On the sidelines of the G20 Summit in New Delhi, Memorandum of Understanding (MoU) was inked among several powerful nations – India, the US, Saudi Arabia, the EU, the UAE, France, Germany, and Italy. This historic agreement marked the initiation of the India – Middle East – Europe Economic Corridor (IMEC). While the specifics of this project are yet to be unvelied, it is a pivotal component of the Partnership for Global Infrastructure Investment (PGII), a Western-led initiative aimed at financing critical infrastructure endeavors across the globe. The PGII is seen as a direct response to China’s Belt and Road Initiative (BRI), raising questions about the future of global infrastructure development.
What is the Partnership for Global Infrastructure Investment (PGII)?
The PGII, first introduced in 2021 during the G7 summit in the UK, was initially known as the Build Back Better World (B3W) framework. However, progress was limited. In 2022, the PGII was officially launched as a collaborative venture among G7 nations. Its primary objective is to fund infrastructure projects in developing countries through a combination of public and private investments. The PGII collectively aspires to mobilize approximately $600 billion from the G7 countries by 2027, dedicated to enhancing critical infrastructure that improves the lives of people in the Global South. In essence, the G7 intends to present an alternative framework for infrastructure projects, in contrast to China’s BRI, on a global scale.
Why was an Alternative to BRI Needed?
China’s BRI, initiated in 2013 by President Xi Jinping, aimed to rejuvenate ancient trade routes spanning from Europe to East Asia. China extended loans to various countries for infrastructure projects, often awarding contracts to Chinese companies. While this allowed China to expand its global influence, it also faced criticism, particularly from Western nations like Italy, a G7 member that was part of the BRI. Critics argued that China’s loans created unsustainable debts for recipient countries, potentially leading to the transfer of public assets to foreign contractors or China itself. Environmental degradation, high debts, and corruption were significant concerns. Nonetheless, if these issues were effectively addressed, the BRI had the potential to significantly boost global trade and income.
How will PGII be Different from the BRI?
The G7 emphasizes that the PGII will prioritize transparency, climate change-resilient infrastructure, and the advancement of gender equality and health infrastructure development. The PGII seeks to bridge infrastructure gaps in developing countries, focusing on sustainable and inclusive development.
What has been announced so far as Part of PGII Initiatives?
The PGII has already unveiled several projects, including clean energy and telecommunications initiatives in Indonesia. The US government’s agency, the International Development Finance Corporation (DFC), will invest over $15 million in India’s health infrastructure. The EU, through its Global Gateway program, will activate 300 billion of investments in critical connectivity projects, with half allocated for Africa between 2021 and 2027.
Challenges Ahead for the PGII
The success of the PGII depends on various factors. China is in the process of adjusting the BRI to address criticisms, focusing on a ‘Green BRI.’ Furthermore, China can mobilize larger investments than the G7, which must secure political consensus within their countries to pledge such funding. G7 nations also lack control over guaranteed private-sector participation.
UPSC Mains Questions
- How might the rivalry between the PGII and BRI impact the infrastructure development and economic prospects of countries in the Global South?
- To what extent can the PGII address the criticisms leveled against the BRI, such as unsustainable debts and environmental concerns?
- What challenges do G7 countries face in securing both political and private-sector support for the PGII, and how might this affect its success?
- In the context of global infrastructure development, how significant is the shift towards sustainable and climate-resilient projects, as emphasized by the PGII and China’s ‘Green BRI’?
