DAYTONA BEACH, Florida — During its June summit in Germany, the G7 launched a $600 billion infrastructure plan for middle-income and developing nations. This project will invest money over a five-year period and is aiming to promote both economic and human development in African, Asian and Latin American countries. The plan is also a response by the democratic alliance to China’s own global economic aid package, the Belt and Road Initiative (BRI). By launching this sweeping aid package, the G7 countries aim to reassert democracies’ global leadership over economic development and poverty reduction through investments in energy security, digital infrastructure, gender equality and health care access.
Transitions Toward Renewable Energy Sources
A pillar of the G7 infrastructure plan is assistance via economic aid to further the transition to a renewable energy-based economy for middle-income and developing countries. Specific programs G7 presented in its plan are $14 million in nuclear energy development in Romania to promote sustainable development and European energy security.
USAID has pledged $40 million in investments for Southeast Asian countries to promote the establishment and regional trade of renewable energy technology, aiming to increase regional trade by 5%.
The plan also includes a $30 million investment in India to improve agricultural practices to become more environmentally sustainable, with an emphasis on supporting entrepreneurs using such practices to increase food production and decrease food insecurity.
Another major project is $2 billion for a solar power grid system in Angola. It aims to help the country meet its climate commitments by having 70% of its economy carbon-free by 2025, according to the Sovereign Wealth Fund Institute (SWFI).
These commitments to build sustainable development in middle-income and developing countries are a major step toward alleviating poverty by creating economic opportunities in the green energy sector and improving human health by reducing pollution and addressing environmental health.
Human Development Just as Important as Economic in Poverty Reduction
The G7 infrastructure plan also places an emphasis on human development and its relation to poverty reduction. One program in the area of human development is a $320 million project to build 100 hospitals and clinics in the Ivory Coast in an effort to improve health care access and quality.
This health care program is coupled with another West African project in Senegal. It is a $3.3 million project to build a multi-vaccine manufacturing plant, according to NPR. This project offers material solutions to resolving the persistent problem of COVID-19 vaccine inequity in developing countries because this manufacturing plant will produce COVID-19 vaccines for the region along with other vaccines to safeguard human health.
The G7 infrastructure plan also seeks to modernize telecommunications to improve infrastructure in middle-income and developing countries. One project includes a $600 million submarine cable extending from France to Singapore and running through Egypt and the Horn of Africa, SWFI reported. This roughly 10,500-mile cable will bring high-speed internet access to surrounding countries and greatly improve digital infrastructure for such countries to benefit.
Such investments from the G7 infrastructure plan promise to spur economic development in middle-income and developing countries. It is improving living standards through increased health care access and modern infrastructure. This could create an environment where economic opportunities and productivity can flourish for poverty reduction.
Democracy’s Response to BRI
The G7 infrastructure plan also has global significance for its reputed motives of combatting China’s increasing influence over the global economy and development. Since the launch of BRI, democratic countries have received encouragement to create their own global development strategies as the exploitative and autocratic practices of Chinese aid packages have become more apparent.
China has received accusations of predatory lending in its economic aid. It charges interest rates of 4%, around four times higher than the World Bank average. China’s payment plans for the loans are much shorter, averaging 10 years compared to global averages of 28 years.
An egregious example of exploitative aid practices by China was Sri Lanka in 2017. Due to the country defaulting on its loans, China forced it to sign a 99-year lease of the port of Hambantota, BBC reported. This is granting China an increased commercial and potential military presence in the Indian Ocean.
The most recent example of developing countries struggling to meet the conditions of BRI is Zambia, which is currently seeking to renegotiate its external debts to China. Such practices by China make the G7 infrastructure plan all the more important to show that the democratic world can restore its leadership over global poverty reduction.
U.S. President Joe Biden echoed the themes of democracies reasserting leadership in global poverty reduction by stating at the G7 infrastructure plan announcement “When democracies demonstrate what we can offer, I have no doubt that we’ll win the competition every time,” African Business reported.
Biden’s statement underscores the ideological significance of the plan that it intends to curb exploitative practices and focus on socio-economic development in a manner that safeguards the sovereignty of other nations necessary to reduce poverty in middle-income and developing nations.
The G7 infrastructure plan presents the first instance of a comprehensive strategy by the democratic world to tackle the issue of global poverty and challenge the preeminence of China’s BRI in the process. The plan offers hope that democratic countries can still wield moral and global leadership over the issue and demonstrate that poverty reduction is most successful when driven by mutual interests in a more prosperous and stable world instead of bare national self-interest alone.
– John Zak