President Joe Biden heads to India this week with a rare task for U.S. leaders — courting the developing world.

Biden’s trip to the G-20 meetings in New Delhi marks the most concerted effort by the United States in decades to win the favor of so-called developing nations — more than 70 countries, concentrated in the Southern Hemisphere, with high debt burdens and poverty levels.

Those nations, long neglected by Washington, are critical to Biden’s economic agenda. He’ll need to increase trade with many of them — from Bolivia to Indonesia and the Democratic Republic of the Congo — to secure the raw materials and components needed for his domestic manufacturing renaissance. And he will need their buy-in for his campaign to rewrite the rules of the global economy to encourage fair trade between democracies, and penalize China’s state-led industries.

U.S President Joe Biden (center) and First Lady Jill Biden (right) greet Bolivia’s Minister of External Relations Rogelio Mayta Mayta (left) at the 9th Summit of the Americas in Los Angeles, Calif. on June 8, 2022.

Greg Baker/AFP

The ill will generated by Western trade policies and development institutions is a key reason why China has been able to be so successful in its Belt and Road Initiative. While many Chinese loans came with higher interest and some opaque terms for borrowers, many nations preferred them to the major reforms demanded by Western nations.

“Strategic competition with China is the lens through which this administration sees everything, for good or bad,” said Matt Duss, the former foreign policy adviser to Sen. Bernie Sanders (I-Vt.), now at the Center for International Policy. “They recognize that part of the reason that China has been so effective at making inroads and building relationships with a lot of countries in the Global South is because it has offered an alternative to what is seen as a pretty onerous set of conditions from the IMF and World Bank.”

Now, with the Belt and Road Initiative spanning over 130 nations, even American lawmakers who supported neoliberal policies for decades are wondering if those conditions have backfired.

“If China’s offer is we’re not demanding reforms, just saying here is some money, here’s an investment, and our offer is [that] once we help you improve all these aspects of yourself we’re open to interaction … we will fall farther and farther behind,” Virginia Sen. Tim Kaine, the Democrats’ vice presidential candidate in 2016, said during a heated hearing of the Senate Foreign Relations Committee in July.

The neoliberal policies also had consequences stateside, hollowing manufacturing centers in the U.S., leading to deprivation and populist backlash, while making U.S. supply chains vulnerable to the disruptions of the Covid pandemic and Russia’s war. Biden’s team has been adamant that they want to reverse that dynamic, with figures from Sullivan to trade chief Katherine Tai declaring an end to the “Washington Consensus” on free trade and development, and their intent to develop a “new economic world order.”

Instead of prioritizing free-market reforms in developing nations, Biden’s team is now more interested in them partnering with Western governments and financial institutions on projects that will address climate change and create new supply chains outside of China — or both. The old conditions of neoliberalism — privatization and austerity — are giving way to new conditions under Biden’s new economic order — namely, climate action, pandemic resilience and a turn away from Chinese-style autocracy.

“We’ve had a real turn,” said the senior White House official. “I think the way that the IMF approaches those programs and the way the World Bank approaches those programs are really different from the way that they were in the ’90s.”

Biden’s plan to alter neoliberal development practices can be summed up in one term: de-risking.

In U.S. media, “de-risking” is most often used to describe Biden’s push to move supply chains out of China — thereby reducing the risk of disruptions during a conflict or crisis.

But the term has a broader implication when it comes to development and industrial policy. Here, de-risking means reducing the risks that investments in the developing world pose to private Western financial institutions. While building a road or bridge in a developing nation may present too much risk to get Western banks interested on their own, some outside funding — either from a government, a multilateral development bank, or both — could make the investment look less risky, and prompt them to open their purse strings.

The approach involves “providing some public sector money to bring down the cost and risk of private-sector lending,” said the White House official. “So that’s definitely an element of our strategy, but it’s not the only element.”

De-risking originated as a concept in international development, said Romanian economist Daniela Gabor, a professor at the University of the West of England-Bristol who has written widely on the subject. But it has recently been embraced by Western leaders like Biden and French President Emmanuel Macron, who have framed it as the engine of revitalized industrial policy.

Taken broadly, de-risking is the basic logic behind Biden’s Inflation Reduction Act. By offering generous tax credits for clean energy products — and additional incentives for paying higher wages, using U.S.-made parts, and putting projects in disadvantaged communities — the law seeks to bribe private banks into spending trillions of dollars on clean energy projects.

As Gabor and fellow economist Ndongo Samba Sylla put it, de-risking is the “idea that national governments should play an active role in mobilizing private capital, particularly that of investors in the Global North, toward green projects.”

Some aspects of de-risking — like public-private partnerships — have always characterized Western development aid. But Biden’s team sees a more deliberate role for the state in directing that capital toward its preferred goals — namely, climate adaptation, pandemic prevention and other aspects of the U.N.’s Sustainable Development Goals.

To do that, Biden hopes to overhaul the multilateral development institutions like the World Bank. As the bank’s largest shareholder, the U.S. has an outsized influence in the organization, though it also includes input from Europe and China — which is the third-largest shareholder of the bank.

Reforming multilateral development banks “is really going to be a core part of what we’re talking about at the G-20, a part of our value proposition,” said the senior White House official, “and the aim is to end up making the banks better and bigger and able to more effectively deliver results.”

The U.S. nominated and pushed through a new president for the World Bank, former Mastercard CEO Ajay Banga, who is seen as as more amenable to Biden’s agenda.