EU’s Global Gateway to counter Chinese BRI

Overtaking China in global power race no mean task

Politics

December 8, 2021

/ By / Brussels

EU’s Global Gateway to counter Chinese BRI

Introducing the Global Gateway, Commission President Ursula von der Leyen emphasised importance partnerships with African countries

After months of pow-wow about China and its rising power and influence around the world, the EU unveiled its own massive infrastructure development programme, Global Gateway. The move is unusually bold for the EU, but it would take much more than announcing a multi-billion financing to curtail Chinese influence at EU’s borders and beyond.

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In search for a transformative moment to re-establish their close allies’ relations, both the European Union and the United States have found China as the common denominator which can help them quickly regain lost charm of trusted allies. Under four years of Trump Presidency, relations between Brussels and Washington were at their lowest ebb since the end of the World War II. But things have changed since the arrival of Joe Biden in the White House and today both the EU and the US realise that without a common approach and definite direction, China poses the greatest threat to their transatlantic interest and their democratic values.

The EU itself has been engaged in a blow hot blow cold kind of relationship with China for the past few years, more so since the Chinese handling of the coronavirus, at least during the early days of the pandemic.

In response to China’s Belt and Road Initiative (BRI), the European Commission on December 1, in Brussels unveiled the new ‘Global Gateway Strategy’ infrastructure programme. The EU is set to invest EUR 300 billion on infrastructure and other projects as part of Global Gateway, a new venture from the 27-country bloc designed to compete with China’s vast and influential Belt and Road Initiative. The strategy is designed to offset China’s USD 1 trillion Belt and Road Initiative, which is reshaping the architecture of global commerce.

Introducing the Global Gateway, Commission President Ursula von der Leyen emphasised importance partnerships with African countries, identifying the February 2022 EU-Africa Summit as the first venue in which the EU will discuss its new connectivity strategy with regional partners.

The EU, for now, will focus on areas in its periphery, mainly Africa and eastern Europe, where it is facing numerous challenges ranging from strategic and geopolitical issues to humanitarian ones like migrants’ crisis that has been haunting Europe for over six years now.

A new era of great-power competition or say reality has begun to unfold. In a time of heightened US-China competition, US President Joe Biden and his G7 counterparts in June agreed to launch Build Back Better World (B3W) — a values-driven, market-led, high-standard, and transparent infrastructure partnership to help narrow the USD 40 trillion infrastructure gap in the developing world by 2035. The B3W initiative aims to mobilise bilateral and multilateral as well as private-sector capital for investment in climate, and health security, modernized digital technology, gender equity, and equality.

After the election of Joe Biden as President of the United States and his administration’s urgent desire to closely work with the EU on global economic and security challenges, the Build Back Better World (B3W) and Global Gateway fits very well in the joint objectives of the two powers. Both initiatives are set to provide an equitable and greener alternative to China’s Belt and Road Initiative for infrastructure development in developing and underdeveloped countries.

China’s Belt and Road Initiative as a geo-economic vision and geopolitical strategy has been closely watched and scrutinised by those countries who now see the China danger at their door. In the Indian perspectives, the BRI can be broadly classified as optimist, the sceptic and the cautionary. India has refused to join BRI or back it because it does not offer a level playing ground to the country’s businesses. It has also opposed BRI because a key component of the initiative, the China-Pakistan Economic Corridor (CPEC), passes through Pakistan-occupied Kashmir (PoK).

EU’s China challenge

China’s expanding influence in Europe has started worrying EU countries and it is satisfying to see that EU has started re-evaluating its policies with respect to the China challenge. This Global Gateway strategy thus takes place in a context of a shift in the attitudes of both the United States and the European Union towards China’s growing economic and geopolitical rise, as well as a broader evolution of Beijing’s own priorities and external strategy.

It is true that while the US has taken a tougher stance in dealing with China’s persistent lack of reciprocity in economic relations and violations of international norms, the EU countries have only recently begun reacting concretely to the economic and security-related considerations linked to certain Chinese investments on their soil. The EU’s official acknowledgment of China as a “systemic rival” in a policy document can be said to be a departure from previously conciliatory language and is an admission that EU’s policy towards China was half-baked and half-conceived.

