Interviews | Economy

Global Gateway: The EU Alternative to China’s BRI

Insights from Benjamin Barton.

Global Gateway: The EU Alternative to China’s BRI

President of the European Commission Ursula von der Leyen at the European People’s Party summit, June 24, 2021

Credit: Flickr/ European People’s Party

The Diplomat author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy.  This conversation with Dr. Benjamin Barton, assistant professor in the School of Politics, History and International Relations (PHIR) at the University of Nottingham Malaysia, is the 288th in “The Trans-Pacific View Insight Series.”

Explain Brussel’s strategic calculus behind “Global Gateway” as an alternative to China’s Belt and Road Initiative (BRI).  

The Global Gateway (GG) represents the latest in a string of EU policy actions, strategies and declarations designed to reflect, and produce, a viable alternative to the BRI. It would appear that there is growing apprehension in EU policy circles not only of the extent of the BRI’s roll-out but also of the economic, social, political, and diplomatic side-effects it is garnering, especially in parts of the world where the EU’s strategic interests are non-negligible and long-standing, e.g., the Balkans, North Africa, Sub-Saharan Africa. The effects have got to the point where they now stand as an affront to the EU’s own strategic interest, hence the drive to develop a credible alternative policy avenue to finance the construction of infrastructure in the Global South.

Compare and contrast Global Gateway and BRI in terms of market access, quality standards, and branding.  

The EU will soon release the actual contents of the GG. However, from what can be gleaned from Ursula von der Leyen’s recent State of the Union address as well as from past like-minded EU initiatives, the GG is likely to collide head-on with the BRI especially since the EU seems undeterred in its attempts to link it back to a “values-based approach.”

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The main differences will be noticeable in terms of the way contracts will be tendered, with an emphasis on transparency in the procurement process, and on the type of infrastructure “actors” who will be given preference – i.e., [the GG will be] diametrically opposed to BRI contracts, which overwhelmingly favor Chinese state-owned enterprises (SOEs) and policy banks. More emphasis, I would imagine, will be placed on the financial, environmental, and social sustainability of awarded contracts and projects. The onus would appear to include consideration for individual “dignity and freedom.”

This constitutes a direct shot across the bow to some of the much-decried negative side-effects triggered by the BRI, namely: the footprints of debt, white elephant projects, the insufficient consideration for local employment and technology transfer, the apparently unscrupulous terms of interest repayment, the dubious respect for the findings of environment impact assessments, etc. In some ways, ironically, GG attempts to emulate the BRI by repackaging the EU’s model for funding infrastructure overseas into a revamped framework. Indeed, back in 2013, China’s leadership leaned on the country’s strong overseas presence in the world of infrastructure to devise a united strategic heading under the aegis of the BRI. Through the GG, the EU is attempting once again to breathe life back into its global infrastructure footprint.

How might Global Gateway attract countries already participating in the BRI?

This must be the most contentious aspect of GG and a lot will ride on the EU institutions’ plans for it. Leading proponents in Brussels and in member state capitals do seem to have finally come to terms with the comparative weakness of the EU’s infrastructure financing schemes in relation to the BRI. That weakness is largely connected to the EU’s preference for associating financing with conditionality, whether political or bureaucratic. GG forms part of an attempt by the European Commission to render the EU’s model leaner and better suited to the needs of its partners on the demand-side of the equation.

It will be intriguing to see if Brussels is able to reconcile its inclination for “transparency” with its ability to help meet the demand for infrastructure financing and construction amongst its desired partners. After all, the BRI was met with support by leaders in the Global South precisely because of the alignment, amongst others, of local political interests with those of the Chinese SOEs and policy banks seeking projects. The EU’s wish to “take a values-based approach, offering transparency and good governance to our partners” might sound like music to ears of many in Brussels but [the unpopularity of] this top-down attitude is partly one of the reasons why the BRI has been able to make such headway in the Global South.

Analyze the stakes for Brussels in making Global Gateway a credible and sustainable alternative to China’s BRI.  

When establishing a direct comparison, it’s easy to get the impression that GG will pose little threat to the BRI’s preeminence in the world of infrastructure financing and construction. Indeed, the BRI has almost a decade’s lead, in which time it has firmly implanted itself. The BRI’s attractiveness derives from its adaptability to the local context, the interconnectedness of the model it offers (between authorities, financiers, engineers, and builders) as well as benefiting from a general reputation for efficiency. As we’ve started to see of late, though, the BRI is far from perfect and has been exposed by “rotten apple” projects.

To get up to speed, the GG will need to avoid squaring up to the BRI on its own turf but instead play to the strengths of the EU’s existing infrastructure financing model, albeit tweaking it by revising the incentive structure, i.e. recalibrating the red-tape demands, with the types of projects financed in order to attract the attention of local authorities in partner countries as well as that of the companies/banks needed to help turn political promises into concrete infrastructure projects. As von der Leyen was quoted: “We are good at financing roads. But it does not make sense for Europe to build a perfect road between a Chinese-owned copper mine and a Chinese-owned harbor.” This may be so, but the EU is nonetheless faced with a steep task ahead in successfully rolling out the GG to the detriment of the BRI – a process which will require sustained political will and financing.

Assess how Global Gateway will function alongside the OECD-led “Blue Dot Network” supported principally by the United States, Japan, and Australia.

GG is effectively the EU’s very own version of the “Blue Dot Network.” Their respective values dovetail one another: financing projects which are open and inclusive, transparent, economically viable, financially, environmentally, and socially sustainable, and compliant with international standards, laws, and regulations. There are no surprises here. This is simply the result of a sustained recognition in the West of the need to devise a plan to counter the BRI, which has taken on a multiplicity of forms: policy responses of an individual, such as the EU’s “Connecting Europe and Asia” strategy, or multilateral, e.g., B3W Infrastructure Plan, scope.

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The desire to meet the infrastructure gauntlet thrown by the BRI seems to be there. The challenge, however, will be to devise a rival infrastructure ecosystem which is as much commercially viable as it is politically tolerable, while ensuring coordination to create working synergies across these initiatives to avoid redundancies.