Former British Prime Minister, David Cameron, has called for reforms at the World Bank and the International Monetary Fund (IMF) to counter Beijing’s influence.
“Through its Belt and Road Initiative, China is lending vast amounts for huge infrastructure projects. The appeal to borrowers is that these loans have fewer conditions attached than those of traditional Western institutions. But they are saddling countries with debts they can ill afford to repay,” he wrote.
“The reach is wide: since 2017, China has become the world’s largest official creditor, surpassing the World Bank, IMF and traditional creditors combined. However, there is little point complaining about countries signing up for the Belt and Road if we can’t say to them ‘here’s the alternative’.”
The former prime minister called for Britain to stand up to Beijing by pushing for reforms at multilateral development banks (MDBs) like the World Bank and the IMF to make it easier for less developed countries to have access to much-needed capital.
Additionally, he noted that every continent is served by its own regional lending establishments.
“It might not be as catchy as ‘make poverty history’, but ‘expand MDBs’ balance sheets’ is the next big imperative in the fight against poverty,” he said.
The former PM said that MDBs should make more risky investments by loaning an extra trillion dollars to countries in Africa, Asia, and the Middle East.
Cameron said that the U.K. could also take the lead by using the Commonwealth Development Corporation (CDC), now known as British International Investment (BII), to carry out similar work to MDBs and remove Beijing’s influence from the poorer nations of the British Commonwealth.
Low British Foreign Aid
Cameron also lamented the $3.71 billion cuts in Britain’s foreign aid spending during the pandemic from 2020 to 2021. Whitehall cut the target for the total spending from 0.7 percent of gross national income (GNI) to 0.5 percent.He wrote that maintaining foreign aid spending at 0.7 percent of GNI was one of his “proudest achievements” in office and that the decision to cut the overseas development budget in 2020 was “a mistake.”
He said he was a “realist” who understood the tight financial situation facing the government at the time, but “the need for investment in developing countries is greater than ever.”
He said that triple economic blows resulting from the pandemic, the war in Ukraine, and “catastrophic climate change” are playing into the hands of Beijing.
He also criticized that more British aid was being spent to house migrants in the U.K. rather than alleviating poverty overseas.
More than a billion British pounds have been stripped from the government’s overseas aid budget to be spent on feeding and housing illegal migrants in the U.K., say critics.
Cameron said that lowering aid spending overseas increased risks at home, and referred to failed states like “Somalia and the problems of piracy, mass migration and terrorism,” he explained.
He believes that alleviating poverty overseas with additional aid will encourage more economic migrants to stay in their home countries as living standards there improve.
In 2022, Whitehall 28.9 percent of the total British development budget was spent on refugees domestically.
Many Conservative members of Parliament agree with Cameron’s views regarding the neglect of the foreign aid program.
Quietly Pushing Back Against Beijing
Last year, officials at Whitehall told The Telegraph about the government’s plan to fight back against Chinese attempts to buy up the Commonwealth by underwriting British-backed deals.Then Foreign Secretary Liz Truss’ foreign development strategy would focus on providing investment and projects in countries where Beijing was providing cheap infrastructure.
The British government has since been attempting to halt Chinese influence and other rivals from spreading their influence in developing markets and allow the U.K. to retake its place on the world stage.
Whitehall has been primarily targeting Commonwealth and former Commonwealth countries in Southeast Asia and the Caribbean, which have become increasingly dependent on Beijing, which has invested $847.37 billion across 42 Commonwealth countries since 2005.
Further work to amend the articles of the African Development Fund to facilitate market borrowing could release an extra $25 billion.
In 2022, the UK’s Export Credit Agency also offered clauses to poorer nations in its loan agreements to suspend repayments if an economic shock hit.
