The B3W is meant to close the infrastructure gap in developing countries at a cost of 40 trillion dollars. It is a transparent and climate-conscious initiative, unlike China’s. Its main obstacle is financial since government finances have been burdened by the fight against COVID-19. Resistance can also be expected from private investors and countries that already have close ties with China. There is also a risk of indirectly subsidising China.
Rome (AsiaNews) – It will not be easy for the United States and other G7 countries to turn the Build Back Better World (B3W) initiative into a real alternative to China's Belt and Road Initiative (BRI), Chinese president Xi Jinping's infrastructure plan to make China the cornerstone of world trade.
Sponsored by US president Joe Biden, the G7 launched the B3W last weekend in Britain. As announced by the White House, it seeks to close the infrastructure gap in developing countries by 2035.
Washington and its allies want to promote an alternative to the Belt and Road scheme (the new Silk Roads), based on respect for financial, environmental and social standards, as well as good governance.
The Belt and Road plan has come under fire for funding polluting facilities (coal plants), opaque tenders that favour Chinese companies, and the forced relocation of populations to make way for new infrastructure.
The harshest accusation, however, is that it saddles countries with huge debts, making them increasingly dependent on their Chinese creditor.
According to Evan Ellis, professor of Latin American Studies at the Strategic Studies Institute of the US Army War College, the B3W is a step in the right direction because it provides a transparent, rule-of-law-based, good governance alternative to the Belt and Road, especially its “digital” division.
However, the B3W faces several challenges. G7 countries have pledged hundreds of billions of dollars for new infrastructure for middle- and low-income countries, but the figure is far from the 40 trillion which the seven richest democracies estimate to be needed to reach its set goal.
Between 2013 and 2020, BRI-related projects cost US$ 3.7 trillion, this according to Refinitiv, a provider of financial markets data and infrastructure. The China Global Investment Tracker however puts the figure at US$ 763 billion.
The G7 countries will find it hard to find the necessary funds. Their finances are already under pressure due to spending to deal with the COVID-19 crisis. For this reason, the B3W scheme is expected to raise capital without public funding.
It “is not clear that the governments will be able to motivate enough private sector partners to invest in projects with significant constraints regarding the environment, social justice, etc.,” said Ellis speaking to AsiaNews.
Another issue is breaking a relationship that has been structured over time. Ellis points out that many Latin American countries favour Chinese loans and projects because Beijing does not impose fiscal and financial conditions or management controls and transparency obligations.
“A case in point is Trinidad and Tobago's recent announcement that it was turning down an IMF loan offered at 1% to take a Chinese loan at 2%, with a requirement that 15% of the money be spent on Chinese products,” Ellis explained. "Trinidad's government preferred extra costs and conditions in favour of Beijing to avoid IMF oversight."
Faced with B3W conditions, including respect for the environment and benefits for disadvantaged groups, it is likely that many developing countries will continue to do business with China.
In the end, “many developing elites will prefer to take Chinese money, which lets them continue to divert part in bribes, spend the money irresponsibly,” Ellis argued.
On top of that, the G7 initiative might even indirectly benefit China. According to Ellis, “to the extent that these projects are channeled into renewable energy sectors where the Chinese already dominate in areas such as wind, photovoltaic panels, etc., there is a risk that they could cause the West to subsidize China, not circumvent it.” Unless the US and its allies get their partners in the developing world to drop Chinese tech giants, the same thing could happen in telecommunications, since many developing nations already use technology by China's Huawei and ZTE.