G-7 alternatives to BRI: Contrasting Italy and Pakistan approaches

The announcement by United States of America (USA) President Joe Biden that it is working with other G-7 members to provide alternatives and compete with the Belt and Road Initiative (BRI) of China through a network of infrastructure projects is challenging news for Beijing. “We are going to compete on that and we are doing it in a different way,” President Joe Biden said in a news conference at White House on October 26, 2023. “The Belt and Road Initiative has ended up in debt and a noose for most of the people who have signed on.” He said the U.S. was working with G-7 partners to provide infrastructure for those nations. “At the G20, we were able to act on a proposal to build a railroad all the way from Riyadh through the Middle East, Saudi Arabia, Israel, up through Greece and pipeline across the Mediterranean up into Europe.” On the sidelines of the G20 Summit in New Delhi in September key world leaders led by Prime Minister (PM) of India Narendra Modi and President Joe Biden launched the ambitious India-Middle East-Europe Economic Corridor. President Biden had since given a subtle hint that the Hamas-led attack on Israel might have been engineered to disrupt this proposed corridor; Israel being a key player in the project.The U.S. President made it clear, however, that the “extreme competition” which he wanted with China was not conflict. “We’re going to compete with China in every way, according to the international rules,” he said. “Economically, politically and other ways; but I’m not looking for conflict.”Italy a key member of the G-7 and the only member to have joined the BRI block has rescinded its participation from the project on December 04, 2023. Prime Minister of Italy, Giorgia Meloni has long been opposed to participate in the initiative and even termed it as ‘a serious mistake’. Even, Defence Minister of Italy Guido Crosetto, had described the decision of Italy to join the BRI an “improvised and wicked” one. He further stated that Italy’s decision to participate in the BRI was based on the understanding that the partnership would increase the exports out Italy. This premise he recognizes was wrong. His angst was further amplified when he further highlighted by his statement that “we have exported a load of oranges to China, they have tripled their exports to Italy in three years,” and that “the most ridiculous thing then was that Paris (France), without signing any treaties, in those days sold planes to Beijing for tens of billions.” These statements in addition to those by other high ranking functionaries of the Italian government are a prelude for it to withdraw formally from the BRI.The characterization by President Biden of BRI projects as “debt and a noose” is an apt description in the case of Pakistan’s CPEC. The common citizens of Pakistan are reeling under the exploitative nature of China Pakistan Economic Corridor, the flagship project of the BRI in Pakistan demanding a withdrawal of the CPEC.  In this regard President of China Xi Jinping had to emphasize to the PM of Pakistan Anwar-ul-Haq Kakar on the latter’s visit to Beijing for the 3^rd BRI forum meeting recently on the need for Pakistan to ensure the security of Chinese workers and engineers engaged in CPEC projects. As several Chinese workers and engineers working projects under the CPEC in Pakistan have been killed in militant attacks in the past few years, prompting China to demand stepped-up security for its personnel. The attacks have taken place presumably because common people of Pakistan are not benefitting from the CPEC projects, rather facing difficulties because of these projects. At one point of time, Beijing had even demanded that Chinese security force personnel be deployed in Pakistan to protect Chinese workers and engineers. Islamabad has so far resisted this pressure but may not be able to for much longer.What rulers and citizens of Pakistan have to understand is that 98 percent of the Chinese funding to Pakistan purportedly for development is in the form of “less than generous loans,” as a research report by AidData, a U.S.-based research lab, has found. The rulers of Pakistan, backed by the military, do not, however, care for the common people of Pakistan. An anti-India posture helps them to stay in power. The research report, as quoted in a PTI report from Karachi on November 7, 2023, says that only two percent of the development funding of China to Pakistan came in the form of grants in the 20-year period between 2000 and 2021. The CPEC was launched in 2013, believed to be the largest partnership of the BRI of China. “out of the total Chinese development finance portfolio of $70.3 billion committed between 2000 and 2021 in Pakistan, eight percent was official development assistance, comprising grants and highly commercial loans, while 89 percent was other official sector loans,”. “With a maturity period of less than 10 years and a grace period of less than four years, these loans carry on an average an interest rate close to four percent,” The AidData report further states that “It is worrying that the less-than-generous Chinese loans coupled with Pakistan’s mismanagement have made Pakistan’s debt load even higher.”According to AidData estimates, the outstanding public and publicly guaranteed debt of Islamabad to Beijing stands at $67.22 billion and is19.6 percent of the GDP of Pakistan. This is $21.2 billion more than what Pakistan has officially reported to the Debtor Reporting System of the World Bank. “In terms of the composition of debt from China, since 2018 China has pivoted away from infrastructure lending towards emergency lending in Pakistan; ensuring that the earlier debts taken by Pakistan for energy, transport and other CPEC projects can be repaid on time and with interest,” a senior research scientist of AidData Ammar A. Malik has commented. Thus Pakistan is now incurring loans from China to repay past debts and the role of Beijing is that of the classic money-lender.It is not surprising that the Pakistani side took the advantage of the BRI Forum meeting in Beijing to brief the Chinese side on the situation in Jammu and Kashmir. A joint statement issued by China and Pakistan after the BRI Forum was a reaffirming their support for each other on issues concerning their respective core interests and major concerns. Pakistan obligingly committed its support for the so-called one-China Principle that is the synonym for annexation of Taiwan, attempts to extend its hegemony in the South China Sea region, and the suppression of human rights of the Uighur and Tibetan  people in Xinjiang and Tibet. China indirectly backed Pakistan on the Kashmir issue by its support for the territorial integrity of Pakistan.  China has been using the BRI to spread its influence abroad with infrastructure projects funded by its investments. It has reached the end of the road on BRI with Italy as well as with G7 countries which are proposing an alternative. It retains hope with an economically weak, no-alternative and unstable Pakistan.