President Biden said America will foot a third of the $600 billion G7 infrastructure program meant to rival China’s initiative
The G7 countries are expected to spend as high as $600billion on infrastructure projects in less-prosperous regions around the globe, with one-third of that bill being paid by the United States over five years. This announcement was made in Germany on Sunday. The money is expected to be comparable to the Chinese Belt and Road Initiative.
Joe Biden, the US president, stated that Western countries are committing to it. He was flanked by G7 leaders. “financing for quality, high-standard, sustainable infrastructure in developing and middle-income countries.”He said, without naming China specifically that the G7 did what he was referring to. “fundamentally different because it’s grounded on our shared values”.
China has been accused by the United States of attempting to weaponize its wealth through large-scale investments in countries in Asia and Africa. Trump claimed that Beijing was seeking to pursue these goals. “debt trap diplomacy” towards its borrowers, offering loans that the recipients ultimately can’t pay back and taking already built infrastructure as collateral.
China denies the claims, stating that it benefits itself as well as the countries targeted by its infrastructure investments. They are valued at $2.5 trillion. Most of this money goes to roads and ports which give China better access to foreign markets and resources.
It was almost a decade since its inception, and the US has not been able to offer an alternative program to China. G7 nations presented their own version last year during a meeting that took place in Cornwall, UK. “Build Back Better World”(BBBW), which was intended to be a mirror of the domestic plans of the Biden government, but that plan was rejected by Republicans as well as some Democrats. BBBW became the Partnership for Global Infrastructure and Investment.
“This isn’t aid or charity,”Biden spoke on Sunday during his speech at Schloss Elmau, Germany. “It’s an investment that will deliver returns for everyone, including the American people and the people of all our nations.”
“It’ll boost all of our economies, and it’s a chance for us to share our positive vision for the future and let communities around the world see themselves – and see for themselves the concrete benefits of partnering with democracies,”He said.
US has committed $200 billion to cover the cost of the US commitment. This will be done using a mix of federal money and private capital, such as private equity, pension funds and insurance funds. The EU announced its own €300 billion ($317bn) answer to Belt and Road in December last year.
PGII will invest in four main areas according to the White House. These include climate resilient infrastructure and energy resources, secure communications and projects supporting gender equality. Biden said there were “dozens of projects already underway” and gave a handful of examples.
Those included, $14 million in support of Romanian efforts to build a small modular reactor (SMR) plant; a $600 million contract to build an undersea telecommunications cable to connect Singapore to France via the Middle East and the Horn of Africa; and a $320 million private development project to build hospitals in Cote d’Ivoire.
Politico, for example, noted that Western plans to invest in climate mitigation were being undermined. While still relevant, they took a backseat due to hiking energy prices and the EU’s plans to decouple from Russia, which led some members to rely again on coal-fired power plants instead.
The issue of high inflation is another concern in the US as well as the EU. This affects both the price of the US dollar and euro and can potentially reduce the impact of allotted funding over the long term.
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