Will #B3W provide an Alternative to #China’s #BRI ?

Beyond the contrasting elements of the B3W and the BRI themselves, there is a question regarding how each recipient country will respond to the competing initiatives.

The recently announced U.S.-led G-7 infrastructure plan will need to play catch up if it is going to compete with China’s more established Belt and Road Initiative.

China Serbia

By Guy Burton and Roie Yellinek

Biden's G-7 Infrastructure Plan to Counter China

At the June G-7 summit, President Joseph R. Biden Jr. announced the Build Back Better World partnership, a global infrastructure investment initiative aiming to compete with China. Will the B3W provide an alternative to China’s Belt and Road Initiative? And will it make much of a difference in and for the Middle East, especially the Gulf Arab countries that have long been close to the United States and have growing ties with China?

Because of the character of the B3W, the nature of projects it is likely to fund, and the types of recipients that will take part, the initiative, at least in the short term, is not likely to measure up as a choice-forcing alternative to what the Chinese offer with the BRI. The region has become increasingly multipolar, enabling states to pick and choose among the offerings presented by external powers. The range of options therefore makes it difficult for the United States to pressure regional parties to choose sides.

Biden proposed the B3W initiative for the United States and its G-7 partners. The White House released a communique ahead of the G-7 summit setting out the goals, in particular the plan to help low- and middle-income countries access finance and development assistance to help construct necessary infrastructure projects. In this respect, the B3W proposal echoes China’s BRI and its efforts to increase world connectivity. For now, the details are vague regarding the financing and scope of the B3W, but it is intended to be global in scale and will be driven both by partnerships among the United States and its allies, as well as common values, standards, and a concern for climate change.

Despite its ambitions, though, the B3W may struggle to advance, especially in the Middle East and particularly in the Gulf states. The B3W vision has the disadvantage of being extremely new and uncertain. Launched just a month ago, it is still a statement of intent rather than a program of action. No funds have been committed to it yet, and there will be an extra level of complexity compared to China’s government-run BRI, because the B3W is slated to incorporate both public and private entities. It is unclear where exactly the money will come from, and the inclusion of private funding may mean Washington and its partners will have less control over spending so that funding may not go to areas and countries that they consider strategically most important. The B3W will also be playing catch up with the more established BRI.

The Chinese government launched the BRI in 2013 to make use of surplus Chinese capital in China’s immediate neighborhood in Central and Southeast Asia. The BRI has since been widened to include many Middle Eastern countries. The sums pledged for BRI projects have leveled off in recent years alongside a growing apprehension over risky ventures. Chinese state investors have become more wary about approving and funding projects that they see as unviable, which has narrowed the scope of activity.

Biden may discover that rather than being an alternative to the BRI, the B3W may be more complementary or, even worse, just an imitation in some instances, possibly even a pale one. While the B3W’s backers have suggested that it will cover projects that tackle climate change, boost health-care provision, develop digital technology, and enhance gender equity and equality, those relating to infrastructure will be a primary concern. That could mean the B3W would compete directly with proposed BRI projects, the majority of which have focused on the construction of roads, ports, railways, airports, and power stations.

Beyond the contrasting elements of the B3W and the BRI themselves, there is a question regarding how each recipient country will respond to the competing initiatives. Although U.S. antagonism with China has grown over the past decade, the fundamentals of the emerging global bipolarity between the world’s two largest economies are substantively different from those during the Cold War. Whereas the United States and Soviet Union presided over two sharply delineated orders, one liberal, the other socialist, today’s world is more integrated from decades of globalization. That interconnected nature of the world could make it so that potential B3W recipients in the Middle East wouldn’t necessarily have to pick sides.

Moreover, most of these countries are already U.S. allies and partners, like Saudi Arabia, the United Arab Emirates, Israel, Jordan, and Egypt. While they will welcome the prospect of greater Western investment, they will not reject that offered by China, unless Washington presses them to do so. For that to have any chance of success, it may be necessary for the United States to go further than merely expressing its “concern.” However, it is unlikely that such a U.S. statement or more strenuous objection would convince countries to turn down Chinese investment or revisit their previous acceptance of such investment. Indeed, when the administration of former President Donald J. Trump made clear its opposition to Chinese investments in Israel, the most that the Israeli government – arguably the United States’ closest regional partner – did was set up a review panel to scrutinize foreign investments. Moreover, its remit was only advisory and not retrospective.

