The new US-led G7 global infrastructure initiative “Build Back Better World” (B3W) has prominently alluded as a counterproposal to China’s Belt and Road Initiative (BRI); however, current indications suggest that the G7’s agreed-upon B3W initiative may turn out to be a dud.
The 47th G7 summit was held in Cornwall, England, from June 11 to 13, 2021, and according to the White House, June 12, 2021 – Statements and Releases, US President Joe Biden discussed “strategic competition with China” with the G7 leaders and committed to “concrete actions” to help meet the enormous “infrastructure needs in low- and middle-income countries.” The new U.S.-led G7 global infrastructure initiative “Build Back Better World” (B3W) aims to be a “values-driven, high-standard, and transparent infrastructure partnership” led by major democracies, who announced that the COVID-19 pandemic had exacerbated the developing world and that they plan to “help narrow” the $40+ trillion infrastructure gap.
On the sidelines of the recently concluded United Nations Climate Change Conference, also known as COP26, U.S. President Biden further pushed his initiative for a collaborative, green, and sustainable infrastructure that he set “pathways towards net-zero emissions by 2050.” The leaders discussed how the B3W, Global Gateway and Great Britain’s Clean Green Initiatives will “jumpstart investment, sharpen focus, and mobilize resources to meet critical infrastructure needs to support economic growth” and committed to “viewing all projects carried out through infrastructure development partnerships through the lens of climate change.”
Leaders and strategists in the United States have continued to criticize China’s “debt-trap diplomacy and modern-day colonialism.” For example, the Trump administration used the Sri Lankan port of Hambantota to warn of China’s “debt-trap” strategy: Former Vice President Mike Pence accused China of using “debt-trap diplomacy” to expand its influence in 2018. Former Attorney General Barr raised the issue of China policy at the Gerald R. Ford Presidential Museum on July 17, 2020 “loading poor countries up with debt, refusing to renegotiate terms, and then taking control of the infrastructure itself, as it did with the Sri Lankan port of Hambantota in 2017. This is little more than a form of modern-day colonialism.” However, a closer examination reveals that the situation is far more complex. According to Deborah Brautigam and Meg Rithmire in “The Chinese ‘Debt Trap’ Is a Myth,” “the narrative wrongfully portrays both Beijing and the developing countries it deals with.” It went on to say that “debt-trap diplomacy” portrays China as a deceptive creditor with gullible victims like Sri Lanka, and while India was alarmed about by the development in its own strategic backyard, an Indian firm joined an international consortium with the U.K.-based engineering firm Atkins Limited to develop a long-term plan for Hambantota Port and a new business zone.
Given the foregoing, and given the heightened US-China confrontation and competition, the B3W can be interpreted as a US-led counterproposal to China’s Belt and Road Initiative (BRI), as it prominently alludes to strategic competition with China, but it can also be interpreted as a multilateral, global welfare, and sustainable development initiative, regardless of its strategic intent.
In terms of scope and funding, the BRI focuses on traditional hard infrastructure, while the official White House Fact Sheet stated that “the G7 and other like-minded partners will collaborate through B3W to mobilize private-sector capital in four areas of focus: climate, health and health security, digital technology, and gender equity and equality, with catalytic investments from our respective development finance institutions.” To support project construction funds in developing countries, the BRI relies primarily on investment backed by state-owned banks and bilateral loans (both concessional and commercial), with limited success in leveraging private capital, whereas the B3W intends to mobilize both bilateral and multilateral tools, as well as private-sector capital, to accelerate investment.
BRI, which was launched in 2013, is the world’s largest infrastructure program with over 2600 BRI-related projects worldwide, with a total value of US $3.7 trillion as of July 2020. As of January 2021, 140 countries were involved in the BRI-related projects, however, the B3W is still in its early stages. Nevertheless, the groundwork for the US initiative has already begun, with Deputy National Security Adviser Daleep Singh announcing on November 8, 2021, a January 2022 rollout of the first projects in which the US intends to invest in five to ten large infrastructure projects around the world to counter China’s BRI. The US is already scouting for projects in Ecuador, Panama, and Colombia, and another trip to Asia is planned before the end of the year. At least ten promising projects in Senegal and Ghana had been identified.
