The G7 has been forced to relaunch its vehicle to provide infrastructure funds to poor and developing countries only a year after a largely similar scheme was unveiled at the G7 conference in Cornwall in July last year under the label Build Back Better World.
The fund was relaunched at the start of the G7 in Germany on Sunday as the Global Investment and Infrastructure Partnership and with the same goal of providing an alternative to the Chinese Belt and Road Initiative that Beijing has used for more than a decade to build economic ties. with developing countries.
All the G7 leaders led by the US president, Joe Biden, came together at a side meeting on the first day of the summit to make statements supporting the partnership and so underscore their commitment to helping poorer countries. The aim would be to leverage a total $600bn (£490bn) of private and public funds by 2027, with Biden claiming $200bn over the next five years would come from the US.
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.
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.
But 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 mobilize €300bn (£260bn) in investments between 2021 and 2027.
At the time the EU insisted its fund would work alongside Build Back Better World, 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.
Biden, the EU commission president, Ursula van der Leyen, and the UK prime minister, Boris Johnson, met in November at Cop26 in Glasgow to evaluate their differing projects, and whether by duplicating their efforts they were weakening their offer to poor countries.
Speaking at the G7 event on Sunday, Olaf Scholz, the German chancellor, implicitly acknowledged the confusion saying there were advantages if the G7 countries showcased their offers under a common roof.
It does not appear from the statements the funds are being fully merged into one funding stream, but instead being more closely coordinated.
A recent report by the International Energy Agency, World Bank, and World Economic Forum found that by the end of the 2020s, clean energy investment in emerging and developing economies, which was less than $150bn in 2020, needed to expand by more than seven times, to above $1tn annually, in order to put the world on track to reach net-zero emissions by 2050.
The IEA said emerging and developing countries provide only one fifth of clean energy investment, but contain two thirds of the world’s population.
Jake Sullivan, the US national security adviser and key driver of the project, said at an event hosted by the Center for a New American Security last week 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 foreign policy over the remainder of his tenure,” he said.
The Chinese foreign ministry spokesperson, Wang Wenbin, said on Friday at a regular press briefing in Beijing that while China welcomed efforts to promote global infrastructure development, Biden’s initiative was based on a “zero-sum game approach.”
“The relevant initiative from the US side ignores the desire of all countries for common development and win-win cooperation,” Wang said, adding that it “will win no support”.
George is Digismak’s reported cum editor with 13 years of experience in Journalism