Can the EU’s infrastructure initiative be a better, greener version of China’s belt and road?
South China Morning Post (Hong Kong)
Syed Munir Khasru
May 27, 2023
At the EU Indo-Pacific Ministerial Forum in Stockholm on May 13, the European Union reiterated its commitment to strengthening ties and cooperation with the Indo-Pacific region through its Global Gateway initiative. Europe plans to make strategic investments in infrastructure development in the region, with more than 20 flagship projects set to be launched in 2023 and beyond.
Just six days later, President Xi Jinping hosted the first China-Central Asia summit with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. Since the launch of the Belt and Road Initiative, trade between China and the five Central Asian countries has grown rapidly, reaching US$70.2 billion last year, up 40 per cent year on year.
As the East-West contest to grab a share of global infrastructure investment heats up, some see the Global Gateway as the EU’s response to China’s Belt and Road Initiative. The latter was introduced in 2013 to connect China with Asia, Africa and Europe via sea and land. It is considered a central component of China’s foreign policy to create trade and investment opportunities to foster economic growth with partner nations.
While China’s initiative has been criticised for its lack of transparency, environmental impact and debt-trap diplomacy, the Global Gateway seeks to provide an alternative by emphasising investments in future-focused, environmentally responsible infrastructure. The initiative is based on the tenets of sustainability, openness and observance of human rights. With much of the Western world rethinking its economic reliance on China, the EU is attempting to strengthen its footprint in the Indo-Pacific region. Under European Commission president Ursula von der Leyen’s leadership, the EU is undertaking initiatives to counter China’s growing political and economic clout.
The initiative is raising €300 billion (US$324.2 billion) between 2021 and 2027 for investment in digital, climate and energy, transport, health, education and research connectivity initiatives towards consolidating Europe’s development finance, with a concentration on infrastructure development and connectivity. It is positioning itself with a distinct European flavour based on democratic values, equal partnerships, environmental sustainability, safe and secure infrastructure and integration of the private sector.
Given the relatively late start of the Global Gateway, it is unclear how it will compete with the belt and road, what resources it will have and how it will collaborate with other emerging initiatives. The EU is struggling to convince critics that the scheme can compete with China over the long term. There is a reputational cost for failing to deliver on enormous promises. The EU does not have a good track record of leveraging private finance for initiatives outside Europe, and it is unclear whether member states will back the Global Gateway with public cash. Private-sector engagement is also questionable and will be based on risk-reward calculations that could be difficult to reconcile with existing development cooperation norms.
Furthermore, the potentially divergent objectives of the Global Gateway and development policy goals highlight an obvious contradiction. For example, the obvious inconsistencies between helping authoritarian governments with big infrastructure projects while promoting the value-based nature of the EU’s development policy and democracy-assistance schemes. One major criticism of the belt and road has been the tendency for participating countries to incur substantial debts to finance infrastructure projects that might not be economically viable. It also has been attacked for its lack of transparency and accountability. Numerous projects have been shrouded in secrecy and caused severe ecological damage.
Large-scale infrastructure initiatives require careful planning, transparency and accountability to be economically viable. In addition to exercising caution with large-scale debt financing, it is also important to carefully consider the environmental impact of projects. The Global Gateway aims to address these shortcomings by offering opportunities for inclusive and sustainable development through targeted investments in a variety of sectors. While promising to adhere to European social and environmental standards, it faces challenges in terms of project details and financing. To gain the support of participating countries, it is essential to address these challenges and ensure transparency, clarity and robust implementation. It will be crucial to navigate the current geopolitical complexities to establish partnerships to realise the vision.
Some 40 investment programmes have been given the green light in sub-Saharan Africa, Latin America and the Asia-Pacific as part of the initiative. In Africa, the Global Gateway envisions infrastructure initiatives that can improve connectivity, stimulate trade and raise living standards throughout the continent. It can help strengthen partnerships and cooperation, and lead to tangible benefits, including increased investment, technology transfer, capacity development and enhanced regional integration.
For some, the Global Gateway is a competitor to the belt and road, with an emphasis on investment in environmentally responsible, future-oriented infrastructure. The EU wants the initiative to be unique and independent of China’s efforts, surpassing them through transparency, good governance, democratic values, “links, not dependencies” and sustainable infrastructure. If the EU wishes to achieve strategic sovereignty, it must align its actions with its goals. Nearshoring processes are difficult and costly, necessitating significant funding as well as strong political commitment. If the EU acts swiftly, the Global Gateway offers an ideal opportunity to do so.
As the Group of 7 leaders met in Hiroshima to put up a united front against Russia’s aggression in Ukraine and to counter China’s “economic weaponisation” through debt financing, it seems that the “clash of civilisations” is happening on all fronts.