EU’s investment to foil rival China’s BRI?

Through a combination of EU funds, member state investments, and capital raised by European investment banks, the scheme has been presented by Brussels as a big step for the EU in building influence around the world. 

“We will support smart investments in quality infrastructure, respecting the highest social and environmental standards, in line with the EU’s democratic values,” European Commission President Ursula von der Leyen said in a statement.

“The Global Gateway Strategy is a template for how Europe can build more resilient connections with the world,” she added. 

Although the EU did not explicitly mention China is presenting the strategy, the investments are aimed at developing regions such as in Southeast Asia, where a majority of big infrastructure investments in recent years have come via China’s vast Belt and Road Initiative (BRI).

To promote sustainable development internationally, the EU said Global Gateway funding will also be “values-based,” with investments tied to issues like transparency and good governance in other parts of the world. 

This is in stark contrast to China’s BRI, which has provided funds with no strings attached to the domestic politics of recipient nations.

However, with the Global Gateway, the EU hopes to build momentum on other initiatives in Southeast Asia. The strategy is “of particular importance in Southeast Asia,” where the EU has been a strong partner for the region, said Igor Driesmans, the EU ambassador to the Association of Southeast Asian Nations (ASEAN) bloc. Driesmans said the Global Gateway will build on a strategy for cooperation with countries in the region, including the 2018 EU-Asia connectivity strategy. 

“This will include strengthening cooperation on climate change and protecting the environment, boosting trade competitiveness and resilient supply chains, on sustainable infrastructure and green finance, digital transformation, as well as people-to-people exchanges,” he added. 

While these commitments look good on paper, big questions remain over how much effect the Global Gateway will have on the ground in Southeast Asia.

The Global Gateway aims to generate euro 300 billion by 2027. However, a significant portion of this comprises existing commitments and mere loan guarantees. According to a recent Oxford economics study, China has already provided around $740 billion worth (euro 653 billion) of BRI projects in Southeast Asia alone. “This is more than the EU has for Global Gateway projects across the entire world,” noted Greg Raymond, a researcher on Southeast Asian strategic affairs at The Australian National University.

Raymond said another problem for the EU’s investment scheme is its values-based approach. Out of 11 Southeast Asia states, only Timor-Leste was classified as “free” in Freedom House’s latest rankings on political freedom. Moreover, Timor-Leste is the only state not part of the ASEAN bloc.

In Transparency International’s latest Corruption Perceptions Index, Cambodia and Laos were ranked near the bottom.

“China is often preferred as a source of infrastructure because Southeast Asian regimes do not want transparency as they are using the Chinese projects as part of patronage politics or lining their own pockets,” Raymond said.