Chinese investments in strategic sectors in developing countries and struggling economies in particular have led to severe degree of economic dependence of these countries on China. And this influence does not always remain limited to the economic policies of the debtor country. As has been seen in numerous instances around the world, Beijing is quick to jump in on an opportunity and arm-twist the debtor nation to modify its foreign or defence policies and align them to Chinese interests.

This has started affecting EU’s influence in many developing nations across Africa and Asia. Against this backdrop, the Global Gateway Initiative will be helpful in plugging and maintaining economic and security relationship to meet their mutual challenges. In this respect it is not out of place to mention that EU members States cannot get away from their “sins” of the past when they endorsed the BRI without understanding its implications. In the original conception of the BRI, Europe was the final destination of this ambitious project, which represents the largest and most attractive consumer market for Chinese products. Having European countries signing in to the BRI has been a major success in the Chinese domestic political context.

Souring ties

The last two years have been full of challenges in EU-China relations, stemming from tensions over the response to the Covid-19 pandemic, the issue of the Chinese tech giant Huawei and 5G telecom network, and questions over labour rights in Xinjiang, Hong Kong and Taiwan, not to mention issues related to trade, climate policy and so on. The signing of the Comprehensive Agreement on Investment in 2020 was only like a ‘smoothie’ to wash down the bitterness.

In the context of Global Gateway Strategy, it is important to notice what Reinhard Bütikofer MEP, Chair of the European Parliament’s China Delegation and Rapporteur of the Connectivity and EU-Asia relations report, commented. “The European Commission’s Global Gateway Strategy represents a breakthrough and an important step forward for the EU. For too long, internal Commission squabbles had held up this important geostrategic initiative. Now, thankfully, President Ursula von der Leyen has made use of her authority to take this forward,” he said.

As China tries to extend its economic reach it may reciprocally reinforce the spread of authoritarianism. In other words, the BRI is one authoritarian road which was aimed to establish Chinese soft power and increase its global political influence. Under the guise of the BRI, China has channeled hundreds of billions of dollars into foreign infrastructure, boosting trade and clearing the way for it to forge political and economic links around the world, from Latin America to Africa and Central Asia. But a combination of growing disillusionment among partner countries with the resulting projects, growing global demand for more investment, and increased unease about the strategic implications of the BRI have opened the door for alternatives to emerge.

The initial positivity around BRI, as propagated by China, has also been undercut in recent years by questions regarding the commercial value of many of its projects, growing worries over murky lending practices, and concerns over it being a vehicle for Chinese control. Debt and transparency concerns have also shrouded Chinese-funded projects around the world, from Sri Lanka to Pakistan and from Uganda to Kyrgyzstan. In recent years, Sri Lanka has been under international scrutiny due to (refuted) accusations of Chinese ‘debt-trap diplomacy’, the main example being the 99-year lease of Hambantota Port to China Merchants Port Holdings Company (CMPHC). The BRI has been disastrous for Pakistan, which is already heavily dependent upon China for its strategic and military needs and over the past decade, it has also become almost entirely dependent upon Beijing economically.

Like many other countries, the Dragon seems to be attempting to make Pakistan servile to its diktats, too. In China’s debt-trap diplomacy, Pakistan is struggling to repay loans for power projects. Although the China-Pakistan Economic Corridor (CPEC) has deepened the decades-long strategic relationship between the two Asian nations, but this has burdened Pakistan with mountains of debt allowing China to use “debt-trap diplomacy” to gain access to strategic assets.

It is important to state that the US- based AidData reveals that a staggering USD 385 billion of Chinese debt to other countries has been hidden from the World Bank and IMF thanks to the way the loans are structured. The AidData report has claimed that Beijing has made its overseas development finance non-transparent. It says that China systematically underreports its debt to the World Bank’s Debtor Reporting System by lending money to private companies in lower middle-income countries by using special purpose vehicles (SPVs), rather than to state institutions.

