US infrastructure fund no match for China’s Belt and RoadDec 19, 2022
Is the US led PGII, slated as a rival to China’s Belt and Road, just a rebranding of an old, failed, initiative?
In June 2022, the White House released an announcement proclaiming President Biden’s new initiative: the Partnership for Global Infrastructure and Investment (PGII). On paper, a wonderful initiative, in practice, 6 months on, something of a disappointment but more so when we look to how it came about and what preceded it.
Anyone paying attention will have noticed similarities with the 2021, G7 announcement of Build Back a Better World (B3W). B3W was announced as G7’s competition with China but PGII doesn’t mention China at all. Apart from that though, both B3W and PGII share other aspects. They have the same four goals: assist the developing world’s transition from fossil fuel to clean energy; improve digital connectivity; fight gender inequality; and provide better health options. They also, according to White House announcements, both have other things in common: creation of opportunities for American workers and businesses; and advances in US national security.
Given that both were borne out of the G7, both are of significant benefit to the USA and both share the same goals, clearly, we’re obviously witnessing the rebranding of an old initiative rather than anything new.
It must be a constant source of disappointment to the developing world to keep hearing about how much help they’re going to get and then finding that none of it materialises into more jobs, higher incomes, lifestyle improvements or anything of substance.
There are good reasons for this, neither of the two initiatives have explained where the money will come from, there are vague and ambiguous statements of “mobilizing $600 billion by 2027” by leveraging “like minded partners.” But it’s not known who will benefit most, who will manage the funds if indeed there are any. Consequently, 18 months since being announced, it’s clear that B3W is no longer functioning and, as an endeavour, it’s been superseded by PGII which, on close inspection, appears to be nothing more than a paper chase.
In November, the White House released a factsheet to include examples of the “New projects” PGII has been responsible for and, hardly a surprise, there aren’t any!
Examples given by President Biden include the Indonesian Just Energy Transition Partnership. Something that came out of COP 26 in Scotland half a year before PGII was announced but has been added to the numbers, presumably to make PGII look good. If anyone wonders who will benefit, President Biden’s “good friend”, Mike Bloomberg’s company, Glasgow Financial Alliance for Net Zero is one of the main funders and the organisation’s leadership consists of a former Bank of England Director as well as a former Stock Exchange Commission Chair, it’s hardly a charity!
Another example given is the Indonesia Millennium Challenge Corporation, this is an offshoot of a 2004 US initiative to end global poverty and, as described on their own webpage, a “good investment for American people”. This Indonesian aspect was launched in 2018, so is something the US were already doing, not as Biden announced, a new PGII initiative.
The Trilateral Support for Digital Infrastructure in the Pacific is the next example provided and this is interesting as it appears to be nothing more than an addition of the word “digital” to a 2018 initiative announced jointly by Australia’s Department of Foreign Affairs and Trade (DFAT), with the US and Japanese governments.
As we go through these examples, we’re starting to see a pattern, a clear pattern of smoke and mirrors to attempt to prove some degree of activity. Let’s move away from Indonesia and the Pacific to take a look at Brazil, the next example given is one of critical supply chains for minerals from Brazil. How much this benefits Brazilians is debatable but it does ensure critical US supplies of nickel and cobalt for electric vehicle production, something Brazil only started in 2022. It’s also, unsurprisingly, an initiative that was announced in 2020 by the US Embassy in Brazil.
Remaining in the Americas, the next example Biden provides is Honduras’ solar energy development, except this one was originally announced in 2015 and reported widely as a success story of US investment and Honduran initiatives. Here, the US Export-Import Bank (EXIM) guarantees loans to US lender, JP Morgan, to finance Latin-American investments and have been doing so since 2015. Obviously Hondurans now enjoy clean power and this is a great benefit to them but it obviously isn’t a new initiative which came about because of either B3W or PGII.
The last example is called “Digital Invest” and was, according to the President, launched in June by USAID as part of PGII. But again, it wasn’t. Reading an announcement made by USAID in April 2022, three months prior to the President’s speech, we notice that the State Department’s Digital Connectivity and Cyber Security Partnership (DCCP), commenced in 2021, was to be expanded to include USAID’s Digital Invest under DCCP and a factsheet produced in October 2021 proves this. This mistimed announcement of a “new initiative”, three months after it was announced as part of an even older initiative is interesting in that, although it was projected to happen under the State Department and is now projected to happen under PGII, the word “projected” is used because, so far, there hasn’t actually been any investment, only that USAID is leveraging to find investment.
If we thought B3W was a bit of a damp squib, we can look at PGII as even worse. Every example the President has given as part of PGII, is something that was already being done. There are profits for US banks, there are benefits for US interests in mining, power generation and communications companies but there appears to be little of substance for the people of low-income countries who don’t care about US workers or US National Security Interests. What they really want are jobs, schools, hospitals, transportation and communication infrastructure which provide better income opportunities locally.