During the G7 summit in Cornwall, the group of nations unveiled a global initiative to help low and middle-income countries to cover the vast cost of green infrastructure. Intended as a green rival to China’s Belt and Road Initiative, the Build Back Better World (B3W) initiative aims to unlock private capital to invest in projects related to climate as well as health, digital technology and gender equality.
The G7 did not give details about timescales or the total investment pot, except to say that it would contribute to the upwards of US$40 trillion (£28.4 trillion) needed to pay for such infrastructure in developing countries, and that different members of the group would have responsibility for different parts of the world. China’s Belt and Road Initiative has spanned infrastructure projects in some 140 countries around the world since launching in 2013, including G7 member Italy.
So will the B3W “transform the financing of infrastructure projects in developing countries”, as it is claimed in the Downing Street press release? And how might this be achieved?
Get The Latest By Email
There are several issues likely to face the G7 countries as they work through the detail of the B3W. First, assuming the money will come from nations providing funding alongside private institutions, will they be willing to lend in high-risk situations?
Even in a European context we have witnessed a reticence to get involved in riskier projects. For example, when there was little interest from Europe to invest in the Greek port of Piraeus, it was Chinese shipping giant COSCO that eventually stepped in. This was after Greece had formally announced that it was becoming part of Belt and Road, having struggled to find western investors following its economic crisis.
The reality is that the Belt and Road countries are often risky investment destinations. It is no coincidence that China now plays an important role in United Nations peacekeeping missions: this may be considered at least partly driven by a desire to protect overseas investments.
Second, can the G7 match the loan terms offered by China? Although Belt and Road investments have been criticised for creating an unsustainable debt burden on countries, its lending rates may still be difficult for B3W to compete with given the political risk and credit ratings of the countries involved. On top of this, B3W projects may face an additional hurdle of abiding by more stringent environmental standards, which could pile on more costs.
Third, policymakers in Washington are being open about their desire to be in strategic competition with Beijing, while other G7 countries – including the UK – are much less keen to be labelled as “anti-China”. This has the potential to create faultlines in B3W while it is in gestation.
Not only that, the G7’s recent difficulties in dealing with the Trump administration may not be easily forgotten – not least the stance on China. Since the Biden administration is in a similar place on this issue, it may make it more difficult for the US to take a leadership role in B3W, since it may want to run the initiative more aggressively against its Chinese rival than some other G7 members would choose to. The prospect of a multilateral competitor to Belt and Road therefore seems like wishful thinking.
The EU dimension
Fourth, there have been several competing initiatives popping up recently, most notably an emerging global EU “connectivity strategy” geared at democracies around the world. So far, attempts to get this initiative moving include a deal to collaborate between the EU and Japan in 2019, an EU-ASEAN statement on connectivity in December 2020, and more recently a potential global infrastructure partnership between the EU and India. There are no such signs of collaboration with China, even though our recent research suggests it could lead to significant welfare gains for both sides.
At any rate, if B3W is to make a significant impact there will need to be some serious consideration on how to work in tandem with the EU’s connectivity initiative. The EU may not yet have delivered tangible results, but with plans developing, B3W will be playing catch-up.
Overall, it is unlikely that these competing initiatives will sideline China’s ambitions – notwithstanding evidence that China is pulling back from the previous scale of Belt and Road. That is not to say that the B3W should not be dismissed too quickly, however, as the US is claiming that it will pull together a significant range of development finance tools to get the project off the ground. For now, it probably pays to be sceptical, but to watch closely to see whether some of the difficulties can be overcome.
About The Author
Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming
by Paul Hawken and Tom Steyer
In the face of widespread fear and apathy, an international coalition of researchers, professionals, and scientists have come together to offer a set of realistic and bold solutions to climate change. One hundred techniques and practices are described here—some are well known; some you may have never heard of. They range from clean energy to educating girls in lower-income countries to land use practices that pull carbon out of the air. The solutions exist, are economically viable, and communities throughout the world are currently enacting them with skill and determination. Available On Amazon
Designing Climate Solutions: A Policy Guide for Low-Carbon Energy
by Hal Harvey, Robbie Orvis, Jeffrey Rissman
With the effects of climate change already upon us, the need to cut global greenhouse gas emissions is nothing less than urgent. It’s a daunting challenge, but the technologies and strategies to meet it exist today. A small set of energy policies, designed and implemented well, can put us on the path to a low carbon future. Energy systems are large and complex, so energy policy must be focused and cost-effective. One-size-fits-all approaches simply won’t get the job done. Policymakers need a clear, comprehensive resource that outlines the energy policies that will have the biggest impact on our climate future, and describes how to design these policies well. Available On Amazon
This Changes Everything: Capitalism vs. The Climate
by Naomi Klein
In This Changes Everything Naomi Klein argues that climate change isn’t just another issue to be neatly filed between taxes and health care. It’s an alarm that calls us to fix an economic system that is already failing us in many ways. Klein meticulously builds the case for how massively reducing our greenhouse emissions is our best chance to simultaneously reduce gaping inequalities, re-imagine our broken democracies, and rebuild our gutted local economies. She exposes the ideological desperation of the climate-change deniers, the messianic delusions of the would-be geoengineers, and the tragic defeatism of too many mainstream green initiatives. And she demonstrates precisely why the market has not—and cannot—fix the climate crisis but will instead make things worse, with ever more extreme and ecologically damaging extraction methods, accompanied by rampant disaster capitalism. Available On Amazon
From The Publisher:
Purchases on Amazon go to defray the cost of bringing you InnerSelf.comelf.com, MightyNatural.com, and ClimateImpactNews.com at no cost and without advertisers that track your browsing habits. Even if you click on a link but don't buy these selected products, anything else you buy in that same visit on Amazon pays us a small commission. There is no additional cost to you, so please contribute to the effort. You can also use this link to use to Amazon at any time so you can help support our efforts.
This article originally appeared on The Conversation