Binary Choices Before the Global South

August 08, 2024

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At long last, the club of the world's seven most advanced economies, the Group of Seven (G7), realized it was necessary to reach out to the Global South at the 2023 Hiroshima Summit. This year, the G7 summit in Italy saw a continued engagement with certain selected developing countries, albeit symbolically.

 

Amid the current changing dynamics, to weather a contested global order, the collective G7 needs to recalibrate itself to deal with challenges including strategic interoperability and rising aspirations from the rest of the world.

 

While the G7 still sustains multilateral heft to a certain extent, the sway it holds is getting increasingly irrelevant in the changing world. The strategic interoperability with the developing and underdeveloped worlds that were once lorded over can no longer be taken for granted. Similarly, the G7's legitimacy to formulate rules and policies for global governance is now being contested.

 

From the perspective of this "rich nations club," developing countries and emerging economies that are referred to as the so-called "Global South" (as is habitually portrayed in the narratives of the collective West - including its Asian ally Japan) are simply too large a collective economy to ignore, though their voices generally remain faint in contemporary global governance.

 

Over the past five decades, the G7, representing a combined 10% of the global population, has consistently and persistently dominated global trade and the international financial system, while also holding sway on global matters that involve policy coordination.

 

As of today, the aggregate GDP of its seven member states still remains robust, making up about 44% of the global economy in nominal terms, although this is a spiraling decrease from nearly 70% three decades ago.

 

The G7's 30% contribution to world GDP in purchasing power parity (PPP) terms is ostensibly dwarfed by 58% of the worldwide GDP held by the Global South, of which the original five members of the BRICS group currently contribute 32%. The "threat" posed by the Global South is getting increasingly real as the relevance of the G7 in global governance declines.

 

Throughout the year-long G7 presidency of Japan in 2023, enhancing economic cooperation with the Global South appeared active on the group's agenda. An "outreach session" inviting representatives of governments from emerging economies, namely Australia, Chile, India, Indonesia, and Kenya, along with representatives of the World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD), and Economic Research Institute for ASEAN and East Asia (ERIA), was held for the first time at a G7 Trade Ministers' Meeting. The session, intended for building new supply chains to link G7 and the Global South, was apparently in sync with the Supply Chain pillar under the framework of the US-led Indo-Pacific Economic Framework for Prosperity (IPEF).

 

Amid the escalating geopolitical competition between China and the US, tensions with China have been a centerpiece of the G7 agenda since last year's Hiroshima Summit. At the 2024 G7 Summit, a large part of the final communiqué was dedicated to the concerns posed by China's economic expansion. It referenced Beijing dozens of times, more in an adversarial tone, thereby marking a more hawkish attitude toward China than ever before.

 

Reading between the lines, beyond rhetoric of economic security that the G7 avowed to undertake lies the unsettling fear of China's growing sphere of influence in the Global South through its mammoth Belt and Road Initiative (BRI). As of August 2023, 152 countries across Asia Pacific, Africa, the Americas, and beyond, most of which are from the Global South, have committed to embarking on this mega endeavor. This, in itself, is a vote of confidence in the BRI, a direct rebuff to the unsubstantiated allegation of a "debt trap" against China by the collective West.

 

To counter the BRI, the G7-sponsored Partnership for Global Infrastructure and Investment (PGII) remains high on the agenda, albeit with very little information made accessible to the needy developing nations. The 600 billion USD pledged by the leaders of the G7 and the European Union (EU) for PGII, which was characterized as a relaunch of the US-led Build Back Better World (B3W) partnership in 2021, has yet to be seen as a viable solution to the ever-widening infrastructure finance gap.

 

In the public domain, the G7's inaugural 600 billion USD pledge promised a litany of ambitious infrastructure projects in the Global South. The yet-to-be-born projects involve railways and green energy, including an economic "corridor" linking India to Europe via the Arabian Peninsula, as well as a trans-African corridor connecting Zambia to Angola via the Democratic Republic of the Congo (DRC), to name a few. Alongside this, partnerships were fostered with Indonesia, Vietnam, South Africa, and Senegal in their respective energy transitions from fossil fuels to renewable power.

 

However, beyond the rhetoric and hubris, to marshal 600 billion USD by the end of 2027 is, in itself, a tall order, as the respective G7 member states' governments have so far provided little hard cash. Nor have they raised much private capital from investors.

