12 Sep Partnership for Global Infrastructure Investment (PGII)
This article covers “Daily Current Affairs” and the topic details “Partnership for Global Infrastructure Investment (PGII)”. This topic has relevance in the “International Relations” section of the UPSC CSE exam.
What is Partnership for Global Infrastructure Investment (PGII)?
What is the background of PGII?
What are the various projects of PGII?
GS2: International Relations
Why in the news?
On September 9, Prime Minister Narendra Modi unveiled the expanded Partnership for Global Infrastructure and Investment (PGII) and the India-Middle East-Europe Economic Corridor program.
About the Partnership for Global Infrastructure Investment (PGII):
- The PGII emerged from an announcement made during the G7 summit in the UK in June 2021.
- The G7 comprises the United Kingdom, the United States, Canada, France, Germany, Italy, Japan, and the European Union (EU).
- Initially, the initiative was termed the Build Back Better World (B3W) framework, as US President Joe Biden proposed.
- The PGII was officially launched during the G7 summit in Germany in 2022.
- It is a collaborative effort to finance infrastructure projects in developing countries through public and private investments.
- The PGII was developed in response to China’s Belt and Road Initiative (BRI), which finances infrastructure projects on a global scale.
- Funding Goal: President Biden aimed to mobilise approximately $600 billion from G7 member countries by 2027.
Need for an Alternative to China’s BRI:
China’s Belt and Road Initiative (BRI):
- Under President Xi Jinping, China initiated the Belt and Road Initiative (BRI) in 2013.
- The BRI aimed to revitalise historical trade routes connecting China to regions as far as Europe, including Rome, in a massive infrastructure development effort.
Criticism of BRI:
- Debt Sustainability:
- China faced criticism from Western countries and others for providing loans for infrastructure projects that could result in unsustainable debt burdens for recipient countries.
- In many cases, Chinese companies were awarded contracts for the projects.
- A 2019 World Bank report raised concerns that among the 43 corridor economies examined, 12 could face unsustainable debt situations, potentially leading to the transfer of public assets to foreign contractors or China.
- India’s Opposition:
- India opposed the BRI because it included the China-Pakistan Economic Corridor (CPEC), which ran through Pakistan-occupied Kashmir.
- India emphasised the need for transparency and respect for sovereignty in connectivity initiatives.
- Italy’s Concerns:
- Italy, the only G7 member involved in the BRI, also expressed concerns about the benefits of enhanced trade connectivity.
Announcements of PGII Initiatives:
- Projects in Indonesia:
- Recent announcements included various projects in Indonesia, spanning clean energy and telecommunications, among other sectors.
Health Infrastructure Investment in India:
- India was also part of the PGII discussions, resulting in investments in its health infrastructure.
- The U.S. International Development Finance Corporation (DFC) pledged over $15 million for India’s health infrastructure, supporting initiatives such as the expansion of eye clinics and the production of affordable women’s hygiene products for underserved areas.
- EU’s Global Gateway Program:
- The European Union (EU) unveiled its Global Gateway program, which aims to activate $300 billion in investments for critical connectivity projects from 2021 to 2027.
- Half of this funding is allocated to Africa, with over 90 projects identified in various regions, including Africa, Latin America, the Caribbean, Asia, the Pacific, and the Western Balkans.
Challenges and Considerations:
- China’s Belt and Road Initiative (BRI) has been adapting to address criticisms, focusing on a “Green BRI” and reducing high-risk overseas infrastructure investments.
- China’s capacity for investment remains substantial compared to the G7, which must navigate political consensus within their countries and rely on private sector participation.
- While PGII offers an alternative, it also presents competition with BRI. Success in diversifying infrastructure options for countries with requirements could lead to mutually beneficial outcomes.
Q1. With reference to the Partnership for Global Infrastructure Investment (PGII), consider the following statements:
- The PGII was officially during the G7 summit in the United Kingdom in June 2021.
- The initiative was first known as the Indo- Pacific Economic framework.
- PGII is a collaborative effort to finance infrastructure projects in developing countries solely through private investments.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
Q2. Consider the following:
- United Kingdom
How many of the above-mentioned countries are part of G-7?
(a) Only two
(b) Only three
(c) Only four
(d) Only five
Q3. Partnership for Global Infrastructure and Investment (PGII) and the India-Middle East-Europe Economic Corridor are responses to China’s Belt and Road Initiative. Discuss.