After Vladimir Putin’s war against Ukraine, the world will no longer be the same as before, says Chancellor Olaf Scholz. This is an accurate assessment of the relationship between western democracies and Moscow. But despite the Russian invasion of its neighboring country, not everything has changed from a geoeconomic point of view – this applies, for example, to the dependence of many emerging and developing countries on foreign investment.
In these countries there is often neither a significant transport or energy infrastructure nor an acceptable health or education system. For years, China has been filling the infrastructure gap with its New Silk Road. In the meantime, the European Union, Great Britain, the USA and the G7 countries have also recognized a need for action and have proposed initiatives – from “Global Gateway” to “Clean Green Initiative” to “Build back Better World”.
What are the motives? Since the majority of the world’s population lives in emerging and developing countries, there would be a major boost in productivity if more people and goods could be transported from A to B just as quickly and efficiently and the level of education and health improved.
This would also improve the incomes of the local population and the countries would also be suitable as sales markets for products from other regions. You could also help fight the climate crisis – a local and global win.
However, with China’s advance, it became clear that it is no longer just about improving the economic situation of the countries involved. Economic and other dependencies should also be created, which ultimately lead to the strengthening of certain – and thus to the weakening of others – geopolitical positions.
Beijing is concerned with opening up new sales markets, outsourcing excess capacities, gaining access to raw materials, but also strengthening its own role on the global political stage. In addition to infrastructure projects, China is also planning investments in mining projects and agricultural and industrial projects in emerging and developing countries. In addition, around 120 Confucius Institutes in the Silk Road partner countries are to help spread Chinese culture and worldviews.
In return, the partner countries are likely to support China geopolitically, because there would be a financial collapse if the projects were to be cancelled. After all, the recipient countries do not get Chinese investments for free, they have to pay for them with considerable debt and high interest rates.
In addition, the project work is mainly carried out by Chinese companies and Chinese employees, so that hardly any know-how is transferred. Military targets also seem to be important for Beijing. Well-developed new deep-sea ports in the Indo-Pacific, for example, would allow China to use existing shipping routes more efficiently in terms of capacity and speed and to stand up to its competitor India.
The West no longer wants to stand idly by and watch China’s economic expansionism. Convincing counter-programs offer the chance to prevent one-sided dependencies. However, a large number of smaller programs would only lead to getting bogged down and could not come close to matching the volumes of the New Silk Road. Their total investment is said to be four trillion dollars. After all, the EU’s “Global Gateway” envisages a volume of the equivalent of 336 billion dollars by 2027. For the early years of the Build Back Better World Plan, however, the USA and the G7 countries “only” expect 60 billion dollars.
According to estimates, however, the emerging and developing countries will need infrastructure investments of 40 trillion dollars by 2050. China’s projects are therefore indispensable for improving the situation. Modestly funded counter-programs cannot free the countries from their dependence on Beijing. If at all, only close coordination of all alternatives offers the emerging and developing countries a chance of success. But how realistic is such coordination?
“Global Gateway” covers the areas of digitization, climate and energy, transport, health, education and research. The projects should be sustainable and “high quality”, take into account the needs of the partner countries and enable the local population to permanently improve their lives. It is about “trustworthy” networking with emerging and developing countries, taking into account principles such as the rule of law, human rights and compliance with international standards with fair financial conditions.
The Build Back Better World Plan, which was outlined at the G7 meeting in Cornwall in June 2021 and merged with the “Clean Green Initiative” by Great Britain’s Prime Minister Boris Johnson, also seems ambitious: net-zero emissions in the climate sector, health, digitization, Transport, energy, education and gender equality are on the agenda. Private and public capital should be brought together and used for the emerging and developing countries.
Since the investment sums in the trillions of the New Silk Road seem unattainable anyway, the alternatives focus on the quality of the investments and equal cooperation with the recipient countries. Aspects such as health, education and research also play an important role – in contrast to the transport infrastructure that China is promoting.
If the West and China were to work together on projects in emerging and developing countries, this could not only be in the interests of the countries involved, but also reduce the heightened geopolitical tensions as a result of the Russian war of aggression. The cooperation would possibly prevent an even closer alliance between Beijing and Moscow.
The prerequisite for this are three factors: First, the alternatives to the New Silk Road would have to be bundled quickly and implemented unbureaucratically. Secondly, both sides would have to recognize that, for example, transport infrastructure and digitization or education projects are tackled in a coordinated manner. Thirdly, this should only be possible if “mixed” teams work on it on site.
All three prerequisites seem to be hardly realistic at the moment in the context of the Ukraine war. Perhaps, however, small, concrete pilot projects could at least be started in individual countries. Maybe something bigger would come of it.