Sunday May 28, 2023

Bloc politics

By Editorial Board
June 28, 2022

The Group-of-Seven (G7) countries that play a significant role in Nato as well have come up with some interesting announcements recently. There appears to be a clear alignment on at least two fronts within the group: China and Russia. Of course, the US is leading the show and President Biden wants G7 and Nato to widen that alignment to other areas and fields. Four of the G7 countries – Canada, Japan, UK, and US – have already imposed a ban on Russian gold exports and others are also pondering over it. To counter China’s Belt and Road Initiative (BRI), US President Joe Biden has announced a massive project to raise $600 billion for a new global infrastructure programme in poor countries. The G7 countries have vowed to mobilize that money for investment by 2027. The unveiling of this project sits well with the American ambitions to pose a challenge to the rising influence of China in developing countries. The G7 partners are all on board and likely to materialize this American dream that projects itself as a ‘democratic and liberal’ counterbalance to a ‘communist and authoritarian’ China.

True to its capitalist credentials, the new project is supposed to be a private-led initiative as opposed to the BRI that relies on state-controlled companies and funds. Even before the G7 starts this journey, there is a cautionary tale already in circulation which tells us that the G7 governments would only provide ‘limited amounts of money’ and would rather incentivize private-sector investments. Though the full details of this initiative are yet to be made public, on the face of it this appears to be on the same pattern which the erstwhile Colombo Plan and Marshal Plan followed to counter the Soviet influence after World War II. Strengthening the private sector is an all-time agenda of US policy that does have its benefits. But this trajectory overlooks the needs of the people while those that invest the money generate more profits for themselves and for the private sector at large. Biden has made it clear that federal financing and grants will be limited in scope and there will be more focus on leveraging private sector investments. Development banks and international finance institutions are also likely to play their due role in this project that is also targeting sovereign wealth funds. On the other front, Russia’s war against Ukraine has prompted the G7 to forge some new unity against President Putin and his policies.

Putin’s adventure has fueled a fire whose flames are reaching beyond the borders of Europe. Whatever Putin’s justification – or lack thereof – behind this war is, the fact is that Russia has emerged as an aggressor and the West comprising the European Union, G7 and Nato, has found an excuse to flare up the inferno. These developments presage a world once again divided between two blocs. China and Russia will have many things in common. Both China and Russia now have greater market economies than they had thirty years ago, but they are not liberal democracies in the Western sense of this term. The three-day summit of G7 has a handful of issues that will generate a far-reaching impact on the world in the near future. The crisis in Ukraine and the BRI are just two that will dominate the course of action pretty much for the rest of this decade. For countries such as Pakistan – which suffer just for a couple of billion dollars – such talk about hundreds of billions is music to ears. But how much of it will actually benefit the real people living in developing countries remains an open question at least for now.