As global leaders continue the ongoing battle against economic and societal impacts of Covid-19, a renewed focus on building back better is emerging from the world’s wealthiest democracies. The United States, alongside six other countries forming the Group of Seven (G-7), have launched an international investment initiative termed as the Build Back Better World (B3W) Initiative in June 2021. This move comes as part of their strategic response to counter China’s Belt and Road Initiative (BRI).
Understanding the B3W Initiative and its Guiding Principles
At its heart, the B3W Plan is a threefold proposal encompassing Covid-19 relief, future economic enhancement, and infrastructure development in lower-income and developing nations.
The foundation of B3W lies in the collaborative mobilization of private-sector capital by the G-7 countries and other allies. These efforts aim to significantly enhance four fundamental areas – climate change, health and health security, digital technology, and gender equity and equality.
A key principle underpinning B3W is the pursuit of Infrastructure development that resonates with financial, environmental, and societal sustainability and transparency. Such approaches, according to the backers of the initiative, will result in greater benefits for recipient nations and their local communities.
Another significant aspect is the high compliance standards for investments under B3W, promoted by the Blue Dot Network. These cover a wide range of concerns including environment and climate, labor, social safeguards, transparency, financing, construction, anti-corruption, and more.
The Environment-Friendly Approach and Strategic Partnerships
Investments under the B3W Initiative will be structured to align with the Paris Climate Agreement’s goals, reflecting a clear commitment to environmental sustainability.
Simultaneously, the B3W paints the picture of strong strategic partnerships in its fight against aggressive development models. It aims to introduce a more inclusive model of global development, striking at the heart of sweeping globalized economic issues.
China’s Belt and Road Initiative (BRI) and Associated Issues
Launched in 2013, the BRI project broadly aims to facilitate cross-border transportation of goods, expand energy access, and generate demand for China’s existing surplus capacity. However, this ambitious initiative has sparked widespread criticism.
Western critics have labeled it as new colonialism or a modern-day Marshall Plan. The BRI is being increasingly viewed as a part of China’s debt trap policy, which involves extending excessive credit to another country with the intent of extracting political or economic concessions from the debtor country. Moreover, certain projects like the China-Pakistan Economic Corridor (CPEC) are also seen as tied with strategic implications beyond their commercial nature.
Looking Forward: Challenges and Opportunities
The funding requirements for B3W are enormous. The Infrastructure Bill is projected to cost $1.2 trillion over five years and the Reconciliation Bill, $3.5 trillion over ten years. Both these bills form the bedrock of US President Biden’s economic agenda and are integral to his Build Back Better plan.
However, they have been subject to intense debate in the American Senate, suggesting that their approval might not come easily. This scenario underscores the importance of developing a sustainable funding model for ensuring the success of B3W.
Amidst these challenges, this crisis could indeed be a perfect opportunity to reimagine capitalism. The pandemic has revealed the weaknesses in existing capitalist economies, highlighting societal negative outcomes. Therefore, implementing the B3W blueprint will require revisiting and recalibrating the current model of Capitalism.
Another crucial aspect to consider is the building of consensus among democracies involved in this initiative. Formulating any plan by such countries usually takes time, given the diplomatic and bureaucratic maze they need to navigate. Thus, the main challenge for G-7 countries is to build global consensus and deliver projects in a time-bound manner.
