G-7 40 US$ Trillion Program: Development or Rivalry?

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By Shakeel Ahmad Ramay

 

The world is facing a huge infrastructure gap, which is widening up with every passing year. The world is unable to meet the ever-increasing needs of infrastructure. MGI, in 2016 estimated that the world on average needs to invest US$ 3.3 trillion on infrastructure, every year. The world is not able to meet the demand and there is a gap of US$ 350 billion on yearly basis. It was calculated that the total gap would be US$ 5.3 trillion by 2030. The projections were made without considering the needs of climate change or financial requirements to achieve the targets identified under the Sustainable Development Goals (SDGs). MGI study underlined that the inclusion of SDGs will triple the gap and it would be around US$ 15.9 trillion till 2030.

Poor countries are in dire need of investment. They need investment not only to improve the infrastructure but also need to bring out people from the poverty trap.

Global Infrastructure Hub (GIH) in 2020 came up with its own projections. It underscored that the participating countries would be in need of US$ 94 trillion by 2040. The current trends show that the real investment will be around US$ 79 trillion, which means the gap would be around US$ 15 trillion by 2040. GIH made projections on the basis of data collected from 56 leading countries. It did not include other developing and least developed countries. It is quite unfortunate that they were ignored in the study and also are not part of the planning. World-leading countries are negotiating hard to find solutions for themselves and giving least or no heed to the needs of poor countries. It is against the spirit of the slogan of SDGs “No One Lift Behind”. It is a common and accepted fact that less developed and poor countries are in dire need of investment. They need investment not only to improve the infrastructure but also need to bring out people from the poverty trap.

G-7 40 US$ Trillion Program: Development or Rivalry?
G-7 40 US$ Trillion Program: Development or Rivalry?

China realized the worrisome situation and started to engage with less developed and developed equally. China started with the concrete efforts much before the SDGs commitments, MGI, and GIH projections through a policy of Go Global. China in 2013 launched a comprehensive program with the name of Belt and Road Initiative (BRI). China also pitched the Six-One Hundred programs to help the poor and less developed countries.

Unfortunately, Chinese investment and programs were not welcomed by the USA and Western countries. They immediately started anti-investment and anti-China campaigns at one name or other. Now G-7, the representative group of West proposed its own program with the name of Build Back Better World (B3W). G-7 defined core principles of B3W as 1) values-driven, 2) good governance and strong standard, 3) climate-friendly, 4) strong strategic partnership, 5) mobilizing private capital through development finance, and 6) enhancing the impact of multilateral public financing.

56 countries including G-7 need US$ 94 trillion for infrastructure till 2040

Investment is good in any form, especially help to bridge the gaps and bring the world closer. Unfortunately, it is not the case, as G-7 has termed B3W a rival program to BRI and Chinese investment. One wonders, why G-7 is presenting it as a rival to BRI or China investment, or does it have instruments that can qualify the conditions of rivalry? The birds-eye view suggests that the B3W can never compete with BRI leave alone the rivalry due to multiple reasons and facts. First, it is well-documented fact that 56 countries including G-7 need US$ 94 trillion for infrastructure till 2040. It is required just to support the business as usual model and trends of development. American Society of Civil Engineers in 2021, highlighted that the USA will be facing a gap of US$ 2.6 trillion in the next 10 years to meet the needs of investment in infrastructure. Thus, B3W’s US$ 40 trillion will not be able to meet the needs of leading countries, leave alone other countries.

South Asia would be in need of US$ 2.5 trillion till 2024

The inclusion of developing and least developed countries will further complicate the situation. For example, World Bank in 2014 highlighted that South Asia would be in need of US$ 2.5 trillion till 2024 to meet the development goals. Independent experts concluded that South Asia was not able to invest the required financial resources to support the business as usual model. Owning o lack of ability to generate required resources tt is expected that the needs would have been further increased. The major contributing factors are lower development and higher population growth. COVID-19 has further aggravated the situation.

B3W is not a first rival program. USA has already launched a program with the name of Better Utilization of Investment Led to Development (BUILD). It was designed with a single goal to counter China

Second, B3W is exclusive in nature, as it has been designed to counter China’s rise. I am unable to understand, how the world will sustain growth by excluding the second largest economy of the world. China also happens to be the largest trader and market of the future. The domestic consumption market is in an expansion mode and it was estimated that around 600 million people will join the middle class till 2049 and the existing middle class would have been graduated to the upper class. It presents huge potential not only to China but also to the world.

Third, B3W is not a first rival program. USA has already launched a program with the name of Better Utilization of Investment Led to Development (BUILD). It was designed with a single goal to counter China. The USA promoted the program with the hope that the private sector will chip in and lead the way. However, the program could not produce any result, as the USA was not able to support with financial resources. The USA was expecting that the private sector will come forward to assist the government, but it did not happen. Australia also launched an initiative of the Pacific Fund of US$ 1.46 billion for the Pacific countries. It was aimed to counter the Chinese investment in Pacific countries. Japan and India formulated Asia-Africa Growth Corridor, again the only goal was to undermine the Chinese investment. It was propagated with much pump and show but could not deliver on any front. It is an excellent initiative in theory but no practical actions.

Apart from these facts, it is extremely important to highlight here that in past West developed by exploiting the less developed countries. Western countries colonized Asian and African countries and plundered their resources. Second, they treated indigenous people with cruelty and showed inhuman behavior. They even did not hesitate to go for the genocide of indigenous people. Red Indians in the USA and Aboriginal people in Australia are still suffering. The UK exploited the sub-continent to the extreme and looted its resources. The UK being the superpower at that time exploited the countries. French did not leave any stone unturned to exploit the African countries. Still, many African countries are facing hardships due to France.

However, the circumstances have been changed and there is no space for colonization.  By keeping in mind ground realities West has invented new tools and means to keep control over resources. They erected Bretton Wood institutes and promoted globalization, which helped them to maintain control. China has challenged the hegemony of Bretton Woods and the West with better alternatives. West is trying to renew the hegemony and it is one of the objectives of B3W, which seems difficult as now the world has an alternative to West and Bretton Woods.

In this context, the pertinent questions would be, will B3W be successful. Yes, it can be successful, if G-7 tries to build cooperation with China. For that purpose, first of all, G-7 will have to abandon the words of “rival or countering”. They need to look for ways to build connections with BRI and other initiatives. Second, they need to accept the ground realities and accept that China is now formidable global power. China cannot be single out, as it has its own sphere of friends. Lastly, they need to realize that the hegemony of the West cannot prolong anymore. So, it’s better to live with new dynamics rather than beating the drum of the past.

In conclusion, the world needs cooperation, not rivalries, as, the world is facing multiprong challenges. On top of everything, climate change has threatened the very existence of the earth. Thus, the world needs to cooperate. It is pertinent to mention here that China is ready to cooperate, rather China is urging to cooperate. President Xi Jinping at many times advocated for it, as he believes in “the world is a community and we share resources and future”. Thus, he presented the idea of “Community with Shared Future”.

Note: The writer Shakeel Ahmad Ramay is a Political Economist working with an Islamabad-based Think Tank.

Disclaimer:

The views and opinions expressed in this article/Opinion/Comment are those of the author and do not necessarily reflect the official policy or position of the DND Thought Center and Dispatch News Desk (DND). Assumptions made within the analysis are not reflective of the position of the DND Thought Center and Dispatch News Desk News Agency.

Central Desk
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