G7 leaders announce $600 billion Global Infrastructure and Investment plans
President Biden announced the funding at the G7 summit, which aims to ‘close the infrastructure gap’ in developing countries and strengthen global supply chains.
A new $600 billion Global Infrastructure and Investment fund was announced at the G7 Leaders’ Summit in Schloss Elmau this week, in a bid to help support the infrastructure needs of low-and middle-income countries - as well as deepen economic ties with growing global economies - in what is being seen as a rival to China’s Belt and Road plan.
The Summit comes as many of the G7 leaders are grappling with deep political crises back in their home countries, in addition to facing huge global macroeconomic challenges. The ongoing Russian invasion of Ukraine has also, understandably, dominated the Summit’s focus.
But keen to also offer a vision that is forward looking, Biden and the other G7 leaders announced that the new funding will be aimed at projects tackling the climate crisis, bolstering global energy security, as well as developing and deploying digital networks and infrastructure.
The leaders plan to raise $600 billion over five years to fund the launch of the infrastructure projects, with the US contributing $200 billion. Speaking at the Summit, President Biden said;
Our nations and our world stand at a genuine inflection point in history. Technology has made our world smaller, more immediate, and more connected. It’s opened up incredible opportunities, but also accelerated challenges that impact on all of us: managing global energy needs, taking on the climate crisis, dealing with the spread of diseases.
And the choices we make now, in my view, are going to set a direction of our world for several generations to come.
These challenges are hard for all of us, even nations with resources of the G7. But developing countries often lack the essential infrastructure to help navigate global shocks, like a pandemic. So they feel the impacts more acutely, and they have a harder time recovering.
In our deeply connected world, that’s not just a humanitarian concern, it’s an economic and a security concern for all of us.
That’s why, one year ago, when this group of leaders met in Cornwall, we made a commitment: The democratic nations of the G7 would step up — step up and provide financing for quality, high-standard, sustainable infrastructure in developing and middle-income countries.
President Biden said that what the G7 is doing is “fundamentally different” because it is grounded in the “shared values” of the countries represented at the Summit, and that the funds will be distributed with global best practices, transparency, partnership, and protections for labor and the environment.
China’s similar Belt and Road plan, which is a multi-trillion dollar infrastructure initiative that was announced in 2013 and provides financing to emerging economies to build ports, roads and bridges, has been criticized for targeting countries with too much debt.
President Biden added:
We’re offering better options for countries and for people around the world to invest in critical infrastructure that improves the lives - their lives, all of our lives - and delivers real gains for all of our people, not just the G7 - all of our people.
I want to be clear: This isn’t aid or charity; it’s an investment that will deliver returns for everyone, including the American people and the people of all our nations. It’ll boost all of our economies, and it’s a chance for us to share our positive vision for the future and let communities around the world see themselves — and see for themselves the concrete benefits of partnering with democracies.
Because when democracies demonstrate what we can do, all that we have to offer, I have no doubt that we’ll win the competition every time.
Details of the project
The Partnership for Global Infrastructure aims to bring together hundreds of billions of dollars to deliver quality, sustainable infrastructure that makes a difference in people’s lives in emerging economies, but also strengthens the supply chains and creates new opportunities for organizations across the G7.
The Partnership has four key focus areas, which include:
Developing, expanding, and deploying secure information and communications technology (ICT) networks and infrastructure to power economic growth and facilitate open digital societies - from working with trusted vendors to provide 5G and 6G digital connectivity, to supporting access to platforms and services that depend upon an open, interoperable, secure, and reliable internet and mobile networks with sound cybersecurity.
Tackling the climate crisis and bolstering global energy security through investments in climate resilient infrastructure, transformational energy technologies, and developing clean energy supply chains across the full integrated lifecycle.
Advancing gender equality and equity - from care infrastructure that increases opportunities for economic participation by women, to improved water and sanitation infrastructure that addresses gender gaps in unpaid work and time use – in order to boost the global economic recovery by ensuring that half the population is not forced to sit on the sidelines.
Developing and upgrading the infrastructure of health systems and contributing to global health security through investments in patient-centered health services and the health workforce; vaccine and other essential medical product manufacturing; and disease surveillance and early warning systems, including safe and secure labs.
Commenting on the Partnership’s technology plans, President Biden added:
Our economies’ future increasingly depends on people’s ability to connect to secure information and communications technologies. And we need to strengthen the use of trusted technologies so that our online information cannot be used by autocrats to consolidate their power or repress their people.
That’s why the Digital Invest Program is mobilizing $335 million in private capital to supply secure network equipment in Africa, Asia, and Latin America.
And the U.S. government also supported the successful bid by an American company, SubCom, for a $600 million contract to build a global subsea telecommunications cable. This cable will stretch from Southeast Asia, through the Middle East and the Horn of Africa, to Europe.
This will be essential to meeting the growing demand for reliable security, high-tech connectivity in three key regions of the world.
More details of current projects being funded through the partnership can be found here.
There is a global battle between the economic powerhouses of the East and the West to set the standard for how economies develop in the future. This is as much about creating opportunities for the G7 and emerging economies, as it is about influencing the future direction of global power.