The plan is to wean countries and governments away from China’s Belt and Road Initiative that provides financing for infrastructure like ports, roads and bridges as in Hambantota and Colombo in Sri Lanka and in Pakistan’s Gwadar.
Is China luring poorer countries into a debt trap? Is China a loan shark? Are Chinese “predatory” loans plans aimed at usurping debt-saddled governments to cede key assets.
These are the questions leaders of the Group of Seven (G7) want governments in developing countries to ponder on. The G7 began talks on Sunday in Germany’s Bavarian Alps and made a first significant announcement in the form of a US $ 600 billion infrastructure initiative to help developing countries tackle climate change, improve healthcare infrastructure, invest in gender equity and advance their ICT and digital technology know-how.
This G7 response to China’s multi-trillion-dollar Belt and Road Initiative (BRI) follows on an earlier plan called the ‘Build Back Better World’ announced during the 2021 G7 summit in the middle of the COVID-19 pandemic. There has been hardly any progress on the 2021 plan the group had announced in London.
It is now packaged anew, as the G7’s Partnership for Global Infrastructure and Investment (or PGII) scheme with plans to raise US $ 600 billion over five years to fund the launch of infrastructure projects in middle and low-income countries.
The initiatives include vaccine manufacturing project and a solar project in Africa and laying of a 1,600 km submarine telecommunications cable connecting the Horn of Africa to the rest of the world.
The US will raise US $ 200 billion through grants, federal funds and private investment and the EU has will raise € 300 billion.
No aid, nor charity
US President Joe Biden said this joint fund initiative was no aid nor charity. Instead, it is meant to be an investment in the developing world that will deliver returns for everyone, including the American people as also the people of the G7 countries as it will boost their economies.
“This isn’t aid or charity,” Biden said. “It’s an investment that will deliver returns for everyone” by allowing countries to see “concrete benefits of partnering with democracies,” he said.
To complement Biden’s statement, EU Commission chief Ursula von der Leyen said the G7 offer was for sustainable, quality infrastructure that will listen closely to the recipient countries, by presenting a “positive, powerful investment impulse to the world to show our partners in the developing world that they have a choice”.
The PGII scheme is formed to wean countries and governments away from China’s BRI that provides financing for infrastructure like ports, roads and bridges as in Hambantota and Colombo in Sri Lanka and in Pakistan’s Gwadar.
In hours preceding the G7 summit, the US, UK, Japan and Canada firmed up a ban imports of Russian gold to hit Russian oligarchs and strike at the heart of the country’s war machine. A formal announcement will be made on the summit’s final day.