Alliance against China G7 countries decide on global infrastructure plan

Status: 13.06.2021 6:38 p.m.

At the initiative of US President Joe Biden, the G7 countries agreed on a billion-dollar infrastructure initiative for the emerging countries. It should be an alternative to China’s “New Silk Road”. From Notker Blechner, tagesschau.de It sounds like a kind of “Marshall Plan” for the poorer countries of the world: At the G7 summit in Carbis Bay, the leading western industrialized countries have an infrastructure project entitled “Build Back Better World” (in German: a better world rebuild) decided. Hundreds of billions of dollars are to be invested by the G7 countries in cooperation with the private sector.

The US is the driving force behind the initiative

The project was promoted by US President Joe Biden. It is reminiscent of the billion dollar infrastructure plan adopted in the USA, which Biden promoted under the slogan “Build Back Better”. The aim is to offer poorer countries “transparent high-quality partnerships”, announced Biden at the end of the summit. The global infrastructure project of the G7 states is supposed to be an alternative to the “New Silk Road” with which China is promoting infrastructure projects from Asia to Europe. The People’s Republic has agreed “Belt and Road” projects with around 100 countries, including the construction of new train routes, ports and roads. According to the business information service Refinitiv, around 2,600 projects with a volume of 3.7 trillion dollars have already been launched. Critics accuse Beijing of driving poor countries into a debt trap and into political dependency. With the “Silk Road”, China is pursuing the goal of expanding its geopolitical influence worldwide. A US official called the new G7 alliance against China’s Silk Road a positive alternative vision that “shows our values, our standards and our way of doing business”. It is not about “the countries have to choose between us and China”.

Transparent alternative to the “New Silk Road”?

Chancellor Angela Merkel gave a less ideological justification for the infrastructure plan of the G7 countries. “We have to deal with the fact that China is running quite successfully infrastructure projects,” she admitted. “We can’t just stand by and watch.” The G7 group must show “that we are an important and successful factor in development work in the world”. She emphasized that the project was “not against something, but for something”, namely the expansion of the infrastructure, especially in Africa. The German economy has been demanding for some time that Europe react to China’s “New Silk Road” with its own infrastructure strategy. “If we want to regain spheres of influence in developing countries, it is not enough to criticize China. We have to make better deals,” said Friedolin Strack, head of the International Markets department in the Federation of German Industries (BDI), to the “Handelsblatt”. German companies usually go away empty-handed when it comes to the Silk Road projects.

Trillions of dollars are needed

According to Biden, there is a global need of 40 trillion dollars for the expansion and modernization of the infrastructure. He didn’t give any details. In a preparatory paper for the G7 summit it was said that 1.5 to 2.7 trillion dollars of additional money would be necessary every year for the developing and emerging countries to achieve the sustainable development goals of the United Nations. In fact, many countries in Africa, Asia and Latin America lack modern roads, train lines, bridges and ports, as well as facilities for water supply, sewage and waste treatment. In the opinion of the G7 group, the World Bank and other international financial institutions have proven to be too clumsy when it comes to infrastructure projects. This is why national development banks in particular, such as the German Reconstruction Loan Corporation (KfW) or the US International Development Finance Corporation, are now to develop and implement projects.

Concrete projects only in 2022

It will take a few more months for the G7 countries’ global infrastructure plan to take shape. The first concrete projects are not expected to appear until next year. The new G7 task force for infrastructure projects in developing countries is to make specific proposals in 2022. “I hope that we can present such projects at the next G7 summit,” said Chancellor Merkel. Germany will take over the G7 presidency in 2022.

Consumption around the EM Will football boost the economy?

Status: 11.06.2021 09:55 a.m.

Normally, major sporting events create a special boom in the economy. At the EM this year it will be a little different. From Notker Blechner, tagesschau.de Actually, the “Euro 2020” should stimulate Europe’s economy, especially tourism. For the first time, the European Football Championship will take place in several countries – so the organizers originally hoped that thousands of fans would travel across Europe, go out to eat, shop and stay in hotels. But because of the corona pandemic, this calculation no longer works. Most cities will have a limited number of viewers. Many fans refrain from traveling and prefer to stay at home in front of the television at home.

