- S. President Joe Biden’s administration said it will announce an infrastructure financing mechanism for low- and middle-income countries, designed to rival China’s Belt and Road Initiative.
- Through BRI Project, China has financed and built bridges, ports, power plants, railways, tunnels, and 5G wireless networks around the world.
- The initiative has only expanded China’s footprint & also indebted many nation to Beijing (Sri- Lanka, Pakistan, Zambia, Laos, Djibouti etc.)
- In June 2021, U.S. President Joe Biden unveiled the West’s response to the program: the Build Back Better World initiative, also known as B3W.
- About Back Better World initiative
- The Build Back Better Plan is a Covid-19 relief, future economic, and infrastructure package proposed by G-7 countries for developing and lower-income countries.
Components of B3W
- Through B3W, the G7 will coordinate in mobilizing private-sector capitalin four areas of focus :-
- Health Security
- Digital technology
- Gender equity and equality
- Values-Driven Development
- Infrastructure development carried out in a transparent and sustainable manner – financially, environmentally, and socially – will lead to a better outcome for recipient countries and communities.
- Good Governance and Strong Standards
- B3W to infuse investment by complying with the standards promoted by the Blue Dot Network, relating to the environment and climate, labor and social safeguards, transparency, financing, construction, anti-corruption, and other areas.
- The investments will be made in a manner consistent with achieving the goals of the Paris Climate Agreement.
- Strong Strategic Partnerships
- B3W will envisage countering the aggressive model of development and establish a more inclusive model of global development.
ISSUES WITH BRI PROJECT
- The BRI project waslaunched in 2013, it broadly aims to facilitate cross-border transportation of goods, access to energy, creating demand for existing excess capacity in Chinese industries
- China had an overall exposure of investment of around $750 billion between 2013 to mid-2020.
BRI encompassed five kinds of activities
- Policy coordination
- Trade promotion
- Physical connectivity
- People to people contacts
- Expanding internationalisation
Criticised for following Reasons :-
- A study by AidData(an international development research lab) has found out that 42 countries have more than 10% of their GDP owed as debt to China
2) Chinese Monopoly in the Projects
- Most of the contracts (93%) have also gone to the state-owned enterprises in China
3) Increased Corruption and Reduced Competition
- Due to no private sector participation,there is no competitive element in the program
4) Lack of Transparency and Environmental Concerns
- The debt trap diplomacy, the lack of transparency andunreasonable loan conditions have made the scheme extremely unpopular.
5) BRI- A Recipe For Total Failure
- China has overcommitted itselfand now it is not able to sustain the aid-program. More than 35% of the project portfolio is stuck on the implementation stage.
6) Hamper India’s Strategic Interests
- TheChina-Pakistan Economic Corridor (CPEC) passes through Pakistan-occupied Kashmir (PoK) and Baluchistan, both of which are home to a long-running insurgency where it faces terrorism and security risks.
7) Response of Recipient-Countries
- China is now facing the BRI backlash in a growing number of countriesacross Africa, Asia, Latin America, and Central and Eastern Europe.
- The initiative, “Build Back Better World,” will be “values driven, transparent and sustainable,” according to a senior administration official.
- Since announcement, B3W has languished. Even the name has been scrapped, the Build Back Better bill demised in the U.S. on the grounds of environmental protection, reducing prescription drug prices, etc. A rebrand to “Partnership for Global Infrastructure” is underway.
- Still, some B3W projects were announced in the spring of 2022
- 1) The Digital Connectivity and Cybersecurity Partnership will provide $3.45 million funding for digital finance and Internet service providers this year
- 2) $2.3 million has been made available to small solar energy providers
- 3) Biden administration will provide up to $50 million over five years to a World Bank trust fund trying to expand childcare
- If Congress allocates the resources.
Far from reality
- Surely these are worthy expenditures, but this means that Biden’s administrative commitments can cause global infrastructure renewal add up to $6 million. Even if Congress allocates the additional $50 million, that’s a far cry from the billions Biden promised in his original announcement.
- B3W is the wrong approach to competing with China in the developing world.
- The United States is bad at investing and maintaining physical infrastructure, so it never made sense to try to build infrastructure projects abroad.
- Those activities are best left to the multilateral economic institutions namely the World Bank and regional multilateral banks such as the African Development Bank.
No Positive Alternatives
- 1) United States has launched Power Africa, a program aimed at providing electricity to millions of households in the region
- 2) The Blue Dot Network, in which Australia, Japan, and the United States collaboratively promote global sustainable infrastructure development.
- 3) Enhancing Development and Growth Through Energy, an initiative that helps governments in the Indo-Pacific region expand energy access.
- These projects differed from Belt and Road in that the United States committed very little money, and most of the funds that were allocated were invested in private companies
Advantage to China over America
- 1) Chinese firms dominate the competitive procurement of leading infrastructure lenders such as the World Bank
- 2) They won $2.3 billion worth of World Bank–financed infrastructure contracts outside China in 2020, compared to the United States’ $27 million worth of contracts.
- 3) Of the 20 largest construction contractors, 14 are in China, six are in Europe, and none are in the United States.
- 4) China owes its dominance partly to government subsidies, but U.S. policymakers may claim that Chinese subsidies are unfair.
- The Biden administration’s strategy for competing with China involves subsidies to American companies.
- But the gravest flaw of B3W is that it appears to be based on the very model of self-dealing capitalism for which the U.S. government has condemned China.
1) Mobilising Funding
- The Infrastructure Bill is estimated to cost $1.2 trillion over five years and the Reconciliation Bill, $3.5 trillion over ten years.
- Thus, there is a need to develop a sustainable funding model for the success of B3W.
2) Reinventing Capitalism
- Covid-19 has exposed the fragility and societally negative outcomes of contemporary capitalist economies.
- Thus, in order to lead to global development as highlighted by the B3W blueprint, it will require fine-tuning of the current model of Capitalism.
3) Building Consensus in Democracies
- Thus, the main challenge for G-7 countries is to build global consensus and deliver projects in a time-bound manner.
- 4) Rather than trying to beat China at its own game, the United States needs to recommit to global cooperation, openness, transparency, and equal opportunity.
- 5) When it comes to physical capital, the World Bank and regional development banks are best suited to accomplish those goals.
- 6) When it comes to human capital, the United States can and should take the lead, reopening its doors to students and scholars.