U.S. President Joe Biden Offers Funding for Global South at G20 Meeting

Introduction

WASHINGTON, Sept 7 (Reuters) – U.S. 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 United States can help fund your development.

Advantage of Xi Jinping’s Absence

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.

Biden’s Pitch

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.

Challenges Faced by Developing Countries

• Climate change
• Aged infrastructure
• COVID-19 pandemic
• Higher inflation
• Rising U.S. interest rates

China’s Belt and Road Initiative

China’s Belt and Road project has funneled billions of dollars to developing countries but left many deeply in debt. The credit has dried up in recent years and many countries are struggling to repay their debts as interest rates rise.

World Bank Reform

Washington thinks a rebooted World Bank could meet the Global South’s needs and serve its own interests. The White House is seeking $3.3 billion from Congress to complement earlier steps by the U.S. and close allies to raise $600 billion by 2027 in public and private money for the Partnership for Global Infrastructure and Investment, a Belt and Road alternative that excludes China.

Foreign Policy Goals

Biden has premised his foreign policy on standing up to Russia’s war in Ukraine, managing competition with China, and restoring U.S. alliances neglected by his predecessor Trump. These efforts have found success with traditional U.S. partners but have resonated less with developing countries.

Conclusion

While Xi is finding new ways to engage the developing world, 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. The outcome of the G20 meeting will determine if the United States can step up and offer a credible alternative to China’s lending and infrastructure projects.