The G7 Touts Its Wonder-Weapon against China’s Belt and Road Initiative
At the G7 meeting in Elmau, Bavaria, the launching of the Partnership on Global Infrastructure and Investment was announced, as a plan to compete with the BRI in developing countries, financed with $600 billion. Judging from past experience, that money will never materialize. After all, developing countries are still waiting for the $100 billion per year to compensate for “climate neutral” policies promised 13 years ago in Copenhagen….
But even if the funds were allocated, there would be no competition with China. While Beijing is offering roads, railways, energy, water and other “hard” infrastructures chosen by the partner countries with no political conditions attached, the G7 scheme only favors investments in renewable energy, health (which in Western policy jargon means more condoms) and digitalization (distribution of smartphones in the jungle, with no possibility to recharge). So, developing nations can choose between Chinese loans to finance what they decide it is good and productive for them, or Western loans to finance what the West thinks is good and unproductive for them.
But the entire thing is a smokescreen. The EU, for instance, has pledged 300 billion out of the total 600 billion. No such money is included in the EU budget, and to increase it is such a long and complicated procedure that the only option to find the money is to borrow it from the market. But this too is a complicated and long proposition, requiring a unanimous decision by all EU member states.
Another announcement trumpeted at the G7 is the decision to explore a price cap on energy. This was especially pushed by former ECB chairman and current Italian Prime Minister Mario Draghi, whose request had previously been rejected at the European Council. Draghi himself explained in a press conference that the move to put a price cap on energy, especially on gas, is a geopolitical one. “We must eliminate our dependency on Russia forever. Putting a cap on fossil fuels imported from Russia has a geopolitical target, beyond the economic and social one. We must reduce our funding to Russia and we must eliminate one of the main causes for inflation,” said the man who invented QE, the real cause of inflation.
But a price cap would push Russia and other producers to stop selling their hydrocarbons to EU countries, aggravating the crisis. In reality, G7 governments are dancing on the Titanic. Their financial system is blowing out while that part of the world they wanted to exclude is building an alternative to survive and develop.