Only limited economic stimulus

The direct economic effects on the host countries of the EM are likely to be limited. The travel industry, gastronomy and hotel business are not expecting a large boost from foreign guests. Even in the only German European Championship host city Munich, the expectations are not too high. Especially since there was no special boom for the construction industry in the run-up to the tournament – unlike at previous events. Most of the stadiums have not been specially modernized for the European Championship, as is usually the case with major sporting events. The infrastructure in the host cities was also not extensively renovated. “Since the games are being played all over Europe, there was no need to invest heavily,” explains Gert Wagner from the German Institute for Economic Research (DIW) tagesschau.de .

No million investments in infrastructure and stadiums

It was different at the previous European Championships: For the Euro 2012 in Poland and Ukraine. Ukraine invested eleven percent of their gross domestic product and Poland seven percent in the expansion of the stadiums and infrastructure, as the Berenberg Bank has calculated. However, the hoped-for economic boom did not materialize afterwards – at least in Ukraine. The 2016 European Championships in France were more successful: hosting the tournament in their own country cost a good 200 million euros in public expenditure. This contrasted with 1.2 billion euros in revenue. According to an estimate by the European football association UEFA, half of these came from foreign visitors. Not included in the balance sheet, however, are the costs of 1.6 billion euros for the construction and modernization of the French stadiums. This time, the EM should bring the greatest impetus to domestic consumption. Many Germans are expected to spend more money on new televisions, beer, chips, grilled food and maybe a few fan items in June and July in order to watch the European Championship games in their own four walls or in the garden at home. “Basically, consumer goods companies that do a lot of advertising benefit, sporting goods outfitters, food manufacturers and of course beer brands that do particularly well when the weather is good. When there is a barbecue, more beer is drunk,” says capital market strategist Oliver Roth from banking house Oddo Seydler.

More business with TV sets?

According to a survey by the trade association HDE, 41 percent of electronics retailers expect higher sales. Because experience from past major sports events shows that “before and after the start of the tournament, particularly large TV sets are purchased”, according to the market watchers from Nuremberg-based GfK. Electronics retail chains such as MediaMarkt Saturn are already feeling “an increasing interest in large-format TV sets”. After the end of the corona lockdown, the Germans’ desire to consume is likely to reawaken anyway. During the pandemic, many German citizens had no way of spending their money on travel or expensive restaurant and concert visits.

Brewers increase their capacities

Other industries also believe in an EM effect. Every third grocer is hoping for more income from the European Championship, according to the HDE survey. The brewers in particular have increased their capacities and are hoping for good summer business. However, Corona continues to get in their way. Because public viewings, where the beer flows freely, will probably only take place on a small scale. So far, “our business has only been running with slowed-down foam,” explains Holger Eichele, General Manager of the German Brewers’ Association. The sporting goods manufacturers are traditionally considered to be the greatest beneficiaries of a European Football Championship. Adidas, Nike, Puma & Co have been preparing for months with extensive marketing and advertising campaigns for the sporting event of the year. The further the national team they have equipped goes, the better business with the jerseys is. Adidas and Nike deliver a duel here. The brand with the three stripes has three favorites for the title: Spain, Belgium and Germany. Nike can score with world champion and title contender France as well as with secret favorite England. Adidas also provides the official match ball, the Uniforia.

It depends on the cut

How big the consumption effect is in different countries ultimately depends on how well your own team performs. Should the kickers of the outgoing national coach Jogi Low manage a new edition of the “summer fairy tale” from 2006 or 2014, the consumer mood in Germany is likely to jump even stronger. In the betting offices, however, the Löw team is only considered an outsider this time. In the past, winning a World Cup or European Championship title not only boosted consumption, but also infected the stock markets. The stock market of the respective European or world champions usually developed better than the MSCI World Index after the tournaments. DIW economist Wagner, however, considers the psychological impulse to be the most important: “We will get a demonstration that we have the pandemic largely under control in Europe. That will be an important signal.”

Protection of the world’s oceans Hope for the “Blue Economy”

As of: 06/08/2021 12:59 p.m.

The seas are at risk from climate change, pollution and overfishing. But gradually a rethink is also beginning in the economy – the protection of the oceans is recognized as a business. From Notker Blechner, tagesschau.de Sometimes an accident can lead to a complete change in life. For example with Emily Penn. The architect and passionate sailor had her aha experience on a boat trip from Great Britain to Australia. “One night all the passengers woke up to a loud bang,” she says. “Our ship had rammed a plastic mountain – in the middle of the ocean, away from any civilization.” Since then, Penn has been committed to protecting the oceans, giving lectures, organizing events and doing research expeditions to find solutions to the fight against the plastic flood in the oceans. Penn is known as the “advocate for the seas”.

