The World Bank (WB), along with the Group of Seven (G7) countries, has decided to invest US$40 million in developing countries in order to stabilize global supply chains. The WB plans to raise US$100 million within five years, and the Korean government will contribute US$3 million in the early stage. This marked the first time an international organization has mapped out a direct investment and action plan to stabilize global supply chains. Some critics point out that international organizations usually avoid getting involved with political controversy but the IMF and the World Bank have gone too far with the United States to keep China in check.
The World Bank held an event to celebrate the launch of the Resilient and Inclusive Supply-Chain Enhancement (RISE) Partnership at its annual meeting in Marrakech, Morocco, on Oct. 11 (local time). The RISE Partnership is aimed at enhancing the resilience of global supply chains. Previously, only developing countries’ mineral mining was supported, but in the future, the RISE Partnership intends to stabilize and diversify supply chains by supporting subsequent stages such as processing and manufacturing. The RISE Partnership has been accelerated since the G7 summit in May when the participants agreed to provide finance, knowledge, and partnerships to developing countries under the name of RISE. The Korean government joined the program in June at the request of Japan, this year’s G7 chair.
Japan will contribute US$25 million while the Korean government US$3 million as an initial contribution. “A single country’s diversification of supply chains obviously has limitations,” a Korean government official said. “But the utilization of an expert network of the Extractives Global Programmatic Support (EGPS) Multi-Donor Trust Fund at the World Bank can generate significant positive effects.”
However, some experts say that that the launch of the RISE Partnership is a way to hold in check China expanding its influence by investing heavily in infrastructure projects in developing countries in accordance with its Belt and Road Initiative (BRI). While the World Bank did not explicitly call for lowering supply chain dependence on China or Russia, a consensus was formed with respect to supply chain vulnerabilities, they say.
At the G7 summit in May, the participating world leaders issued a statement where they agreed to set up a kind of economic and security council to boost cooperation in supply chains. At the time, Japanese Finance Minister Shunichi Suzuki said in an interview with media outlets, “The G7 countries do not specifically target China, but they believe that many supply chains are overly dependent on China.” The move to diversify supply chains in clean energy sectors such as solar power and batteries was regarded as a way to keep China in check, as it is bound to clash with China’s monopoly on key minerals.
U.S. President Joe Biden addressed a U.N. General Assembly meeting in September and called for a redefinition of the roles of international organizations including the U.N. Security Council and the World Bank. U.S. Treasury Secretary Janet Yellen has strongly demanded international organizations such as the International Monetary Fund (IMF) and the World Bank, which reflect U.S. values of keeping China in check in a global power struggle. “The IMF and the World Bank play an important role against opaque and unsustainable lending by China and other countries,” Yellen said. Yellen’s remarks mean that the IMF and World Bank should hold China in check at a time when China is expanding its presence in developing countries by lending funds to them through the Asian Infrastructure Investment Bank (AIIB). The United States is the largest contributor to the World Bank established after World War II. Every head of the World Bank since its inception has been American, including the newly elected World Bank Group President Ajay Banga, who is an Indian-American.
The problem is that the World Bank is an international organization, which means it has no choice but to think about the political meaning of its actions. Japanese media outlets quoted Japanese Finance Minister Suzuki as saying that the RISE Partnership is a project to work with the World Bank to address concerns about supply chain dependence on China and diversify supply chains.
In response to the report by Japanese media outlets, the World Bank abruptly canceled an interview with a group of Korean journalists just 10 minutes before it was to start. It appears that the World Bank felt burdened about some experts’ interpretations that the launch of the RISE Partnership was a move to keep China in check.
Demetrios Papathanasiou, head of the World Bank’s energy and mining department, was scheduled to give a 30-minute interview to Korean journalists about the launch of the RISE Partnership at 6 p.m. on Oct. 11 (local time). The Korean reporters had been preparing to confirm the expected effects of the launch of the RISE Partnership and the roles of Korea in the partnership through the interview.
The RISE Partnership was launched with the intention of creating added value and preparing new growth opportunities by supporting not only mineral mining in developing countries but the subsequent stages of processing and manufacturing. While the partnership had been led by the World Bank and the Group of Seven (G7) countries, Korea joined it at the suggestion of Japan, which chairs the G7 meeting this year.
Korean Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho also attended a RISE Partnership launch event in Morocco on the occasion of the International Monetary Fund-World Bank Annual Meeting and exchanged opinions about how to diversify supply chains with high ranking officials from major countries such as India and Canada.
The World Bank did not agree on the interpretations that the RISE Partnership aims to keep a tight rein on China. The launch of the RISE Partnership mixes well with international organizations’ role to support developing countries without excluding any, the World Bank says.