Why is it in the news?
Recently, Memorandum of Understanding (MoU) was signed at the G20 Summit in New Delhi establishing the India-Middle East-Europe Economic Corridor (IMEC).
- IMEC envisions a network of transport corridors to enhance economic integration between Asia, the Arabian Gulf, and Europe.
- IMEC is part of the Partnership for Global Infrastructure Investment (PGII), a joint initiative by multiple countries.
PGII Origins and launch
- PGII was first announced during the G7 Summit in the UK in June 2021.
- Officially launched in 2022 during the G7 Summit in Germany.
- Aims to mobilize nearly $600 billion from G7 countries by 2027 for global infrastructure projects.
PGII Goals and Principles
- Emphasizes transparency, climate-resilient infrastructure, gender equality, and health infrastructure development.
- Aims to diversify infrastructure funding options for developing countries.
Significance of PGII
- Investment Plans for India:
- US International Development Finance Corporation to invest up to $30 million in Omnivore Agritech and Climate Sustainability Fund 3.
- The fund focuses on impact venture capital in agriculture, food systems, climate, and the rural economy.
- Investments aim to enhance food security, climate resilience, and agricultural productivity for smallholder farms.
- Investment Plans for Other countries:
- Similar projects announced in West Africa, Southeast Asia, and South America.
- Several projects announced under PGII, including clean energy and telecommunications initiatives in Indonesia.
- Part of the Build Back Better World (B3W) initiative.
- Announced at the G7 summit.
- Concerns about the inclusion of hard infrastructure projects in the investment portfolio.
- PGII seen as a repackaged version of B3W.
- Significance of countering China’s BRI:
- BRI seen as not just an economic project but a tool for political control.
- Concerns about potential Chinese neo-colonialism and unsustainable debt burdens in partner countries.
- Environmental impacts are also a concern.
- Lack of transparency in China’s BRI agenda.
- The European Union (EU) plans to activate €300 billion for critical connectivity projects through its Global Gateway program.
- Half of this funding is designated for Africa, with over 90 identified projects in various regions.
Competition and future prospects
- The success of PGII depends on various factors, including China’s response and the ability to secure funding and private-sector participation.
- PGII and BRI may compete, potentially benefiting countries seeking infrastructure investments.