Biden set to woo Global South at G20

Washington — US President Joe Biden arrives at this weekend’s Group of 20 (G20) meeting in India with an offer for the “Global South”: whatever happens to China’s economy, the US can help fund your development.

Armed with cash for the World Bank and promises of sustained US engagement, Biden hopes to persuade fast-growing economies in Africa, Latin America and Asia that there is an alternative to China’s Belt and Road project, which has funneled billions of dollars to developing countries but left many deeply in debt.

He will have at least one advantage: Chinese President Xi Jinping will not be at the meetings.

While Biden said he was “disappointed”, Xi’s absence as China’s economy wobbles creates a narrow opening for Washington to reshape the agenda of a political club it has struggled to corral.

At the heart of Biden’s pitch are World Bank reform proposals and stepped-up funding for the lender’s climate and infrastructure aid in the developing world, which would free up hundreds of billions of dollars in new funding for grants and loans.

The White House is seeking $3.3bn from Congress to complement earlier steps by the US and close allies to raise $600bn by 2027 in public and private money for the Partnership for Global Infrastructure and Investment, a Belt and Road alternative that excludes China.

“Xi’s absence from the G20 does give the US an opening, which could be compounded by the challenges that China’s economic downturn will have for Belt and Road spending,” said Zack Cooper, a senior fellow focused on Asia at the American Enterprise Institute.

“But the question ... is whether the US will be able to step up.”

Chinese Prime Minister Li Qiang will represent China at the G20 as its leaders cope with sagging growth and a possible property debt crisis. Russian President Vladimir Putin is also skipping the event, sending foreign minister Sergei Lavrov.

The IMF forecasts that the Middle East, Central Asia, developing countries in Asia and sub-Saharan Africa will deliver between 3.2% and 5.0% GDP growth in 2024, faster than the 1.0% they projected for the US and 3.0% globally.

But those countries face serious challenges to reach their potential as climate change tests aged, often colonial-era infrastructure.

The Covid pandemic, higher inflation and rising US interest rates have conspired to make those countries’ debt burdens increasingly unsustainable, causing fears of problems similar to the Asian financial crisis that prompted the creation of the G20 in 1999.

Xi’s decade-old Belt and Road initiative has played a role. China has lent hundreds of billions of dollars as part of the project, which envisaged Chinese institutions financing the bulk of the infrastructure in mainly developing nations.

Yet the credit has dried up in recent years and many countries are struggling to repay their debts as interest rates rise.

Washington thinks a rebooted World Bank could meet the Global South’s needs and serve its own interests.

“Even the last administration — the biggest sceptic of all of this — made investments in foreign aid because those investments are in the naked self-interest of the US, as well as being the right thing to do,” said Jake Sullivan, Biden’s national security adviser, referring to former president Donald Trump’s administration.

Sullivan, in a briefing for reporters before Biden’s trip, maintained that “World Bank reform is not about China, in no small part because China is a shareholder in the World Bank”.

But when the White House asked Congress for cash in August to fund the effort, the White House said in a letter to lawmakers that it was “essential that we offer a credible alternative to the People’s Republic of China’s coercive and unsustainable lending and infrastructure projects for developing countries around the world”.

‘Taking sides’

Biden has premised his foreign policy on standing up to Russia’s war in Ukraine, managing competition with China and restoring US alliances neglected by his predecessor Trump, the Democrat’s likely Republican opponent in the 2024 presidential election.

Those efforts have found success with traditional US partners but has resonated less with developing countries, including Brazil, India and SA, which have tried to avoid being whipsawed by Washington’s conflicts with Beijing and Moscow even as they seek greater Western investment.

“We must be able to  manoeuvre without taking sides, like we have done with the Ukraine war,” said Khulu Mbatha, a former foreign policy advisor to SA President Cyril Ramaphosa.

For his part, Xi is also finding new ways to engage the developing world, hosting a gathering of Central Asian leaders and discussing development in May. In August, he told the Brics summit in SA that the Chinese economy has “great vitality”.

That Brics group, which includes Brazil, Russia and India alongside China and SA, is newer than G20, excludes Washington, and soon plans additions to its roster — Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates.

Xi is also expected to attend an Asia-Pacific Economic Cooperation summit in San Francisco in November, where he may meet with Biden.

Reuters