Shoes, sunglasses and backpacks made from ocean trash

The marine activist is encouraged by increasing business initiatives against plastic waste pollution in the oceans. Several companies and start-ups have developed methods of making new products from marine litter. Adidas offers shoes and jerseys made from recycled “ocean plastic”. Other manufacturers are making new sunglasses, backpacks and skateboards out of marine plastic waste. Even the Dutchman Boyen Slat, founder of the start-up “Ocean Cleanup”, now sells sunglasses with frames made from recycled ocean plastic. “Ocean Cleanup” collects plastic waste on the open sea with ships. The Italian Giulio Bonazzi has managed to make a special fiber – Econyl – from old fishing nets, which is used for tights and bikinis. Bonazzi calculates that every ton of Econyl saves six tons of carbon dioxide.

Marketing gimmick?

Environmentalists warn against being misled. Products made from ocean plastic are often a marketing gimmick and misleading. In some of them there is hardly any plastic waste from the oceans, according to the WWF. Nevertheless: The fight against the mountains of plastic has now begun in business and politics. The G20 states have announced that they will ban plastic waste from the world’s oceans by 2050. It is currently estimated that around 13 million tons of plastic waste end up in the oceans every year.

14 coastal countries are leading the way in marine protection

The pictures of polluted beaches after tankers leaked like now back in Sri Lanka show how important global marine protection is. A total of 14 countries, including Australia, Canada, Japan, Indonesia, Mexico and Norway, have come together in a kind of “Ocean Panel” and have committed to sustainably managing their national waters in the future. “For too long we have made the wrong choice between marine protection and production,” admits Norway’s Prime Minister Erna Solberg, co-head of the Ocean Panel.

Danger to the species: A sea turtle that has become entangled in a drifting net. Image: picture alliance / AP Photo According to a study that was published in the journal “Nature” at the end of March, hundreds of millions of CO2 could be saved through marine protection. So far, not even three percent of the world’s oceans have been strictly protected. The study’s authors see the greatest potential in restricting bottom trawling. This controversial fishing method involves ships pulling a net across the ocean floor. The living beings on the ground are destroyed, plants are uprooted and spawning grounds for fish are destroyed. In addition, the agitation of the seabed releases organic carbon compounds and converts them into climate-damaging CO2.

Great potential for CO2 savings

The Ocean Panel has proposed several measures to promote marine and climate protection: In addition to carbon storage in the seabed, the panel recommends sustainable fishing and aquaculture, the expansion of offshore energy in the sea and ocean-compatible transport. According to calculations, this could reduce carbon dioxide emissions by a fifth, trigger investments of over 15 trillion dollars and create 12 million new jobs. Indeed, there is a gradual rethinking of the maritime economy. The International Maritime Organization has mandated stricter sulfur emissions values ​​in 2020. Instead of using heavy fuel oil, the ships now have to run on marine diesel. The only exception: ships with so-called scrubber exhaust gas cleaning systems are still allowed to use heavy fuel oil. Over 350 container and cruise ships as well as tankers have switched to liquefied natural gas (LNG). LNG contains no sulfur, hardly any nitrogen oxides and 20 percent less CO2. However, the greenhouse gas methane allegedly escapes. “The liquefied natural gas turns out to be a harmful wrong path,” says Nabu in the meantime. Shore power systems have been put into operation in Rostock-Warnemünde and Hamburg so that cruise ships do not need the ship’s diesel for power supply while they are in port.

“Blue Economy” becomes a billion dollar business

Investors such as the DWS fund company from Deutsche Bank have long been interested in the “blue economy”. According to the WWF, the ocean’s annual “gross sea product” is $ 2.5 trillion. This would make the “blue economy” the eighth largest economy in the world. DWS fund manager Paul Buchwitz predicts that the “blue economy” will grow twice as fast as the established economy by 2030. The “blue economy” includes companies that help to reduce marine pollution and curb ocean acidification – as well as those that deal with the sustainable use of marine resources, ecosystems and sustainable fisheries.