Horn of Africa, delivering high speed internet
· Up to $50 million from the US to the World Bank’s Childcare Incentive Fund, which is also getting support from Canada, Australia and numerous foundations
· $3.3 million in technical assistance from the US to the Institut Pasteur de Dakar for the development of an industrial-scale, multi-vaccine manufacturing facility in Senegal that could produce COVID-19 vaccines and others, in partnership with other G7 nations and the EU
While the explicit goal of PGII is not to counter China’s Belt and Road Initiative, the initiative is meant to counter China’s influence and its ongoing, multitrillion-dollar Belt and Road infrastructure project across Asia and Africa.
Chinese President Xi Jinping’s multi-trillion dollar BRI has been criticised for hitting many developing nations with too much debt. The US has always claimed that the Chinese offer of loans is laced with hidden terms that leave countries eventually facing high payback clauses, and intrusive conditions that often cut across climate change objectives. The PGII aims to fill a huge gap left as China uses its economic clout to stretch diplomatic clout into the furthest reaches of the world.
Western officials have argued that China’s BRI uses strong-arm tactics that trap countries in debt and employs investments that benefit China more than the countries participating in the program. Among the countries that have signed long-term BRI deals are Afghanistan, Iran and Hungary.
The United States says the G7-backed effort promotes responsible investments that aim to benefit the communities that receive the funds.
European Commission President Ursula von der Leyen said the G7 is offering “sustainable, quality infrastructure” and will be “listening closely to the recipient countries.”
When asked about the PGII, Chinese foreign ministry spokesman Zhao Lijian, according to Reuters, said: “China continues to welcome all initiatives to promote global infrastructure development.”
“We believe that there is no question that various related initiatives will replace each other. We are opposed to pushing forward geopolitical calculations under the pretext of infrastructure construction or smearing the Belt and Road Initiative,” he added.
Decades of economic globalization have interwoven countries so tightly together that many matters that could have been tackled by countries individually or in small groups previously now entail the greater, broader engagement of many more countries.
In the highly globalized international landscape that has been profoundly transformed by transnational industry, supply and value chains, any attempts at reversing the trend would prove costly, and unrealistic.
Plenty of common, global challenges such as economic recovery, climate change, and volatile traditional and non-traditional security risks add to the urgency of greater international synergy in a post-COVID-19 world.
The world, however, appears to be on the brink of another round of geopolitical bisectioning.
As the recently concluded BRICS Summit and the G7 Summit have demonstrated, countries are thinking very differently about how they should interact in a post-pandemic world.
Just like at the 25th St. Petersburg International Economic Forum, where President Xi Jinping and Russian President Vladimir Putin reiterated the significance of building a democratic, multipolar world, where there is no hegemony and bullying. BRICS leaders in their joint statement pledged to work to develop inclusive partnerships for common, global prosperity.
The correct way forward, as the BRICS leaders said, is for countries to work together, rather than against one another.
It is this inclusive global vision, which prompted China’s recent proposals of a Global Development Initiative and Global Security Initiative.
Unfortunately, the developed countries think differently. At their summit in southern Germany, the G7 leaders unveiled a development assistance initiative, which should have been good news for developing countries.
Under the “Partnership for Global Infrastructure and Investment”, a new package of United States President Joe Biden’s “Build Back Better World” campaign trail proposal, the seven countries have pledged to raise $600 billion in private and public funds over five years to finance needed infrastructure in developing countries.
That they are now getting serious about giving, having for so long failed to deliver on their promises of infrastructure funding, should indeed have been a welcome move. Except that international development aid is being used for geopolitical purposes, to rival the China-proposed Belt and Road Initiative, and offset alleged Chinese influence in the developing world.
The Chinese leader has on several occasions invited Western countries to join the Belt and Road Initiative for the betterment of human progress worldwide.
The G7 initiative, however, will inevitably work against the ideal of global synergy and worsen geopolitical divisions in addition to widening the development gaps.
It will, thus, do a disservice to world peace and prosperity in the long run.