Europe recently hosted a meeting of the Group of Seven Major Industrialized Countries amid the challenges of the Ukraine war and China’s growing assertiveness in Asia. Some of the ideas that have been put forward have remained at best half-finished, such as the “Partnership Initiative for Infrastructure and Global Investment” on which the administration of US President Joe Biden is betting to contribute to the revitalization of developing countries, jobs create in industrialized countries, and yield returns from private investment, and then achieve world peace.
In his report, published by the American Institute of Economic Research, author Doug Bando says that the leadership of the Partnership for Infrastructure and Global Investment Initiative represents a “threat” to China, which the author considers “on the verge of to dominate the world “. through the Belt-and-Road Initiative, As a result, poor countries will become needy through “debt trap” diplomacy, and they will control important projects around the world, with the construction of facilities for military use in secret, according to the writer.
Consequently, the author believes that the United States and the West are obliged to respond by investing their people’s money in the same type of foreign projects, saving the local population and defeating the Chinese Communists.
According to the author, Beijing should not be underestimated, but at the same time it is not the tyranny that is portrayed. added, while young people strive to leave the country.
He noted that the Belt and Road Initiative program was initially ambitious, but Beijing softened its expectations, realizing that the focus on developing countries whose governments tended to be authoritarian and economically controlled at the same time limited the possibility of implementing advanced projects. and can be well implemented. management. According to Sarah Hsu of the University of Tennessee, “there is no evidence that Chinese banks are borrowing or investing in money laundering projects to gain a foothold in these countries.”
America and China
According to the author, the Republic of China has not yet built up a network of foreign bases, Chinese trade practices have generated various forms of negative reactions in countries as diverse as Malaysia, Zambia, Sri Lanka, Pakistan and Myanmar, and many countries have suffered from the “Ugly China” syndrome similar to the “American” syndrome The Ugly ”mythical during the Cold War, and the author believes that the Belt and Road Initiative is not the ruthless geopolitical power that terrorizes many in the West.
The author also believes that Joe Biden is committed to his previous plan to fight inflation by spending more money, “and the White House, along with the rest of the leaders of the Group of Seven Major Countries, called on the Partnership for Infrastructure and Global Investment announced: Initiative to mobilize hundreds of billions of dollars and provide high quality sustainable infrastructure It makes a difference to the lives of people around the world, strengthens and diversifies our supply chains, creates new opportunities for American workers and businesses, and improves our national security. “
The United States is expected to contribute $ 200 billion over a 5-year period; It is “through grants, federal funding and benefit from private sector investments,” provided this amount is supplemented by “additional capital from other like-minded partners, multilateral development banks, development finance institutions, sovereign wealth funds, and more.”
The other G7 countries will contribute another $ 400 billion at the same time, and the funding is supposed to focus on 4 main priorities:
- Addressing the climate crisis and improving global energy security.
- Develop, expand and deploy the infrastructure of secure ICT networks.
- Promote gender equality and equality.
- Develop and modernize the infrastructure of health systems and contribute to global health security.
Biden emphasized in announcing the initiative that “it is not aid or charity, but rather an investment that will bring returns to everyone, including the American people and the people of all our countries, and will work for all our economies. to strengthen. “
Build a better world
The program aims to “promote democracy and defeat tyranny.” This all sounds great in theory, but the author sees that the associated problems are many:
- The first is that the Infrastructure and Global Investment Partnership has been renewed after launching under the name “Rebuilding a Better World” last year to align with the US administration’s massive domestic spending plan. Realizing that Republican opponents were unlikely to accept a similar international effort, and that foreign governments did not want to be seen as supporting a biased political platform, the administration placed its old initiative in a new spirit.
- Secondly, the new name and official announcement indicate that all officials have come up with it after a year of reflection, travel and consultation. Is it really hard work to make a statement? Given no names or commitments, where do the $ 200 billion and $ 600 billion estimates come from? How will the financial contributions be implemented? International aid conferences meet regularly and make generous promises of aid, but even these commitments made to some of the most desperate people on earth are often not kept.