Already several Gulf Arab countries are active partners in the BRI. Saudi Arabia, Oman, and the UAE are especially important in this respect, owing to their growing and deepening relationships with China. These three countries have comprehensive strategic partnerships with China and are among the largest recipients of Chinese investment in the region. Across the region as a whole, only Egypt, Algeria, and Iran have similarly high levels of exchange and ties.

Moreover, regional voices appear keen to maintain these links. At the Pujiang Innovation Forum in China in early June, Sultan Ahmed Al Jaber, the UAE’s minister of industry and advanced technology, referencing the UAE’s ties with China said that it is “a bond that will only strengthen in the years ahead, as we deepen our economic, technological, and cultural ties.” Already, a number of projects have been identified for BRI cooperation in the Gulf, ranging from the Saudis’ futuristic city of Neom (which several U.S. companies are also significantly involved in) and development of the King Abdulaziz International Airport to the second phase of the Dubai airport in the UAE. Saudi Arabia’s nuclear program, which it is keen to develop, could be added to this list of Chinese investment in the future, assuming it comes to fruition, as China has already shown interest.

The presence of the BRI in the Gulf Arab states therefore means that the B3W will be competing in a crowded field. Rather than appearing as a stark alternative, the Saudis and Emiratis are likelyto see the B3W as increasing the range of sources available to them as well as providing them with a bargaining position.

Meanwhile, in Gulf Arab states like the UAE, the Biden administration has resorted to carrots and sticks to discourage partners from working too closely with China. For example, with the recent F-35 fighter jet deal, the administration highlighted the strong maintenance contracts that the United States can provide while also threatening to end cooperation with countries working with China if the United States believes China’s presence jeopardizes its partners’ or U.S. security. However, this seems an empty threat as severing such contracts would mean leaving the field open to greater Chinese investment – exactly the outcome the United States wants to avoid. Elsewhere, U.S. threats will not work so well, especially in relation to countries like Iran, where the B3W will not be a player, leaving the field totally open to the Chinese to dominate. The expected – if for now delayed – U.S. return to the Joint Comprehensive Plan of Action nuclear deal and removal of some sanctions may be the peak of detente with Iran. The incoming conservative president, Ebrahim Raisi, shows little sign that he will consider a wider dialogue regarding Iran’s ballistic missile program or regional behavior. His unwillingness to do that may well discourage Western countries from increasing trade or investment in the country, lest they fall afoul of those U.S. sanctions that remain. At the same time, China is an important partner for Iran, with a number of BRI projects planned in the energy and transportation sectors, alongside already established ones, for example, in telecommunications.

Given the likely limitations of the B3W, there are ways the G-7 leaders can increase the appeal of the B3W over the BRI. For instance, reducing the gap between the types of projects that the BRI covers and those of the B3W would make the choice more direct between Chinese and Western investment. Another option would be for Washington and its G-7 partners to adopt a more participatory and collaborative approach to developing projects with recipients and implementing the B3W initiative in the region.

The G-7 leaders should also formulate a clear narrative about the B3W. It should not belong to one country, but to all seven G-7 countries. They also need to effectively market the initiative, just as China’s message of “win-win situations” has done for the BRI. Finally, the B3W should be integrated into other Western development projects and tools of soft-power influence, similar to how Beijing has integrated the BRI with tools like the Confucius Institutes, China Radio International, and cultural centers, which have proved invaluable in advancing China’s soft power. Given the BRI’s significant head start and aggressive regional ground game, the G-7 leaders will have their hands full trying to scale up quickly and promote the BRI to make it an appealing alternative to China’s investment offerings. All that is a tall order for an unfunded, nascent B3W initiative.

Source:  Arab Gulf States Institute in Washington

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