What the G-7's global infrastructure plan means for development agencies

At the G-7 summit in the United Kingdom earlier this month, U.S. President Joe Biden’s administration led other leaders from the group of wealthy countries in launching an infrastructure partnership widely viewed as a competitor to China’s Belt and Road Initiative. It even has a competing acronym. Instead of BRI, Biden’s global plan to narrow the $40 trillion infrastructure finance gap in lower-income countries is called Build Back Better World — or B3W. Officials from Biden’s administration insist B3W is not an “anti-China” effort. “Our aim has not been to create an anti-China coalition. It’s been to make clear what we’re for, and who we are, and to do that with self-confidence in our democratic model and our way of life,” said Daleep Singh, Biden’s deputy national security adviser for international economics, speaking to the Center for Global Development on Monday. At the same time, Singh said, “BRI should not be the only game in town,” and most of the positive attributes the White House ascribes to its own initiative align with regular criticisms of China’s development finance model. B3W, which Singh suggested would seek to mobilize “hundreds of billions of dollars,” will be “a values-driven, high-standard, and transparent infrastructure partnership led by major democracies,” a White House fact sheet explains. It will focus on four priority areas: climate, health and health security, digital technology, and gender equity and equality. One similarity between China’s BRI and the G-7’s B3W is that both involve significant involvement by public sector entities. “Our aim has not been to create an anti-China coalition. It’s been to make clear what we’re for, and who we are, and to do that with self-confidence in our democratic model and our way of life.” --— Daleep Singh, deputy national security adviser for international economics, Biden administration Announcing the initiative, the White House pledged “to mobilize the full potential of our development finance tools, including the [U.S. International] Development Finance Corporation, USAID [the U.S. Agency for International Development], EXIM [the Export-Import Bank of the U.S.], the Millennium Challenge Corporation, and the U.S. Trade and Development Agency.” The administration is still figuring out how B3W will pull these different agencies together, a perennial challenge for presidential initiatives that must contend with a fragmented U.S. development system. As Singh put it on Monday, “We’re at the beginning of the effort to define all of the execution modalities.” He also offered some clues about what some of the early stages might entail. “The first step, as I see it, is to assess and potentially augment our development finance toolkit,” Singh said. That would likely begin with an attempt to “assess the financing needs of the developing world as they relate to infrastructure” and determine whether the U.S. government has the “right mix of tools” for “the entire lifecycle of the projects we wish to advance,” he said. The administration has named most U.S. development agencies as potential participants in the effort, and Singh said the White House could also look to Congress if additional tools or capabilities are needed. U.S. development finance efforts have just been through one of the most significant reforms in their history, a bipartisan effort with substantial congressional involvement which led to the creation of DFC. Once the needs assessment has been done — with buy-in from multilateral development banks and the G-7 partners — Singh said the goal will be to come up with “a repeatable process for developing a pipeline of bankable projects.” “I expect this effort will require sharing information and improving coordination with the private sector and then working with our development agencies that have personnel on the ground who really understand the binding constraints to the development impact that we’re looking for with respect to infrastructure,” he said. That will likely take the shape of a two-track investment approach. The first will be aimed at mobilizing the private sector by using B3W as a “first mover” that can help address market failures related to risk, information, or time horizons. The second track will involve grants and concessional loans from development agencies.