By P.K.Balachandran/Ceylon Today
Colombo, May 15: Seeing China’s Belt and Road Initiative (BRI) rapidly gaining acceptance across the globe despite Western warnings that it is a “debt trap” Japan has conjured up a strategy to reverse the trend. The strategy is meant to meet the interests of the West and of the Global South not by fighting with China, but by active cooperation with it in structured programs.
Japan’s masterly strategy is based on cooperation between G7 and G20, that is between the advanced West (G7) and the Global South, China and Russia (G20).
The plan comprises two thrusts – one aims to give a strong economic development content to Western efforts to woo the Global South, and the other aims to make the advanced nations (G7), and the developing non-Western nations (G20) to cease contradicting each other and cooperate so that development efforts in the Global South proceed unhindered.
Unlike the US, Japan sees development through cooperation as the route to the achievement of the West’s “democratic” goals and not a confrontation against the “authoritarian” regimes.
Again, unlike the United States, Japan has sensed that countries in the Global South, especially Asia, are wary about the West’s stress on security measures to contain China. Those in the Global South don’t approve of the blocking of China’s economic and developmental efforts. In the absence of Western largesse, they value China’s liberal financial and technical assistance. More importantly, countries in Asia do not want to be the venue of military conflict between the West and China. The condition of Ukraine is a daily reminder of this dreadful prospect.
These are the reasons why countries have either formally or informally become part of China’s BRI. In South Asia, Pakistan, Nepal, Bangladesh and Sri Lanka are either officially or unofficially part of BRI. These countries cold-shoulder the US when the latter comes up with suggestions that they join the Indo-Pacific Group.
For these countries, the Indo-Pacific group is a veiled strategic, semi-military security alliance against China, despite the gloss of an economic content put on it by the US off and on. Bangladesh and Sri Lanka have explicitly said that they will not go in for military alliance but would welcome economic assistance and investments from the Indo-Pacific group.
Being an Asian country, Japan has grasped the sentiments of the people here and has come up with an economic plan not just for the G7 but for G7 and G20 combined. This was announced in a communiqué from Tokyo in April, entitled: “Bridging the G7 and the G20: A Call to Action”. It will be presented to the summit of the G7 in Hiroshima to be held between May 19 and 21 with Japan as chair.
The G7 is an informal grouping of seven of the world’s advanced economies, including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union. G20, on the other hand, is a group of non-Western countries including India, China and Russia.
Code-named Think7 Japan (or T7-Japan), the communiqué calls for an end to confrontation between G7 and G20 to be replaced and planned and practical cooperation for the general good. The basic idea is to stem the on-going slide to poverty in the Global South.
According to World Bank Group estimates, the number of people living in extreme poverty (on less than $2.15 per day) will increase to 600 million by 2030, and more than 3 billion people will live on less than $6.85 per day, following declining growth trends in recent months. At their spring meeting in April 2023, the International Monetary Fund and the World Bank noted that both the G7 and BRICS could hamper growth if they favored competition over cooperation in areas such as inflation and debt, climate finance, just energy, agriculture transition, and sustainable infrastructure investments. It was also pointed out that the increasing weaponization of food, trade, and reserve currencies and the lack of multilateral agreement on international financial institution reforms pose huge short- and long-term risks.
It is now recognized that rising geopolitical tensions and unilateral approaches to national security could further undermine global supply chains and their socioeconomic benefits.
How G7 Can Help
The T7 Japan points out that the G7 countries’ high innovation and transformation capabilities should be mobilized to support science-based policy-making. The communiqué says that Japan has established coordination with Think 20 India (T20 India) including with African counterparts and T20 Brazil.
“The T7 Japan Communiqué will be supplemented by a joint statement issued by T7 Japan and T20 India ahead of the G20 India summit,” the communiqué said.
Bane of Nationalism
T7 Japan wants G7 to work with G20 to counter rising nationalism and the retreat of globalization, which pose significant threats to global peace and stability. T7 Japan calls upon think tanks and civil society to get involved in sustainable development and economic issues, collaborate more openly and frequently, and in a structured manner.
T7 Japan wants the “G20 Common Framework for Debt Treatment” to gather all creditors together, including China, and work out a common program. It has decried “bilateral swap lines” which have very limited efficiency and are hindering an integrated approach to debt in G20 countries.
“Fragmented responses will only hamper current efforts to reform the global financial architecture and improve the impact of multilateral development bank finance. Coordinated implementation of the multilateral development banks’ ‘Capital Adequacy Frameworks’ report could help leverage more capital for climate finance and the SDGs in developing countries,” the communique says.
On climate change, it says that current climate commitments fall far short of the planned trajectory and will not deliver on the Paris Agreement goals. Developed countries have not yet fulfilled their pledge to jointly mobilize US$ 100 billion annually to support developing nations in facing climate change.
“The G7 should play a pivotal role in tackling climate emergencies and contributing to increased climate finance flows through a transformation of the financial architecture with the engagement of all relevant stakeholders,” the communiqué says.
The success of low-carbon transition requires a greater focus on resource efficiency and the robustness and sustainability of supply chains, including the production of critical minerals through responsible sourcing practices, T7 Japan says. It urges G7 to phase out fossil fuel subsidies more quickly It noted with regret that fuel consumption subsidies doubled as compared with 2021.
T7 Japan is inviting G7 Leaders to create a temporary “special tax” on oil and gas industries dedicated to accelerating transition research and climate and biodiversity action. Such new resources could contribute to the US$ 100 billion in pledges to support climate mitigation and adaptation in the Global South, the communiqué suggests.
Trade and Tech Controls
The T7 Japan noted that due to geopolitical tensions policymakers in some countries have introduced trade and technology controls that are counterproductive in the long run.
“The threshold for controls should be set as clearly as possible to reduce policy uncertainty and ensure economic activities under the rules-based trading regime of the World Trade Organization,” it said.
The T7 Japan calls for the acceleration of digital transformation and build on the rapid development of artificial intelligence (AI) to support social and economic inclusion and public services. It also calls for the promotion of gender equality and the empowerment of women and girls as a core action in all countries for achieving the SDGs.
The communiqué noted that both G7 and G20 have taken several initiatives to strengthen global food security since the global financial crisis of 2007–2008, but these initiatives have remained “small, isolated, and ad hoc.” Therefore, the G7 and G20 should channel their combined resources to build a resilient food system that can stabilize and improve the global food situation and protect the most vulnerable.
New Approach to Human Capital
Turning to improve human capital, T7 Japan said that it encourages the G7 to pursue new efforts to design learning in the 21st century. “Learning must be defined more holistically and include not only the development of foundational cognitive skills but also the development of students’ skills to care for themselves, others, and the planet. For example, mitigation and adaptation skills with respect to climate change can be learned in schools.”