The G7 summit is all the hype on the global diplomatic web. While the Biden-Putin interview is another expected summit moment, the announcement of an initiative has appealed just as much as it annoys a few. Group of Seven (G7) partners: United States, France, United Kingdom, Canada, Italy, Japan and Germany, have launched a global infrastructure initiative to meet colossal needs in infrastructure in low- and middle-income countries. The project – Rebuilding a Better World (B3W) – aims to be a partnership between the most developed economies, namely the members of the G7, to help reduce the estimated $ 40 trillion worth of infrastructure needed in the developing world. However, the project appears to be run like a rival to China. Belt and Road Initiative (BRI). Amid strong criticism leveled against the People’s Republic at the Summit, the B3W initiative emerges as an alternative multilateral funding program to the BRI. Yet the developing world is the least of the worries of the optimistic model challenging the Asian giant.
While the B3W claims to be a very cohesive initiative, the BRI has spread beyond comprehension and would be extremely difficult to dethrone, even when some of the world’s most lucrative economies come together to compete for the largely untapped potential. of the region. Now, let’s be fair and dispute that neither the G7 nor China is about the well-being of the region rather than the profit. However, China has a head start. The BIS was unveiled in 2013 by President Xi Jinping. The initiative was conceived as a long-term, transcontinental investment policy and program aimed at consolidating infrastructure development and fostering the economic integration of developing countries along the historic Silk Road.
The highly sophisticated project is a long-held dream of the Chinese Communist Party; operating on the premise of dominating networks between continents to establish indisputable sovereignty over regional economic and political decision-making. Referring to the official plan of the BIS published by China’s National Development and Reform Commission (NDRC), the BRI leads to: “Promote the connectivity of the continents of Asia, Europe and Africa and their adjacent seas, establish and strengthen partnerships between countries along the Belt and Road [Silk Road], set up multidimensional, multi-level and composite connectivity networks and achieve diversified, independent, balanced and sustainable development in these countries ”. The excerpt clearly amplifies the thinking and main agenda of the BIS. On the other hand, the B3W simply presents itself as a superfluous rival to an already outdated program.
Originally known as One Belt One Road (OBOR), the BRI has since grown into the region’s infrastructure niche, mainly comprising emerging markets like Pakistan, Bangladesh and Sri Lanka. The remarkable feature of the BRI has been the mutually inclusive nature of the projects, i.e. the BRI has requisitioned projects in many rival countries in the region, but the initiative manages to keep the projects in parallel without no interference or hindrance. . With a loose grip on governance while giving carte blanche to the political and social realities of each specific country, the BRI program presents a perfect opportunity to jump the bandwagon and secure funding for development projects without undergoing scrutiny. and complications. With the attractive nature of the BRI, the program has grown significantly over the past decade, now welcoming 71 countries as partners in the initiative. The BIS currently accounts for one-third of global GDP and about two-thirds of the world’s population.
Similar to BRI, B3W aims to bring together transnational and regional cooperation between the countries involved while facilitating the implementation of large-scale projects in the developing world. However, unlike China, the G7 faces a series of issues that seem to trump the overly optimistic assumption that B3W is the BRI’s alternative flow.
A major argument in the B3W model is the easy assumption that the 7 democracies have an identical policy towards China and would therefore react in the same way to China’s policies and actions. While the prospect fits with the BRI’s goal of promoting intergovernmental cooperation, the G7 economies are much more polar than China’s partner democracies. It is rather simplistic to assume that the United States and Japan would have a similar stance towards China’s policies, especially when the United States was recently in a tense trade war with China while Japan had a relationship. healthy economy with Xi’s diet. It would be a bold statement to conclude that the United States and the United Kingdom are more closely linked towards the B3W compared to the Sino-Pakistani cooperation towards the BRI. Even if we disregard the long-standing partnership between the Asian duo, the new initiative would demand more from the United States than from the rest of the country, as each country is aware of the strained relationship and the underlying desperation that drove the B3W program to fight its way to the Summit.
In addition, the B3W is timed at a time when Europe has seen its history sloppy in the past year. After Brexit, Europe is the exact opposite of the unified policymaking glorified in the B3W initiative. The European Union (EU), despite US reservations, recently signed an investment agreement with China. A symbolic gesture against the role played by former US President Donald J. Trump in supporting the UK’s exit from the Union. As London falls in peril, she would prefer to partner with China rather than the Democratic regime in the United States to avoid isolation in the region. Despite opposition from the United States, Germany – Europe’s largest economy – continues to position China as a key market for its auto industry. Such a divided partnership poses no threat to the BRI, especially when the partners are heavily reliant on the Chinese market and could not afford an affront to the initiative long envisioned by China.
Even if we assume a unified action plan shared among the G7 countries, the B3W would not succeed in attracting the main developing countries in the region. The main targets of the initiative would naturally be the most promising economies in Asia, namely India, Pakistan or Bangladesh. However, the BRI has already encapsulated these countries: the China-Pakistan Economic Corridor (CPEC) and the Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC) being two of the BRI’s 6 main development corridors.
While participatory democracies as well as targeted democracies would be very cautious in supporting the B3W rather than the BRI, the new insider lacks the basics of a sustainable project let alone compete with the BRI. The B3W is intended to be funded nationally by USAID, EXIM, and other similar programs. However, a project of such complexity involves investments from various funding channels. The BIS, for example, has a total volume of around $ 4 trillion to $ 8 trillion. However, the BRI is publicly funded and therefore benefits from various funding channels, including the issuance of BRI bonds. The B3W, however, is simply insufficient because until recently large corporations and domestic banks in the United States were pushed back by the Biden regime. A specific example is the recent adjustment of the global corporate tax rate to a minimum of 15% to undermine the power of giants like Google and Amazon. Such strategies would prevent the United States and its G7 counterparts from obtaining multiple funding channels compared to the highly leveraged state-funded companies in China.
In addition, the competitiveness of B3W weakens when conditionalities are put in place. On paper, B3W presents humane conditions, including preservation of human rights, climate change, rule of law and prevention of corruption. In reality, however, the targeted countries are riddled with problems in all 4 categories. A simple question would be why would developing countries, already strapped for funds, invest to improve the 4 conditions posed by the B3W when they could easily continue to seek the benefits of unconditional funding through the BIS? ?
The B3W, while being a very lucrative and successful model, is idealistic if it is presented as a competitor to the BRI. Quite simply because the G7, mainly the United States, evades the realities on the ground and looks away from the labyrinth of complex relations shared with China. The only good that could be achieved is if the B3W manages to find its own unique identity in the region, distinct from the BRI in nature and not rivaling the scale of operation. While Biden has remained vocal in allaying concerns about B3W’s goal of targeting the BRI’s trajectory, executives have remained silent on the model’s detailed operations for the near future. For now, B3W would await bipartisan approval in the United States as the remaining partners develop their action plan. It can be said, for now, that the B3W will not hold the candle to the BIS in the long term, but could create problems for the G7 members if it manages to anger China in the short term.