G7 promises to provide funds for Infrastructure development in middle-income nations
To extend loans to Ukraine for its current and future needs as it battles Russia
By K V Prasad
The 50th Summit of G-7, a group of the most developed and advanced economies in the world, met at Fasano city in Apulia, Italy and decided to promote a Partnership for Global Infrastructure and Investments Initiative (PGII). The Group plans to mobilise US $ 600 billion by 2027 to deliver infrastructure projects in developing and middle-income countries besides extending loans to Ukraine to face current and future needs.
The Communique issued at the conclusion of the Summit reiterated commitment to ‘”free and open Indo-Pacific” based on the rule of law. “We will further promote concrete G7 PGII and complementary initiatives to develop transformative economic corridors for quality infrastructure and investment such as the deepening of our coordination and financing the Lobito Corridor, the Luzon Corridor, the Middle Corridor, and the India-Middle East Corridor also building on the EU Global Gateway, the Great Green Wall Initiative, and the Mattei Plan for Africa launched by Italy”, the document said
The Summit was held between June 13 and 15 with Italian Prime Minister Giorgia Meloni chaired the meeting that was attended by leaders from Canada, France, Germany, Japan, United Kingdom and the United States and the European Union. In addition, the Summit was attended by 13 invitees including Prime Minister Narendra Modi and Pope Francis. Among the institutional guests were leaders from the African Development Bank, International Monetary Fund, Organisation for Economic Cooperation and Development, United Nations and the World Bank.
Leaders of the Grouping held six working sessions, with one each devoted to Africa Climate Change and Development, the current situation in the Middle-East, Russia-Ukraine war, Migration, Indo-Pacific/Economic, Artificial Intelligence and Energy.
It was at the 48th Summitt, that the Partnership initiative was launched by the United States and others in G7 with an ambitious plan to reduce the $ 40 trillion gap in infrastructure in developing countries. The aim, apparently, is to counter the massive Belt and Road Initiative, which is the signature project of Chinese President Xi Jinping. The G7 initiative is meant to be a values-driven, high impact, and transparent infrastructure partnership that meets the needs of low and middle-income nations. The G7 industrialised countries control 60 per cent of the global net wealth, drive 46 per cent of the global GDP and represent just 10 percent of the world’s population.
IMEC gets support
In addition, the G7 decided to promote and support the India-Middle East Economic Corridor which aims to set up a transportation network consisting of rail, road and sea routes, connecting India, the Middle East and Europe. The project was conceived and signed between India, the United States, Saudi Arabia, the United Arab Emirates, European Union, Italy, France and Germany during the G20 Summit that New Delhi hosted in September 2023.
The plan includes two corridors, the eastern sector connecting India and the Arabian Gulf while the northern sector will connect the Gulf to Europe. The corridor will include a hydrogen pipeline, a high-speed data cable and an electricity cable. The corridor is considered as an initiative to increase strategic influence in the backdrop of the BRI project. The China backed BRI has faced severe criticism for lacking in transparency and disregarding sovereignty of nations.
Other infra corridors
The Lobito corridor runs from the port city by the same name on the Atlantic Coast of Angola to Zambia passing through the Democratic Republic of the Congo. The Luzon corridor is a strategic economic connection in the largest and most populous island in the Philippines. The Middle corridor envisages connection between Europe and Asia to serve as an alternate to the traditional North and South corridors. It is also known as the Trans-Caspian International and Transportation network. The Great Green Wall is a grand plan to create a wall of trees across Africa from west to east. The main aim is to combat desertification and degradation of land in Africa’s Sahel region. It envisages the move would prevent the Sahara desert from spreading and assist in improving biodiversity besides creating economic opportunities for the local people.
Focus on AI
The idea of the Grouping was to increase the interoperability of governance through AI through an approach that would promote greater certainty, transparency and accountability. Prime Minister Modi addressed the outreach session on AI, Energy, Africa and Mediterranean. (See accompanying story: PM Modi on monopoly and tech)
India and its interaction with G7 is considered critical as the Grouping addresses challenges that exist in the form of economic, geopolitical and strategic areas. The voice of India, with its growing economic clout, strategic presence in the Indo-Pacific region and playing a crucial role as a supplier of energy to meet the crisis in Europe, is heard with attention.
Spotlight on Ukraine
Given the special accent of both the EU and the United States towards Ukraine in its fight against Russia, the G7 document noted that with a view to support Ukraine’s current and future needs in the face of the ‘prolonged defence against Russia’, the Grouping will launch Extraordinary Revenue Acceleration (ERA) Loans for Ukraine. The idea is to make available approximately $ 50 billion in additional funding to the country by the end of 2024.
The European Parliament described the Summit as a “demonstration of the G7’s unity and determination in the face of intense challenges to the rules-based multilateral order and international peace and security: Russia’s war of aggression against Ukraine and the war in Gaza. In the presence of Ukrainian President Volodymyr Zelenskyy, the leaders agreed to provide US$50 billion in additional funding to Ukraine from frozen Russian sovereign assets. The leaders also backed the comprehensive deal on Gaza outlined by United States (US) President Joe Biden. The Italian presidency put special focus on energy cooperation with Africa as a priority for the G7.
Meanwhile, around 80 countries which met in the Swiss city of Obburgen called for ‘territorial integrity’ of Ukraine to be the basis for any peace agreement that would end the two-year old war with Russia. The Joint Communique at the end of a two-day conference that ended on June 15, was held in the absence of Russia.
One hundred delegations, majority from the western world, and some developing countries attended the conference that was described as the first serious attempt towards peace. However, participants from India, Saudi Arabia, South Africa, and the United Arab Emirates, did not sign the final document that kept its focus on issues such as nuclear safety, food security and exchange of prisoners. New Delhi asserted that proposals that are acceptable to both Russia and Ukraine can lead to peace as it dissociated from the final document.
Explaining the rationale behind India’s participation, the Secretary in the Ministry of External Affairs Pavan Kapoor said it was with a view to understand different perspectives and approaches and options to find a way forward for a sustainable resolution of the conflict.
