September 9, 2023
At the Group of 20 (G20) meeting today in New Delhi, leaders announced plans for a new rail and shipping corridor that will connect India and Europe through the Middle East. This ambitious plan is part of Biden’s larger vision of creating high-quality infrastructure projects and the development of economic corridors that together should promote sustainable growth in low- and middle-income countries. The theory is that enhanced global trade should reduce economic gaps among countries, expand access to electricity and telecommunication, and promote clean energy.
They also agreed to continue developing the Lobito Corridor, a rail line linking the port of Lobito, Angola, on Africa’s Atlantic coast, with the city of Kolwezi, Democratic Republic of Congo (DRC), in Africa’s interior mining region. The White House and U.S. allies in this project say they are hoping that an injection of money to build infrastructure will support a transparent and developed critical minerals sector that will advance global supply chains for those minerals while benefiting local economies in Angola, Zambia, and DRC.
Anyone with even a passing knowledge of the history of Africa has reason to be skeptical of this plan, although Japan and India don’t carry the same colonial baggage European countries do in Africa. G20 leaders are trying to combat the legacy of colonialism by expanding the table of leadership to those countries previously excluded. In New Delhi the G20 admitted the African Union as a permanent member. The African Union was formed in 2001, and its 55 member states cover more than 12 million square miles and have a total population of more than 1.3 billion people. The G20 is now effectively the Group of 21.
Funding for the projects will come through the Partnership for Global Infrastructure and Investment (PGI), the Group of Seven’s answer to China’s Belt and Road Initiative. The G7 is a political bloc of advanced economies that share values of liberal democracy.
In a joint statement, the leaders of India, Brazil, South Africa, and the United States said they met on the margins of the G20 “to reaffirm our shared commitment to the G20 as the premier forum for international economic cooperation to deliver solutions for our shared world.” Aside from the U.S., the three countries making that statement are all members of BRICS, the economic bloc that includes China.
Their statement, along with the fact that each of those countries will hold the presidency of the G20 for the next four years, indicates G20 pressure on China. So does the fact that the president of the World Bank, nominated by Biden, is former MasterCard chief executive officer Ajay Banga, an American citizen who was born in India. Banga is both familiar with financial services and deeply concerned about inclusive and sustainable growth.
The economic news coming out of New Delhi shows the global side of Biden’s political vision. Led by the U.S., the G20’s call for massive investment in developing the infrastructure and economies of other countries echoes the post–World War II Economic Recovery Act of 1948, better known as the Marshall Plan. Under this plan, the U.S. spent more than $13 billion to help Europe rebuild its infrastructure and economy. This rebuilding stabilized European governments and provided the U.S. with reliable trading partners.
“One Earth, One Family, One Future,” Biden told a meeting of the PGI. He called for “building sustainable, resilient infrastructure; making quality infrastructure investments; and creating a better future [that] represents greater opportunity, dignity, and prosperity for everyone.”
The idea that public investment in infrastructure serves democratic goals fell out of favor in the U.S. in the 1980s. Leaders insisted that private investment reacted more efficiently to market forces whereas government investment both distorted markets and tied up money that private investment could use more effectively. In fact, the dramatic scaling back of public investment since then has not led to more efficient development so much as it has led to crumbling infrastructure and its exploitation by private individuals.
In late July the New York Times noted that since 2019, billionaire businessman Elon Musk has steadily taken over the field of satellite internet, infrastructure that is hugely important for national security. In just four years Musk has launched into space more than 4,500 satellites—more than 50% of all active satellites. This means that Musk’s Starlink is often the only way for people in places hit by disasters or in war zones to communicate.
On Thursday, excerpts from a forthcoming biography of Elon Musk by historian Walter Isaacson revealed that Musk “secretly told his engineers to turn off [Starlink] coverage within 100 kilometers of the Crimean coast” after learning that the Ukrainian military was sending six small drone submarines packed with explosives at the Russian naval fleet based in Crimea. After talking to Russian leaders, who said they would respond with nuclear weapons—later events suggest this was a bluff—Musk shut off Starlink, the drone submarines lost the connectivity they needed to find their targets, and the weapons simply washed ashore.
