Business Maverick: US resuscitates bid at G7 to counter China’s Belt and Road

2022/06/27 07:11:00

The Build Back Better World initiative has struggled to get off the ground because not enough G7 partners contributed financially when it was unveiled last year.

The Build Back Better World initiative has struggled to get off the ground because not enough G7 partners contributed financially when it was unveiled last year.

The Build Back Better World initiative has struggled to get off the ground because not enough G7 partners contributed financially when it was unveiled last year.

President Joe Biden rebooted his effort to counter China’s flagship trade-and-infrastructure initiative after an earlier campaign faltered, enlisting the support of Group of Seven leaders at their summit in Germany.Sunday 26 June 2022 - 5:25pm G7 world leaders agree to ban Russia gold exports, further putting the squeeze on Russia's finances POOL/AFP | BENOIT TESSIER World powers on Sunday agreed to ban gold exports from Russia, kicking off a G7 meeting aimed at taking new steps to deplete Moscow's war chest and bolster Ukraine's defences.Win (L-R) Britain’s Prime Minister Boris Johnson, Germany’s Chancellor Olaf Scholz and US President Joe Biden walk to a family photo opportunity during the G7 Summit held at Elmau Castle, southern Germany on 26 June, 2022.26 June 2022 - 16:15 Luyolo Mkentane President Cyril Ramaphosa will on Monday take part in the G7 Leaders’ Summit in Schloss Elmau, Germany.

The Build Back Better World initiative, named after Biden’s domestic spending and climate agenda, struggled to get off the ground because not enough G7 partners contributed financially when it was unveiled a year ago, according to people familiar with its lack of progress.European officials cited the Biden administration’s inability to get its own ambitious economic legislation through Congress.They are seeking to close ranks for Ukraine against Russia's invasion while grappling with the intensifying global fallout of the war.“When democracies demonstrate what we can do –all that we have to offer – I have no doubt that we’ll win that competition every time,” Biden said during an event on the sidelines of the summit.The measure has been rebranded the “Partnership for Global Infrastructure and Investment” and the US is calling on leaders to agree to fund the launch of projects in middle- and low income countries to the tune of $600 billion over the next five years.Russian President Vladimir Putin had been hoping"that somehow NATO and the G7 would splinter", Biden said.It will consist mostly of private sector investments, with some funding from the US Development Finance Corporation and Export-Import Bank and other commitments from foreign governments..

The US would contribute $200 billion in total though it’s unclear what the split would be between private and public sector funding, and how the government plans to convince companies to take part." Scholz also hailed Western unity which he said"Putin never expected", adding that each member of the club"needs to share responsibility" for facing the mounting challenges the war presents.There is the potential for the same challenges to crop up under the initiative’s latest incarnation, in part as the G7 prioritises other issues such as taming inflation and dealing with the fallout of Russia’s invasion of Ukraine.“Russia’s invasion of Ukraine in early 2022 and the uncertain economic recovery from COVID-19 threaten to undermine progress,” Chatham House said in a June 24 research paper.Looking to the summit, Ukrainian Foreign Minister Dmytro Kuleba urged the G7 to approve more sanctions on Moscow and more heavy weapons for Ukraine to defeat"Russia's sick imperialism".“Changing priorities among donor nations, driven by events in Ukraine, risk a further shift in development policy towards bilateralism and fragmentation within the G7 and with recipient nations.” Expectations have already been tempered.From soaring inflation to a looming food crisis and energy shortages, Russia's invasion of Ukraine, now in its fifth month, has mired the world in a series of crises.

While it’s pitched as a direct alternative to President Xi Jinping’s Belt and Road program, the US official noted it would be unrealistic to compare the two dollar-for-dollar.Each partner country wants to put its own branding on the partnership, but all would operate under the PGII umbrella.Seeking to turn up the heat on Moscow, the G7 announced it would outlaw imports of Russian gold.The Biden team’s view is that countries around the world are waking up to the reality the BRI didn’t achieve outcomes for them and that they’re receptive to a US-led alternative.Russia’s actions in Ukraine also serve as a warning for countries worried about being overly indebted to others with the resultant geopolitical risks, the US official said.- 'Weaponised energy' - While Western allies have hammered the Russian economy with unprecedented sanctions, Putin's army has been digging in for a drawn-out war.China Hesitates on Bailing Out Sri Lanka, Pakistan as Debt Soars China has sought to reinvent its trillion-dollar initiative during the pandemic, which has disrupted global supply chains and closed international borders.

That’s led to a shift away from large-scale projects toward ones designed to make Beijing more competitive in other priority sectors, including through its so-called Digital Silk Road.Johnson warned that"any attempt to settle the conflict now will only cause enduring instability" and risked giving"Putin licence to manipulate both sovereign countries and international markets in perpetuity", a Downing Street spokesman said.Belt and Road projects valued at $13.66 billion were announced last year, down from about $80 billion in 2020 and nearly $200 billion the previous year, according to data by Refinitiv.Paris backs a US proposal for a maximum oil price, Macron's office said, but added that"it would be much more powerful if it came from the producing countries".Among the G-7-backed projects announced Sunday are $2 billion in solar projects in Angola, a $600 million contract to build a submarine telecommunications cable that will connect Singapore to France through Egypt and the Horn of Africa and $14 million to support a design study for Romania’s deployment of a small modular reactor plant.One of the four planks is information and communication technology along with health, climate and gender equality.At the same time, they will aim to minimise"as much as possible the effect of these rising oil prices and the way (Putin) has weaponised energy".

That includes, for example, offering alternatives to Chinese telecom giant Huawei Technologies Co for the deployment of 5G networks and building childcare centers.The official said the US will also focus on investing in projects that help supply chain security by making the US and other allies less reliant on China.- Systemic rival - Scarred by a reliance on Russian energy that has hampered several European nations including Germany and Italy from going all out to punish Russia, the G7 was also warily looking at China -- which it views as a systemic rival.Amos Hochstein, one of Biden’s key energy advisers, has been leading the US approach and scoping out new projects over the past few months..As the gulf separating Western allies from Russia and China widens, the G7 will also be looking to rally other major players to its side.

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