By Yi Xin
Realizing that the flop of its Build Back Better World (B3W) partnership is almost a fait accompli, the US, together with other G7 countries, announced a $600 billion Partnership for Global Infrastructure and Investment (PGII) at the G7 summit in late June. The project promises $200 billion mobilized by the US over the next five years, and the remaining $400 billion from the European Union and other G7 members. The plan is ambitious. However the question is whether it will deliver real benefits. The answer is probably not and it will, to a great extent, stay as another new buzzword and a promise to be materialized, just like the $100 billion pledge for international climate finance made in 2020 and the announcements on vaccine donations to poorer countries this year, which, if fulfilled, could have been enough to save 600,000 lives, the equivalent of 1 death every minute.
The motive of the project is “noble” at the first glance. The PGII, in documents posted on the White House’s official website, was pictured as a plan to “develop a values-driven, high-impact, and transparent infrastructure partnership to meet the enormous infrastructure needs of low- and middle-income countries and support the United States’ and its allies’ economic and national security interests.” The emphasis is more on the latter half, the interests of the US and its allies, or to be more specific, of the US itself. Everything by the US is always for the US.
If the term “national security” seems vague, another phrase may help to understand the real intention of this new flagship project, countering China, a conclusion made by analysts and economists, from the east and the west and western media including the BBC, Reuters and Bloomberg. China’s Belt and Road Initiative (BRI) has yielded fruitful outcomes since its inception in 2013. The number of China-Europe freight train trips in 2022 reached 10,000 on August 21, 10 days earlier than last year. The China-aided future headquarters of the Africa Centers for Disease Control and Prevention has won acclaim while igniting people’s hope in transforming public health in Africa. It is not only about the BRI. A growing number of countries and international organizations have also expressed support for China’s Global Development Initiative and Global Security Initiative.
While the Chinese initiatives are receiving warm response worldwide, Quad, AUKUS, IPEF and B3W, new acronyms are created by the US every few months, serving for the interests of the country in a bid to deepen the ties with its allies and partners and suppress China. However, promises made of assistance to developing countries in urgent needs are yet to be fulfilled by the acronym producer. The B3W has so far yielded just $6 million in global infrastructure construction, a far cry from its promise of narrowing a $40 trillion gap in infrastructure investment for developing countries.
This explains why John Berthelsen, editor-in-chief of the Asia Sentinel commented that the PGII is “too little, too late, and the smattering of projects pales in the face of Beijing’s vast infrastructure investment.” Wendy Cutler, former deputy US trade representative in the Obama administration, put it straight, “the more concrete, affirmative actions the G7 can take instead of just words in a final statement, the more impactful and relevant the group will be going forward.” The world wants and needs to see real money, detailed plans and concrete actions.
That leads to the most essential question, how will the US fulfil its $200 billion promise, which seems too magnanimous to be true? The answer is that there is possibly no “how” considering the US’s current financial and political situations.
Financially, the higher-than-usual inflation in the country offers it little space to squeeze $200 billion out of the tax payers. Washington has promised to raise $200 billion through federal funds, multilateral development banks and private investment. It seems to be a “something out of nothing” trick as most of the money is expected to be afforded by the private sectors. The excuse from some G7 leaders is that public sectors alone cannot narrow the gap. However, the burning reality is that the private sectors are not at all eager to pay for the government’s lofty ambition, given their own troubling economic conditions and fading confidence in the authorities. That being the case, how much of the $200 billion promise will be materialized is yet to be answered.
Politically, the US may be too occupied to implement its magnificent vision. Domestically, gun violence and abortion restrictions are raising the public’s suspicion of the government, system and even values. Internationally, the COVID-19 pandemic and the US taking a hand in the Ukraine crisis and elsewhere are all bringing more uncertainties to the future of not only the PGII but the world order as well. Also noteworthy is that this administration’s approval rating has hovered around a record low of 36% since first hitting it in May. Perhaps it is now too occupied to put its PGII promise into practice.
The prospect of the PGII is anything but optimistic. International infrastructure development should never be an arena of zero-sum game between major economies. The world needs more collaboration, connectivity and win-win cooperation, rather than decoupling, grandstanding and building “small blocs with high fences”. Will the PGII work? The world is watching.
(Yi Xin is a Beijing-based observer.)