According to Isaacson, Ukrainian officials begged Musk to turn the coverage back on, but he refused, saying that Ukraine “is now going too far and inviting strategic defeat.” He told U.S. and Russian officials that he wanted Starlink to be used only for defense. Then he offered a “peace plan” that required Ukraine to give up territory to Russia and reject plans to join the North Atlantic Treaty Organization (NATO). Later, he again disabled Starlink coverage in the midst of a Ukrainian advance.
Isaacson portrays Musk as frustrated by being dragged into a war. “Starlink was not meant to be involved in wars,” Musk told Isaacson. “It was so people can watch Netflix and chill and get online for school and do good peaceful things, not drone strikes.” Since the story broke, Musk has defended his unwillingness to be in the middle of a war.
But Mykhailo Podolyak, a top advisor to Ukraine president Volodymyr Zelensky, pointed out on Musk’s own social media platform X, formerly known as Twitter, that the same Russian fleet Musk protected went on to fire missiles at Ukrainian cities, killing civilians, including children. Russia is also attacking Ukraine’s infrastructure for exporting grain, which threatens the price and availability of food in Africa.
The privatization of the functions of government in the U.S. has given a single man the power to affect global affairs, working, in this case, against the stated objectives of our own government. Republican leaders eager to push that privatization have made their case by turning voters against taxes, although the tax cuts put in place since 1981 overwhelmingly benefited the wealthy and corporations, permitting a few individuals to amass fortunes: Forbes, for example, estimates Musk’s net worth at $251.3 billion.
On Friday the Internal Revenue Service announced that increased federal funding under the Inflation Reduction Act and the help of artificial intelligence will enable a new push to go after 1,600 millionaires who owe at least $250,000 and 75 large businesses with assets of about $10 billion apiece that owe hundreds of millions of dollars in taxes.
Senator Ron Wyden (D-OR), chair of the Senate Finance Committee, said the plan “goes to the heart of Democrats’ effort to ensure the wealthiest are paying their fair share.” It also goes to the heart of the idea that billionaires must not be able to impose their will on the rest of us by virtue of their monopolization of key aspects of our infrastructure. Still, Republicans continue to argue for private investment according to market forces. Opposing taxes and the government programs they fund, they have clawed back as much of the new funding for the IRS as they have been able, and they continue to call for more cuts.
This week, as a fight over funding the government by the end of the month looms, the implications of the parties’ different visions of government could not be clearer.
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Notes:
https://www.whitehouse.gov/wp-content/uploads/2023/09/Project-Gateway-Multilateral-MOU.pdf
https://www.nytimes.com/interactive/2023/07/28/business/starlink.html
https://www.washingtonpost.com/opinions/2023/09/07/elon-musk-starlink-ukraine-russia-invasion/
https://apnews.com/article/irs-millionaires-back-taxes-2624282ac20388311bd03ee76ae36f70
https://www.brookings.edu/articles/house-republicans-want-to-cut-the-irs-budget-again/
https://www.brookings.edu/articles/who-is-ajay-banga-us-nominee-for-world-bank-president/
Twitter (X):
Thanks for this clear presentation of where things stand economically (and more) in the world and the US. So clear that Democrats need to win the trifecta in 2024. Musk is a total threat to peace and stability---in his domination of satellites and in his own instability. Thank you again, HCR.
Thank you for showcasing the G21 and their plans for infrastructure projects to assist our global partners.
We need to get US satellites positioned near Ukraine so that Ukraine no longer has to depend on the whims of Elon Musk. Musk believes Russia’s threats rather than contacting the US government to ascertain the truth.
The top 1% no longer just depend on influencing IRS regulations to attain tax breaks—now they lobby to reduce the workforce to prevent/delay audits to make them follow the rules.—and the Republicans have introduced legislation to do just that. There are basically two ways to balance a budget—bring in more revenue or cut outgo.
As you’ve repeatedly said, the contrast can’t be any clearer—take care of the common man or help the oligarchy get richer. The choice at the ballot box is ours.