 

A case in point is the G7-promised Just Energy Transition Partnership (JETP) project in Indonesia, which is supposed to mobilize 20 billion USD to help the country switch from coal-fired power to renewable energy, but was delayed as the G7 countries haggled over funding, half of which was earmarked for the private sector. This differentiates the PGII projects from those of BRI, which are funded by Chinese state-controlled banks.

 

Henceforth, it's still premature to conclude that the G7-sponsored PGII model posed a viable alternative to rival the decade-old BRI, albeit the former has widely been touted as "values-driven, high-impact, and transparent."

 

In this context, Japan has consistently been skeptical, if not critical, of the quality of BRI infrastructure projects undertaken by Chinese state-owned enterprises. In 2015, Japan presented the Partnership for Quality Infrastructure, ostensibly intended to rival the BRI with its forte in infrastructure development. Yet, under close scrutiny, the much-touted "high-quality" Japanese projects that used to capture the imagination of some state actors in Southeast Asia have yet to leave any convincing footprints of "quality infrastructure" in the region and beyond.

 

Along with India, Japan is well remembered for its joint effort in launching the Asia-Africa Growth Corridor in 2017. The United States and Australia later harmonized their efforts with these two countries under the framework of the Quad - the minilateral Quadrilateral Security Dialogue dedicated to serving the US "Indo-Pacific" security interest. Yet, the promised initiative has sunk into oblivion ever since, thereby casting more apprehension among Global South nations toward the infrastructure agenda backed by Washington and its allies.

 

In enhancing engagement and cooperation with the Global South, Japan has been a consistent and steadfast contributor among the seven advanced economies. This is supposed to be viewed positively in light of bridging the widening gulf of the Global North and South. Yet, in reality, the modus operandi of Washington appears to override all in any of the multilateral or minilateral pacts. The collective G7 is no exception.

 

Interestingly, while acknowledging the existing trust deficit between the Global South and the G7, the Japanese Minister of Economy, Trade, and Industry, Yasutoshi Nishimura, who co-chaired the 2023 G7 Trade Ministers' meeting, said, "We don't intend to build new walls to keep others out or form blocs of countries in the name of economic security, but rather aim to further enhance trade and investment with trusted partners."

 

To reconcile his pledge of no intention "to build new walls" with what Washington is doing to keep China out of the IPEF supply chain on the pretext of hedging against over-dependence on China is indeed difficult.

 

Parallel to this, Washington's relentless efforts to build a "small yard, high fence," as was described by President Biden's National Security Advisor, Jake Sullivan, in denying Beijing's access to cutting-edge technologies on a grandiose rationale of national security, conspicuously contrast against Nishimura's words.

 

In the same vein, what appears even more oxymoronic is that while the G7 is trumpeting its leading role in maintaining and developing a free and fair-trade order, the US sanctions and punitive tariff hikes have time and again been weaponized against countries deemed detrimental to Washington's interests. Dictates of the US exceptionalism are virtually having the final say vis-a-vis the WTO in addressing any trade disputes. This is mirrored by the lavish use of such platitudes as "rules-based order" among the collective West in maintaining their grip on global governance, where the US dictates are allowed to prevail at the expense of the United Nations Charter.

 

If anyone were to judge the G7's commitment to upholding good global governance by mere words, Minister Nishimura's pledge to "continue to work for the development of the world economy and global peace and prosperity while cooperating fully with the Global South" would presumably present an image that the G7 and China are virtually on the same page as far as global peace and prosperity are concerned.

 

To be fair, Nishimura did not have a crystal ball to gaze at when he made the remarks at the G7 Trade Ministers' meeting last year before the G7 summit in 2024, but the position of G7 and the EU on freezing the Russian financial assets amounting to 325 billion USD, which were largely held in their territories across Europe, was not anything abrupt or unexpected. Such contemplation has long been looming at the behest of Washington.

 

At the G7 summit in mid-June 2024, the decision to lend Ukraine 50 billion USD interest accrued from the frozen Russian assets amid the ongoing Russia-Ukraine military conflict was provocative enough to ignite strong retaliatory moves from Russia.