- “Thirdly, the Infrastructure and Global Investment Partnership is not only incomplete but has barely started, and the administration and the G7 members do not even pretend to have developed anything new, but rather have blocked some existing projects, ‘ invited some agencies and pointed out some Existing funds, and they expected to be joined by a group of existing public agencies and private funds, then they expected amazing projects that have not yet been identified, as well as their creation, and indicated that everything would be subject to standards not yet identified. developed, with returns that have not yet been proven, according to the author.
- Fourth, it’s hard to defeat an opponent with whom you have nothing to defeat; Beijing eventually adapted the Belt-and-Road initiative to economic and political reality, providing real money for real-world projects, although results varied. As for the previous US attempts to confront China’s program, it has not achieved much, while the poor countries want the money because what appears to be US criticism of Chinese funding does not serve their own interests.
- Fifth, how will all these massive, uncontrolled investments provide ‘returns for everyone’, as Biden puts it? And if there are so many unique projects with good social and economic design, why is it not already funded? The World Bank, the Asian Development Bank, the Inter-American Bank, the African Development Bank and the European Bank for Reconstruction and Development are all busy, as are dozens of aid agencies around the developed world as governments maintain sovereign wealth funds and seek private capital. ‘ An irreplaceable neglected economy. So what additional value will government bureaucracies provide across the G7?
- Sixth, if the whole plan is related to private funding, what is the role of government? Jake Sullivan, national security adviser, said: “What we are really trying to insist on is a long-term economic relationship rooted in private sector investment, not in massive cash transfers from the US Treasury to these countries. This means relatively less “Take money, and leverage sector investments. The large private sector can raise billions of dollars, and eventually tens of billions of dollars.”
With the private sector now able to invest, what does the government intend to bring in other than unavailable private funds? And what will private investors get to enter these markets now, unlike ever? Will it be financed by taxpayers’ money? So, there will be no real return, according to the author.
- Seventh, if the real plan is to finance projects with less than excellent economic prospects and the kind that have long been subsidized by multilateral development banks and governments, how realistic is it to expect “returns for all”? Why do we expect better results from previous economic development aid? What about the Millennium Challenge Corporation, which was unveiled with great fanfare in 2004 as a new way to better help global development? What is the evidence for the scarcity of funds for good projects?
Overall, the economic aid record is weak, and there is no evidence that much good will come from the United States and Europe by placing good money after bad money provided by the World Bank, the International Monetary Fund and other multilateral development banks, as well as state aid agencies and commercial banks.
- Eighth, the Partnership for Infrastructure and Global Investment is likely to be influenced by requirements to guard against prejudice and discrimination, and there may be domestic political benefits by addressing issues such as climate change, information technology, gender and healthcare. But many appropriate programs are likely to be placed away from infrastructure that is unlikely to yield any economic return, some may be politically controversial at home and abroad, and very important areas of investment are likely to be ignored.
Finally, the author concludes by asking: How can an unfunded investment program that is currently not subject to standards promote democracy? Will allies only work with democratic regimes, real or fictitious? If so, much of the world will continue to depend on existing funding mechanisms, including the Belt and Road Initiative. And if not, will the provision of funds at least be conditioned on better behavior and less cooperation with authoritarian authorities? If so, enthusiasm for participation is likely to increase, and if not, how will the Partnership for Infrastructure and Global Investment allow democracies to “win the competition” against China, as Biden has argued?
The author says that the West has a long history of providing development finance to poor countries, “and unfortunately it has a bad record. Problems have persisted over the years, and ultimately governments have the essential role of markets and democracy in developing countries, and the multilateral development banks have largely supported the best management method. ” To help projects succeed.
The author concluded that the new “Partnership for Infrastructure and Global Investment” program introduced by the Biden administration is unlikely to be better than previous development initiatives, and is likely to “provide nothing new, and worse. is still a political project aimed primarily at China. ” .