The U.S. has prominently alluded B3W as a strategic competitor to BRI; however, the current approach in B3W is that it is unclear how much money the US or other G7 countries are willing to spend on it, or how far other countries are willing to cooperate. Concerning the financial mechanism, the B3W intends to mobilize both bilateral and multilateral tools, as well as private-sector capital, to accelerate investment; however, the long investment cycle and low return of public infrastructure projects have caused private sector financiers, who are more focused on short-term returns, to avoid this type of investment. Another challenge is that the G7 countries may face domestic difficulties as a result of a change in government or administration, either to continue with the same policies or implement new policies (both domestic and foreign policy – an option of completely abandoning or continuing with a less effective approach), or the initiative may face opposition from members of the majority or opposition party even during the proposed legislation in the country’s parliament or assembly. For example, despite passing it with a razor-thin majority hours before Biden’s departure for Europe, the United States Senate was evenly divided on Biden’s $1.75 trillion B3W social policy and climate package, with weeks of wrangling over both the details and costs. Simultaneously, a second initiative to invest $1.2 trillion in America’s deteriorating infrastructure failed. In Asia, in the case of the US-India strategy to counter China, in line with the Obama administration’s Asia Rebalancing Strategy (2011) and the US-India Joint Strategic Vision (2015), for example, accelerated the Modi government’s signing of the “historic” Indo-Naga Framework Agreement in order to create a conducive environment in India’s North-Eastern Region (NER) for India’s Act East Policy (AEP 2015), whereas the Trump administration’s Indo-Pacific Strategy (2017) was “marked by uncertainties in terms of priority and emphasis, resulting in a “worrying” policy situation for Modi’s strategy against China.” As a result, it appears that the hedging of a China-counter strategy through the US-India relationship under AEP has failed to produce the desired results.
B3W details are currently scarce, and in such a scenario, countries will seek the most appealing option with a realistic approach. From a practical standpoint, countries with underdeveloped infrastructures may find the BRI more appealing because of traditional hard infrastructure development, rather than the G7 B3W “soft” infrastructures outcomes. Despite the fact that the BRI has been tainted by negative environmental and social impacts, a lack of transparency, and corruption, and has been criticized for “debt-trap diplomacy,” research indicates that Chinese banks are “willing to restructure existing loan” terms and have never seized any country’s assets.
Other attempts by the EU, G20, Japan, and the Blue Dot Network to compete with BRI have either not yielded desirable results or have failed. Without a doubt, some countries may be interested in B3W options that go beyond what China’s BRI, EU, G20 and Blue Dot Network can provide; however, the differences discussed above between BRI and B3W indicate that B3W is unlikely to pose a serious geopolitical threat to China’s BRI. Additionally, stricter B3W standards will increase public scrutiny, lengthen timelines, and increase upfront costs, making it less competitive. As a result, the challenge will be to decide whether to adhere to stricter fiscal and B3W standards, or whether the B3W must strike a balance of flexibility and cost-effectiveness that will entice countries to join the B3W. Otherwise, B3W will have to walk a tightrope between ensuring flexibility and cost-effectiveness while adhering to stricter B3W standards. Furthermore, in the absence of direct funding mechanisms, the B3W is also less streamlined, and it may be unable to compete on scale with BRI at this time.
Regardless of whether B3W is interpreted as a counterproposal to the BRI or not, both have plans to address the global challenge of climate change by developing green and sustainable infrastructure to reduce environmental impact, increase energy efficiency, and reduce pollution. As a result, rather than attempting to “beat” BRI in order to realize a vision of creating a truly better world, B3W must make a critical strategic decision on how to complement BRI in their sectoral focus or even in financing mechanisms.
Author’s Disclosure Statement: Augustine R. is an independent researcher on the India-Naga-Myanmar political issue, as well as on broader global security and strategic issues, and does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article/opinion.
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