Former UK Prime Minister Calls for World Bank Reforms to Counter Beijing

Former UK Prime Minister Calls for World Bank Reforms to Counter Beijing
David Cameron leaves his home ahead of giving evidence to the Commons Treasury Committee on Greensill Capital in London on May 13, 2021. Victoria Jones/PA
Bryan Jung
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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.

He warned that the United Kingdom also risks losing out to communist China unless it steps up foreign aid assistance, Cameron wrote in The Sunday Telegraph on April 15.

“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.

Cameron wrote that MDB reform would provide a definite “counterweight” to Beijing’s growing global influence.

“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 International Monetary Fund logo outside the headquarters building during the IMF/World Bank spring meeting in Washington on April 20, 2018. (Yuri Gripas/Reuters)
The International Monetary Fund logo outside the headquarters building during the IMF/World Bank spring meeting in Washington on April 20, 2018. Yuri Gripas/Reuters

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.

For example, the BII fought off bids by a Chinese-backed rival in 2021 to win a license to provide telecom infrastructure in Ethiopia as part of an international consortium of businesses.

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.”

“It was a promise made to the world’s poorest countries—and one that I made sure we kept,” Cameron told The Telegraph.

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.

Illegal immigrants onboard U.K. Border Force vessel HMC Speedwell after being picked up at sea, as they are brought into the Marina in Dover, southeast England, on Dec. 21, 2021. (Ben Stansall/AFP via Getty Images)
Illegal immigrants onboard U.K. Border Force vessel HMC Speedwell after being picked up at sea, as they are brought into the Marina in Dover, southeast England, on Dec. 21, 2021. Ben Stansall/AFP via Getty Images

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.

“When Labour left office in 2010, Britain was an acknowledged development superpower. When David Cameron was in government . . . we were definitely a development superpower," Andrew Mitchell, the U.K. development minister, told The Telegraph.
“Today, let’s be frank, we are not a development superpower and we need to win that back. It’s impossible to deny that Britain’s reputation during recent years internationally has declined.”

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.

Construction of the Nairobi Expressway, undertaken by the China Road and Bridge Corporation (CRBC) on a public-private partnership (PPP) basis, along Uhuru Highway in Nairobi, Kenya, on Oct. 20, 2021. (Thomas Mukoya/Reuters)
Construction of the Nairobi Expressway, undertaken by the China Road and Bridge Corporation (CRBC) on a public-private partnership (PPP) basis, along Uhuru Highway in Nairobi, Kenya, on Oct. 20, 2021. Thomas Mukoya/Reuters

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.

The African Development Bank agreed in 2022 with Whitehall and the City of London insurance markets to share risk and release an additional $2 billion for climate finance, Mitchell and Njuguna Ndung’u, Kenya’s finance minister, told The Telegraph.

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.

Bryan Jung
Bryan Jung
Author
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.
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