 

In this context, the US Treasury Secretary, Janet Yellen, who is an architect of the plan to use Russia's central bank assets to help Ukraine, can claim an initial triumph with her brainchild at this stage. She should be well aware of the tit-for-tat risks in her calculus. The credibility and integrity of the financial institutions involved in the move would be left at stake, precipitating a yet-to-be-known impact on the European banking industry as well as the Euro. As the brunt is more likely to be borne by her trans-Atlantic allies, her indifference to the potential backlash is thus anticipated.

 

To the world at large, it's common sense that the decision would dash any hopes of brokering peace in the ongoing kinetic conflict. However, this is Washington's least concern, as the conflict is dubbed a proxy war instrumental in "bleeding" Russia to its decline.

 

Meanwhile, the G7 summit's decision scripted in the communiqué may have left many quarters across the world skeptical of its probability of being implemented, given that several leaders of the G7 are now either in political limbo or booted out of office after the summit. Beyond the long shadow cast on the outcome of the summit, perhaps the key triumphs the G7 can celebrate are the visibly enhanced trans-Atlantic agreement on solidarity over issues of countering China more assertively and the consensus reached on aiding Ukraine financially with frozen Russian assets.

 

On the outreach to the Global South, as a follow-up to the Japanese inaugural effort last year, the Italian host continued the engagement by inviting 12 developing countries to the summit. Ostensibly, the foregrounding of Africa took center stage at the 2024 summit. The G7's African outreach via new policies rolled out is primarily motivated by Europe's current need to diversify its energy sources following the Ukraine conflict, on the one hand. On the other hand, it's also a collective intention of the US-led G7 to rival China's influence on the vast continent, which has long been plundered its rich mineral resources by the Western colonists.

 

In this context, the Energy for Growth in Africa initiative launched to invest in sustainable industrial and infrastructural development in Africa is a clear case in point. The newfound fever for investing in Africa has been revved up. Aside from the G7, individual Western countries are of no exception in jumping onto the bandwagon. For instance, Italy on its own, under the Mattei Plan, has promised grants and loans worth 5.5 billion EUR to several African countries in the name of helping develop their economies.

 

Be that as it may, the way forward for development in Africa lies in sustainability and equitability. China, through its egalitarian partnership model under the BRI framework, has made impressive inroads in Africa, while the investability-driven initiatives spearheaded by the G7 remain to be seen. In reality, the nightmarish economic plundering footprints of the European colonial powers stay etched in the memory of most emerging economies in Africa.

 

Like Africa, the entire Global South will continue to be wooed by major powers scrambling for power dominance and strategic resources, but gone are the days of predatory economic subjugation by the contending powers. Pursuant to redeeming their respective sovereignties from the colonial masters, the developing countries and emerging economies have every legitimate right to claim concomitant peace and economic prosperity, which are not mutually exclusive. Instead, both are co-dependencies that reinforce one another.

 

While the 2024 G7 Summit was dangling big carrots of promising investments to the Global South and singing assertive, if not combative, tunes against China and Russia, little did the world anticipate the offer presented by Beijing at the commemoration of the 70^th anniversary of the Five Principles of Peaceful Coexistence two weeks later.

 

Beijing announced its renewed commitment to keeping the spirit alive alongside bringing common development via South-South cooperation and the bridging of the Global North-South gulf to the table. These were made deliverable through the avenues of the three Chinese global initiatives, which are rooted in the ideal of building a global community of shared future - an epitome of the embodiment of the Five Principles of Peaceful Coexistence.

 

The binary choices before the Global South are now obvious. It is not an ideological face-off, as is trumpeted by the collective West. Instead, competing offers mark a defining moment for the Global South to choose between peaceful coexistence and hegemonic primacy for themselves and the world as we enter a multipolar era. 

 

 

 

Please note: The above contents only represent the views of the author, and do not necessarily represent the views or positions of Taihe Institute.

 

This article is from the July issue of TI Observer (TIO), which focuses on the recently concluded 2024 G7 Summit, examining the global governance dilemmas and domestic political challenges faced by the G7 countries, and discussing their efforts to engage Global South countries. If you are interested in knowing more about the June issue, please click here:

http://en.taiheinstitute.org/UpLoadFile/files/2024/7/31/135526382bbd6aa96-0.pdf

 

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