In a move that is potentially beneficial to infrastructure-deficient developing countries, the European Union this week agreed to launch a global infrastructure plan linking Europe to the world. This comes after it formed partnerships with Japan and India to coordinate transport, energy and digital projects to link Europe and Asia. Last month, the Group of Seven nations also agreed to set up the Build Back Better World (B3W) plan - an alternative to China's Belt and Road Initiative (BRI), which offers to build roads, railways, ports, trade hubs and digital links in developing countries and that connects China to the rest of the world. The United States also has its Blue Dot Network initiative with Japan and Australia to build quality infrastructure worldwide.
There is little doubt these initiatives are to counter the BRI, seen as China's way of using economic and financial resources to increase its political influence globally. Still, given that the developing world is estimated to need US$40 trillion (S$54.2 trillion) in infrastructure funding by 2035, these initiatives should be welcome news for less developed nations. For the potential benefits of these plans to be realised, however, challenges and issues need to be addressed. The West's new initiatives have been touted as being of high standards, transparent and sustainable - something the BRI projects are accused of lacking. Yet, the B3W initiative aims to use private capital for projects in developing nations that are unlikely to be profitable. It risks becoming an empty slogan unless it recognises the need to solve the financing problems of essential but unprofitable infrastructure.