The European Union has revealed details of a $340 billion global investment plan, which was described as a “real alternative” to China’s Belt and Road Initiative, also known as the New Silk Road.
European Commission (EC) President Ursula von der Leyen said the Global Gateway (Global Portal) scheme should become a trustmark.
Under the aforementioned strategy, China has provided funds for railways, highways and ports in various places, but is accused of leaving some countries drowning in debt.
The EC chief noted that countries need “reliable partners” to design projects that are sustainable.
The EU is now looking at how it can get billions of euros from its member countries, financial institutions and the private sector, which would come in the form of guarantees or loans, rather than donations.
A Different Approach
President von der Leyen said that the EU wants to show that a different, democratic approach can be translated into projects focused on tackling climate change as well as global health security and sustainable development projects for developing countries.
The projects have to be of high quality, with a high level of transparency and good governance, and they have to offer tangible results for the countries involved, he explained.
An EU official told the BBC the plan will have a big focus on Africa .
The Chinese strategy, for its part, has also reached Africa, Asia, the Indian-Pacific region and the EU.
The Chinese company Cosco owns two-thirds of the large Greek container port in Piraeus and the China Roads and Bridges Corporation has built a key bridge in Croatia.
The Peljesac Bridge in Croatia was financed by EU taxpayers, but was built by the China Roads and Bridges Corporation.
Global Gateway, a new alternative
“When it comes to investment preferences,” said the EC president, “too many times the options that exist come in small print, which implies large consequences, whether financial, political or even social.”
Andrew Small, senior transatlantic partner at the German Marshall Fund, told the BBC that the initiative marks “the first serious effort on the European side to put together packages and look for financing mechanisms , so that countries that are considering receiving a loan from China have an alternative.”
In a report last month, China’s ambassador to the EU, Zhang Ming, said Beijing welcomed the Global Gateway strategy if it was an open initiative and could “help developing countries.”
But he also warned that “any attempt to turn infrastructure projects into a geopolitical tool would fail the expectations of the international community and affect their own interests.”
The Belt and Road initiative
The Belt and Road initiative has become a centerpiece of China ‘s foreign policy .
And while it has developed commercial links by pouring money into new roads, ports, railways and bridges, it has also been criticized for facilitating “predatory lending” in what has been called ” debt-trap diplomacy .”
There are also others who argue that the picture is more complicated and that receiving large loans rarely comes without risk. And beyond this, China has met a need that others have not.
Either way, the economic and geopolitical impact has grown as tensions with the West rise.
Competition or more options?
The question is whether the EU can really act in this geopolitical space, says Andrew Small.
“Or is it too rigid or too watered down by bureaucratic infighting? If they fail to do this, it would be a huge mistake,” he argued.
One diplomat said: “It’s a good sign that Europe is finally exerting its influence in this area.”
“It is a common interest that we share with our transatlantic friends in the United States and the United Kingdom.”
But a common interest could also create more competition , according to Scott Morris, a senior fellow at the Center for Global Development.
In fact, the US has its own Build Back Better World initiative that it launched at the G7 meeting in June. “It’s a noisy space with a lot of brands bumping into each other,” says Morris.
However, he is “hopeful” about the success of the Global Gateway initiative. He says that “more important” than rivaling China, it is an opportunity for Europe to “reach a financing scale that can benefit developing countries.”
The EU has strongly emphasized its “values-based” and “transparency” approach, arguing that it wants to create linkages and not dependencies.
But this is also an issue of influence, as the EC continues to look for ways to show its strength on the geopolitical stage.