G7 relaunches funding program for developing countries under new name | G7

The G7 has been forced to relaunch its vehicle to deliver infrastructure funds to poor and developing countries just a year after a broadly similar scheme was unveiled at the G7 conference in Cornwall last July under the label Build Back Better World.

The fund was relaunched on Sunday at the start of the G7 in Germany as the Global Partnership for Investment and Infrastructure and with the same aim of providing an alternative to China’s Belt and Road Initiative that Beijing has been using for more than a century. decade to establish economic ties. with developing countries.

All G7 leaders led by US President Joe Biden met in a side meeting on the first day of the summit to make statements supporting the partnership and underscoring their commitment to helping the poorest countries. The aim would be to mobilize a total of $600bn (£490bn) in private and public funds by 2027, with Biden saying $200bn over the next five years would come from the United States.

Among the projects cited at the event are a secure undersea cable linking Europe and Southeast Asia, an mRNA vaccine industrial plant in Senegal, solar projects in Angola, a nuclear reactor plant modular buildings in Romania and a port connecting Christmas Island to the rest of the world.

The United States has consistently claimed that China’s loan offer comes with hidden conditions that leave countries ultimately faced with high repayment clauses and intrusive conditions that often run counter to climate change goals. .

But little had been heard of Build Back Better world since its launch, while in January the EU launched its own infrastructure fund for developing countries, called Global Gateway, aiming to mobilize 300 billion euros (£260bn) of investment between 2021 and 2027.

At the time, the EU insisted its fund would work alongside Build Back Better World and not be a rival. The UK, outside the EU, has started its own infrastructure project called the Clean Green Initiative. Japan plans to raise $65 billion over the same period for regional connectivity.

Biden, European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson met in November at Cop26 in Glasgow to assess their various plans and determine whether, by duplicating their efforts, they were weakening what they offered to poor countries. .

Speaking at the G7 event on Sunday, Olaf Scholz, the German chancellor, implicitly acknowledged the confusion, saying there were benefits if the G7 countries presented their offers under a common roof.

It is not apparent from the statements that the funds are fully merged into a single funding stream, but rather are coordinated more closely.

A recent report by the International Energy Agency, the World Bank and the World Economic Forum found that by the end of the 2020s, clean energy investments in emerging and developing economies, which were below to $150 billion in 2020, needed to grow more than sevenfold to more than $1 billion a year to put the world on track to reach net zero emissions by 2050.

The IEA said emerging and developing countries provide only one-fifth of clean energy investment, but contain two-thirds of the world’s population.

Jake Sullivan, the US national security adviser and a key member of the project, told an event hosted by the Center for a New American Security last week that the US-initiated partnership will cover global infrastructure , physical health and digital infrastructure and will provide “an alternative to what the Chinese are offering”.

“We intend for this to be one of the hallmarks of the Biden administration’s foreign policy for the remainder of its term,” he said.

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Chinese Foreign Ministry spokesman Wang Wenbin said at a regular press briefing in Beijing on Friday that while China welcomes efforts to promote global infrastructure development, Biden’s initiative is based on a “zero-sum game approach”.

“The relevant initiative from the US side ignores all countries’ desire for common development and win-win cooperation,” Wang said, adding that it “won’t get any support.”

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