Syllabus: GS2/International Relations
In News
- The proposed India – Middle East – Europe Economic Corridor (IMEC) announced at the 2023 G20 Summit in New Delhi is a part of the Partnership for Global Infrastructure Investment (PGII).
About
- What is it? The Partnership for Global Infrastructure and Investment (PGII) is a collaborative effort by the G7 (or Group of Seven). The G7 countries include the United Kingdom, the United States, Canada, France, Germany, Italy, Japan, and the European Union (EU).
- Objective: It aims to fund critical infrastructure projects such as roads, ports, bridges, communication setups, etc. in developing nations through public and private investment to enhance global trade and cooperation.
- Target: PGII aim to mobilise nearly $600 billion from the G7 by 2027 to invest in critical infrastructure.
- Principles: It is based on the standards and trust principles of the Blue Dot Network (BDN) which are “respect for transparency and accountability, sovereignty of property and resources, local labour and human rights, rule of law, and sound government practices in procurement and financing.”
Timeline
- The Blue Dot Network (BDN) is a joint project of the United States, Japan, and Australia that was founded in 2019 to support investment in high-quality infrastructure projects around the world.
- In 2021, the success of the BDN program influenced the adoption of the Build Back Better World (B3W) initiative by the Group of Seven (G7) nations. However, it did not register much progress.
- In 2022, at the 48th G7 summit in Germany, the Build Back Better World (B3W) initiative was relaunched and renamed as the Partnership for Global Infrastructure and Investment (PGII).
Significance: Alternative to BRI
- PGII is considered to be the G7’s counter to China’s Belt and Road Initiative (BRI) which was initiated in in 2013 under its President Xi Jinping.
- It aims to revive the ancient trade routes crossing to and from China–from Rome in Europe to East Asia. Under this, the Chinese government helped in providing loans for infrastructure projects to various countries, and in many cases, Chinese companies were awarded contracts for carrying out the work.
- However, China was criticised in the West and by some other countries for providing unsustainable debts to countries that will be unable to repay them. Apart from high debts, there are issues of environmental degradation and corruption.
- India has opposed the BRI as it included the China-Pakistan Economic Corridor, which connected Kashgar in China with the Gwadar port in Pakistan via Pakistan-occupied Kashmir.
- Other countries are doubtful of the benefits they might reap from enhanced trade connectivity.
- However, the G7 say their initiative is meant to be transparent, focused on building climate change-resilient infrastructure, and help in achieving objectives of gender equality and health infrastructure development.
Challenges to PGII
- However, what the project could go on to accomplish depends on a range of factors.
- The scale of investments that can be raised by China is higher than that of the G7, who will have to look for political consensus within their countries for pledging to such projects.
- They also have no control over assured private-sector participation.
- Also, China is in the process of modifying BRI to address its criticisms. In 2019, China dramatically diminished its overseas infrastructure investments, especially pulling back on high-risk projects. President Xi Jinping emphasized his commitment to a ‘Green BRI.’
Concluding Remarks
- If PGII succeeds to a certain extent and with BRI addressing its own issues given this competition of sorts, it could actually help diversify the options available to the countries who have infra requirements.
Source: PIB
