EU bid to catch up with China comes too late ‘uphill struggle’

Ursula von der Leyen 'concerned' over Polish court ruling

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In a bid to outcompete Beijing, Ursula von der Leyen is set to reveal the European Union’s own worldwide infrastructure project, dubbed Global Gateway, today. The plan seeks to mobilize up to €300 billion in public and private funds by 2027 to finance EU transport, health, digital and energy projects overseas.

Politico, which has seen a draft of the plans, reports that while no mention is made of Chinese President Xi Jinping’s Belt and Road infrastructure project, the document makes clear Global Gateway is seen as a democratic alternative.

The plan states that the scheme “aims to forge links and not create dependencies” as democracies “must have the ambition needed to help improve people’s lives around the world”.

German Ambassador to the EU Michael Clauss said: “Global Gateway has the potential to turn the EU into a more effective geopolitical player.

“For many partner countries, the offer of rules and values-based cooperation at eye level will be an attractive alternative to the Chinese Belt and Road initiative.”

The document argues that projects financed with the bloc’s money will aim to promote EU best practices and values, including fair competition as well as secure and free access to the internet, which it says will help promote free societies.

But the scheme has been described as “a long shot as far as games of catch up go” with the EU facing an “uphill struggle” to compete with China’s trillion-dollar Belt and Road project which finances infrastructure projects across the developing world and began in 2013.

Think tank Chatham house describes this as an effort by the People’s Republic to develop an interdependent market, to grow China’s economic and political might and to create the conditions needed for the country to build a high tech economy.

It notes China’s motives as being to secure its own trade routes, find alternative markets for its state-owned companies and stimulate parts of the county which lag behind richer coastal areas.

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In another draft document seen by Bloomberg, Ms von der Leyen says the EU will “support smart investments in quality infrastructure” and described the strategy as “a template for how Europe can build more resilient connections with the world”.

The EU’s draft plan adds: “Without proper transparency, good governance and high standards projects can be badly chosen or designed, left incomplete or be used to fuel corruption.”

But one EU official told Politico: “It’s nothing more than a letter of intent, a political statement. It sends a strong message to China by emphasizing democracy and values, but more needs to be done to actually implement them.”

However, Beijing’s scheme is not without critics, who argue it creates debt dependency in countries and many projects fall short in terms of sustainability.

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British MI6 chief, Richard Moore, has warned that Belt and Road creates “data traps” by gathering critical data from around the world.

In June, US President Joe Biden and the G7 agreed to launch Build Back Better World (B3W) which the White House describes as a “values-driven, high-standard and transparent” partnership aimed at narrowing a $40 trillion infrastructure gap in the developing world.

Belt and Road is already well underway with 13,000 projects across 65 countries, including Greece where the port of Piraeus, Europe’s seventh biggest harbour, is majority-owned by the Chinese shipping firm Cosco.

Under China’s scheme, railroads will connect China with Europe, Russia, the Middle East and Central and Southeast Asia. Maritime routes and multiple ports will be improved or built along the South China Sea, Indian Ocean and South Pacific.

Morgan Stanley estimates that China could invest $1.2 trillion to $1.3 trillion by 2027.

This dwarfs the EU’s headline figure of €300 billion which breaks down into €135bn worth of investment from the European Funds of Sustainable Development Plus; €145bn from “planned investment volumes by European financial and development finance institutions” as well as €18bn from other EU external assistance programmes.

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