BRI and EU-Africa Axis

African continent is the largest recipient of BRI. But Chinese investments across the continent have not brought about a China-style economic boom in any single African country. There are several reasons but one which catches the eye is the lack of transparency and hidden clauses of investment. Therefore, the opportunity for the EU is to provide investment support that can create large-scale, value-added production in Africa. But, to do so, the EU needs to deploy its resources in a coordinated, strategic manner. The key to ensuring that EU becomes Africa’s leading growth partner is to combine the Global Gateway with the European Green Deal, the EU’s USD 1 trillion initiative for tackling climate change at home and abroad. Instead of separating its green agenda from its response to China’s Belt and Road Initiative, the EU should consider combining them into a coherent whole.

The EU can merge the means of the Global Gateway with the European Green Deal to achieve their objectives in synergy with each other. In this way, the EU could establish a new foundation for its partnerships in Africa that enhances African prosperity, security, and sovereignty while promoting rules and business practices that are in line with European priorities and values and also take care of the climate change and sustainability issues.

It took time for the European Union to understand that China had an ambitious, over-conscious and ultra-activist foreign policy agenda in its sleeves which go beyond the general economic and trade issues with the West. While the world has focused most of its attention on his assertive policies in the East China Sea and South China Sea because of rising security tensions in these maritime domains, China has been forging a global network of partnerships and friends for China. This partnership diplomacy is meant to substitute conventional alliance diplomacy in international politics.

Although late, but at long last the EU, the US and other Western governments have understood the danger the China’s growing global role and increasingly hardline policies at home and abroad. India was first to took notice of China’s expanding influence in developing countries and in spite of ‘friendly’ gestures, India refused to be a part of the BRI.

If the EU manages to roll out the programme smoothly and effectively, there is likely to be significant exodus from BRI recipient countries towards the Global Gateway. As BRI has also been plagued with allegations of high corruption and inefficiency of recipient countries, it would be important for EU not to jump ‘blindly’ and start flushing funds on the Global Gateway but assess how, why, where and when the Gateway Initiative can counter China. If Global Gateway Initiative fails to counter China’s influence and fails to make a difference, it shall be the sheer failure of the EU member countries for their naive and nascent policy towards China.

It is not out of context to state that China’s internationalisation is not simply a pursuit of geopolitical influence but also, in some telling, a weapon. Once a country is weighed down by Chinese loans, like a hapless gambler who borrows from the mafia, it is Beijing’s puppet and in danger of losing a limb.

Global Gateway could be a game changer, but this is not enough. If EU is really serious about challenging China’s growing influence and its authoritarian ambition, it first must firm up its trade and economic policies. In order to offer more effective response to the BRI, the EU should embrace the geo-political realities of the countries who are trapped in the BRI bondage, encourage trade with them, create conditions to improve their investment climate and help them to take benefit of the multilateral banks and finance institutions without red tape and provide an attractive alternative as needed.

Global Gateway – A historic opportunity

The worldwide hatred and distrust of China offers the EU an historic opportunity to fundamentally revisit its China policy keeping in mind its long-term strategic interests. It is high time the EU fights the evil and the longer the EU takes to decide how it wants to deal with China, the greater is the risk of confronting it from the position of weakness rather than the position of moral strength that the international community finds itself in since the Chinese role in the spread of the coronavirus has been exposed.

If the EU still thinks of China only as a viable trading and business partner, it is sadly mistaken. It is not a country that values human rights, freedom, or mutual respect among nations. The reality is that China is a rogue state which is at war with the world, and it is time that the EU found the fortitude to deal with the stark reality and not pretend otherwise. China is not an option; it is a liability, it is not a partner, but a threat.

It is no secret that China seeks to undermine the social, economic, and political framework of democratic societies and EU’s alliances in a way that is yet to be fully understood. Resisting Beijing’s attempts to reshape and dominate the world is the challenge of our generation, and it should be taken seriously. If the EU fails to understand how China is engaged in trying to reshape the world order for its strategic advantage, European Union will see its economic and political well-being threatened, and the international order tilting towards authoritarianism and away from democratic ideals and freedoms.

In this background, the India-EU Connectivity Partnership can be a vital component of the EU’s Global Gateway initiative that aims to create ‘links and not dependencies’ through investments in quality infrastructure in order to connect goods, services, institutions, banks, businesses and people across the world.

 

-Sunil Prasad is secretary general of the Europe India Chamber of Commerce and lives in Brussels

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