At the recent G7 Summit, leaders took it upon themselves to claim that “Diplomacy is back”. Given that this was the first time in two years that leaders had met in person, the opportunity was seized to discuss what they considered to be the world’s key issues. The summit quantified their claim and hope by pledging to address vaccine inequity, climate change, global taxes, and current conflicts. The summit, however, also announced a new infrastructure program titled ‘Build Back Better World’ (B3W), which has received mixed responses and questions about whether Diplomacy can be ‘back’.
What is ‘Build Back Better World’?
B3W was presented at the G7 Summit by US President Joe Biden as a “values-driven, high-standard, and transparent infrastructure partnership led by major democracies”. It comes from a pressing need to narrow a USD$40 trillion infrastructure gap in the developing world that the pandemic has exacerbated. According to the White House, this US-led initiative aims to coordinate the G7 in mobilising private sector capital to address issues relating to climate, health and health security, digital technology, and gender equity and equality. However, as critics have correctly pointed out, that is the extent of the details of the infrastructure plan.
Despite this, the B3W, as it currently stands, can be perceived as an alternative to China’s Belt and Road Initiative (BRI). China launched the BRI in 2013 to create regional connectivity while also contributing to filling the infrastructure gap in the developing world. It is estimated that China has supported over 2,600 projects worth US$4.2 trillion. However, it is widely known that there is considerable debate and concerns regarding China’s intentions with this initiative. The B3W initiative arguably aims to curb these concerns.
A rival to the BRI?
Although the announcement of B3W did not explicitly mention its intentions to rival the BRI, it was implied. The B3W was announced amidst discussions in a summit that called out China for its human rights abuses against Uyghur Muslims, it’s treatment of Hong Kong’s pro-democracy protestors, and its lack of transparency surrounding the pandemic’s origins. Calling the B3W a values-driven initiative directly references these criticisms of China’s actions and concerns of China’s undermining of the ‘international rules-based order’.
Outside the G7 summit, the BRI had been criticised internationally for its lack of regard for the environment. According to the Lowy Institute, this stems from the environmental risks associated with the large-scale development of rail, roads, ports, and hydroelectric dams. The World Bank has also noted that many of the countries undertaking loans from the BRI initiative have poor records regarding transparency and environmental safeguards. This has raised concerns on the long-term environmental implications during and post-planning projects. The B3W has presented itself as climate-friendly, suggesting that, unlike the BRI, investments under the initiative will be made in a manner consistent with the Paris Climate Agreement.
The BRI has also been involved in concerns concerning the debt sustainability of the countries involved in the initiative. In particular, the BRI has been accused of ‘debt trap diplomacy’ – a term used to describe strategically providing hard-to-pay-back loans as a means to receive concessions that lean to one side. Critics have pointed to the funding of the Hambantota Port in Sri Lanka, which was leased to China for 99 years and resulted in China Merchant Port Holdings acquiring 70 per cent of the port’s operating company after the country had debt-related difficulties. Additionally, the IMF identified eight low-income countries in Africa experiencing debt difficulties linked to the increasing bilateral loans from China. These concerns are amplified by the lack of transparency and lack of information surrounding the BRI loans. The B3W has also presented itself as an alternative initiative in this regard. In particular, it was announced to “offer countries a positive vision and a sustainable, transparent source of financing to meet their infrastructure needs.”
As it currently stands, it seems that B3W presents itself as a potential rival to the BRI by attempting to address existing concerns surrounding the BRI. However, without a detailed plan on how this will be upheld, it’s too early to determine whether it can act as a rival to the BRI.
In particular, although led by the US, the B3W is a multilateral initiative and requires the political will and financial support of the G7. Unlike the US, some G7 members are less interested in rivalling China’s geopolitical reach in this area. For example, after the summit, French President Emmanuel Macron stated that he did not want to be hostile with China. According to Olivia Adams, German Chancellor Angela Merkel also noted that she did not want to frame the G7’s efforts as “anti-Chinese” and that “it is not as if the G7 states aren’t already a very big investor in the world.” As such, this may create difficulties in determining how the B3W will be executed.
Critics of the B3W have also cited the G7 members’ inability to match the loan terms offered by China. Although the BRI’s loans have been criticised, it may be a more lucrative lending opportunity as BRI has tended to overlook countries’ political risk and credit ratings. For example, according to Choi Shing Kwok, director of the ISEAS-Yusof Ishak Institute in Singapore, “Southeast Asian countries that have hosted BRI projects often did so because of the ease with which such deals have been struck in the past.” In addition, with a greater focus on good governance and environmental standards, the B3W may incur higher costs than those projects funded by the BRI.
Should it rival the BRI?
Even if the G7’s execution of the initiative adequately responds to the criticisms and follows through with their initial claims, it begs the question of whether rivalry is the best way to claim that “diplomacy is back”.
While some countries may be willing to consider B3W projects in place of BRI projects, this may not be the case for all. Some countries may wish to keep their allegiances and may have preferred the opportunity to consider both initiatives without having to side in a geopolitical rivalry. For example, a representative from the Indonesian Coordinating Ministry for Maritime and Investment Affairs stated, “We welcome the B3W initiative, but of course, we hope this time they put their money where their mouth is.”
Both the BRI and the B3W are similar in that they aim to address the critical infrastructure gap in the developing world. However, as critics have pointed out, the B3W may be more suitable in complementing the BRI rather than acting as a rival. The Diplomat has noted that the BRI projects have mainly focused on construction, digital technology, and physical infrastructure whereas B3W currently aims to focus on climate, health and health security, and gender equity and equality. As such, there remains a possibility that each initiative’s projects complement or supplement each other. For developing countries on the receiving end, it would also be beneficial to utilise both initiatives and direct them to different sectors in need. However, by posing the B3W as an initiative to counter China, its proponents missed an important opportunity to offer a more comprehensive and diplomatic answer to the world’s infrastructure needs.
