A hidden key to the infrastructural ambitions of the G7: Blue Dot Network
On Saturday, the Group of Seven (G7) and the White House announced a global infrastructure initiative this could give China’s Belt and Road Initiative (BRI) a chance. The secret to implementing this plan: the Blue Dot Network.
In November 2019, the United States, Japan and Australia launched the Blue Dot Network (BDN) – named after Earth’s view from space as a simple “blue dot” – to encourage development in certifying public-private investments in global infrastructure that are transparent and of high quality. By setting common standards for infrastructure development, the BDN aims to improve connectivity, strengthen the economy, increase employment opportunities and contribute to a cleaner environment. When I worked with BDN in 2020, I saw with my own eyes the thirst of American allies and partners for an alternative to the BRI. Now is the time to put some wind in BDN’s sails to realize its potential.
Infrastructure gains in the 21st century in Asia, Africa, and Central and South America will translate into the level of connectivity seen today in Europe and North America. Economic and demographic forces such as increased business activity and population growth will result in closer connections along overland routes between Hanoi, Vietnam, and Hamburg, Germany; between Lagos, Nigeria, and Johannesburg, South Africa; and from SÃ£o Paulo, Brazil, to Santiago, Chile. Regional development banks estimate that the annual demand for infrastructure in Asia, for example, amounts to more than $ 1.7 trillion. If properly developed, new, greener infrastructure will improve the global environment as well as the economy. BDN offers a way to do this.
The international community has previously responded to the global demand for infrastructure by developing principles for Press release from the G7 summit in Charlevoix, the Equator Principles, and the Statement by the leaders of the Osaka Group of Twenty, with its principles of investment in quality infrastructure). While the West spoke of principles, Xi Jinping’s China was busy working through the BRI to build ports, bridges and 5G networks around the world.
The initial brilliance of the BIS has faded as countries came to realize that many BRI projects serve the geopolitical interests of China rather than the infrastructure needs of host countries. Debt to China has grown significantly in the Republic of Congo, Djibouti and Angola, while Pakistan and Kenya have accumulated some of the largest debts to China among BIS countries. Indebted countries are offered demeaning agreements that undermine their sovereignty (for example, the ninety nine year lease from the Port of Hambantota in Sri Lanka to China, reminiscent of colonial practices). Chinese port construction is often seen as a head of the bridge for its military presence. China often ignores the construction, environmental, and labor standards. Most worrying is its complete lack of transparency on the funding and terms of these BRI projects.
Once launched, BDN will mark and certify infrastructure projects to distinguish those that are transparent, accountable and secure from those that are not. BDN certified projects will be transparent in funding and meet high construction, labor and environmental standards. Most democratic countries, including many G7 members, already require these practices. The BDN system encourages investment in quality infrastructure in a manner similar to other certification systems like the US Green Building Council’s LEED rating system for buildings or fishing and forestry certifications.
The BDN offers emerging countries an incentive to adopt regulatory reforms that would then attract global private capital. For industry, BDN provides loan guarantees to mitigate risk and offers a certified seal of approval backed by each host country. To the extent that it aims to increase investment in bankable infrastructure in emerging countries, BDN can transform infrastructure into an investment class.
In 2020, the United States proposed the BDN for G7 support and funding, but the summit was canceled. There was broad agreement within the group except on how best to approach climate change in the context of the BDN. Transatlantic dissonance on climate change in 2020 has been replaced by strong consonance in 2021. This paves the way for BDN to gain G7 approval and be highlighted at the 26th United Nations Conference of the Parties on Luck climate in November.
Here are four actions G7 members should take:
- Highlight BDN and the Coalition for Disaster Resilient InfrastructureâA global partnership that aims to make infrastructure systems more resilient and foster sustainable development â as platforms that can help stakeholders ensure that their climate considerations are taken into account in infrastructure development.
- Work with Australia, India and other democracies to coordinate their respective development finance incentives and instruments to advance investments in BDN.
- Establish an interim BDN secretariat at the Organization for Economic Co-operation and Development or in a credible alternative such as an academic institution capable of coordinating the activities of the BDN.
- Define the Indo-Pacific and the countries around the Adriatic, Baltic, Black and Caspian seas as initial priority areas for investments in BDN for their strategic importance, uptake of BDN and bankability.
The BDN represents another chapter for US leadership to meet global needs and protect the international system from predatory behavior. With the Biden administration’s mission to rebuild better for the world, it is well positioned to make BDN one of its historic legacies for global good.
Kaush Arha is a senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. In 2020, he was US G7 Sherpa for the Blue Dot Network.
Wed, Jun 9, 2021
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