FORGIVE THIS BYSTANDER’S world-weariness, but the Partnership for Global Infrastructure and Investment (PGII), the $600 billion plan for infrastructure and investment to challenge the Belt and Road Initiative (BRI) launched at the G7 summit in Bavaria, seems a bit old hat.
The US government’s statement that President Jo Biden (seen above announcing the PGII at the G7 summit) would announce flagship PGII projects ‘along with additional projects that have been undertaken over the past year’ — and links to a list of ten of them — is a bit of a giveaway.
Not that this would be the first time for governments to wrap up existing initiatives and past promises, tie a bow around them and announce a shiny ‘new’ package.
The PGII intends:
…to develop a values-driven, high-impact, and transparent infrastructure partnership to meet the enormous infrastructure needs of low- and middle-income countries and support the United States’ and its allies’ economic and national security interests.
What worthier and worth-laden circumlocution of intent to counter Beijing’s growing poured-concrete diplomacy could one imagine?
In one sense, the PGII is no more than a rebranding of the Build Back Better World (BBBW) plan rolled out at the G7 meeting in the UK a year ago. BBBW was a play on Biden’s domestic infrastructure plan.
The PGII’s four major categories for investment — clean energy, health systems, gender equality and information and communications technology — will sound familiar from his 2020 election campaign. Cynics might say that having failed to get much traction domestically with his infrastructure plans, the US president is now trying his luck internationally beyond the obstructivism of Congress.
The BRI has had at least a decade’s head start on the PGII. Its investment total is in excess of $1 trillion, although how much in excess is moot as there has been a tendency until recently to slap the BRI label on any overseas Chinese investment.
In many cases, the transparency and effectiveness of that investment and the loans supporting it have not been of the highest standards. However, Western criticism has not been accompanied by much by way of an alternative that does not come with the conditionality typically required by multilateral institutions such as the IMF, the World Bank and the IFC.
The $600 billion over five years that the G7 is now offering will not all be government money. The intention is to combine government funding with private capital from long-term investors such as pension funds, private equity funds and insurance funds — much as large companies augment China’s government overseas direct investment in BRI.
Those large Chinese companies can be state-owned, such as Zijin Mining, CNOOC, China Three Gorges and China Railway Construction, or private such as Alibaba, Boyu Capital and the metals and mining group Tsingshan.
In 2021, 560 new BRI projects worth at least USD100mn were signed, according to Ministry of Commerce data. The average value was USD355mn, compared to USD585mn in 2015. BRI activities are shifting to smaller, less costly and more creditworthy projects that are easier to manage and are less likely to concern recipient countries about the risks of taking on what turns out to be unmanageable and politically contentious debt.
This Bystander assumes that the PGII will subsume the EU’s standalone counter to BRI, its Global Gateway project announced late last year and which we described as ‘at least half a decade late and more than a euro short’. That would give needed financial buklk to the PGII.
Yet, how well the PGII competes with the BRI will depend on its implementation and how well the G7 governments can rally private capital to their cause to give substance to the headline number of $600 billion.