GS-2: Effect of policies and politics of developed and developing countries on India’s interests.
Europe’s Global Gateway
Context: Recently, European Commission launched the Global Gateway initiative
What is Global Gateway initiative of EU?
It is a new European Strategy to boost smart, clean and secure links in digital, energy and transport and strengthen health, education and research systems across the world.
It is essentially an umbrella strategy to synchronize already existing EU and member states global infrastructure investment programs.
Global Gateway aims to mobilize 300 billion euros (around $337 billion) over a five-year period to invest in digital and transport infrastructure, energy generation and transmission, and health projects.
In addition to smaller EU grants, Global Gateway taps into national and EU resources from financial institutions and development banks, in the hope that institutional spending will unlock significant private capital, too.
Merits of Global Gateway
Challenger to China’s BRI: Observers and officials were quick to frame the GG as a European challenge to China’s BRI — itself launched in 2013 to fund infrastructure development projects mostly in developing and middle-income countries in Asia and around the globe.
Strengthen EU ties with world: EU investments have made tangible differences on the ground in much of the developing world as well as in middle-income countries. This strengthens ties with Asia, Africa, and, importantly, the Western Balkan region, and it raises environmental, democracy, and human rights standards.
The European model is about investing in both hard and soft infrastructure, in sustainable investments in digital, climate and energy, transport, health, education and research, as well as in an enabling environment guaranteeing a level playing field.
Value Driven Model: The EU will offer not only solid financial conditions for partners, bringing grants, favourable loans, and budgetary guarantees to improve debt sustainability – but also promote the highest environmental, social and strategic management standards
Complements US initiative: This is Europe’s contribution to narrowing the global investment gap. Also, Global Gateway and the US initiative Build Back Better World will mutually reinforce each other.
Criticisms/challenges of Global Gateway
Repacking of Existing Projects: Global Gateway is mostly repackaging existing programs (InvestEU, our research programme, Horizon Europe and the Connecting Europe Facility) and also that the investment sum remains a fraction of what China is mobilizing.
Geopolitical Influence: Overseas infrastructure investments are always partly geopolitical, seeking to increase the investing country’s own influence while trying to minimize space for others. The EU is no different and naturally seeks to advance its interests and competitiveness.
China factor is exaggerated: Not China but Japan is the largest infrastructure investor, silently and seamlessly implementing affordable good quality projects, especially in Southeast Asia.
Value Driven Agenda of EU: While Europe meets high standards and enjoys great credibility and reputation, the assumption that China does not is flawed. Many middle- and low-income countries are demanding China’s investment that doesn’t come with value-driven agendas unlike that of Western investment which is invariably attached to Democracy & Human rights.
China adapting to criticisms: BRI is now approaching a decade of experience, and China, though relatively new to global investment projects, has learned important lessons from the first phase of BRI (2013-2017). Beijing is also increasingly showing greater empathy for the local economy and sensitivities, and the BRI is moving into new areas of sustainable growth and health where there is great demand.
Scope for complementary multi-source investment: Asian Development Bank estimates Asia’s needs to be $26 trillion through 2030. In other words, even if China were to double the BRI’s investment volume, would still be room for 10 Global Gateways.
Challenges in mobilising Private Capital: While the BRI mobilizes state-owned commercial and policy banks, it is unclear whether the EU will indeed be able to tap into private capital. Infrastructure projects are costly and yield uncertain returns.
Conclusion
Not everything needs to be seen through the lens of binary competition, and not everything Beijing does is ipso facto bad simply because Beijing does it.
Global Gateway is an excellent and meaningful strategy. But instead of trying to outcompete China and lamenting low standards, the EU could make a difference by setting examples, gradually raising the bar for all.
Europe should find ways to coordinate and synergize various national and supra-national projects and share best practices and information. It can also prioritize areas less penetrated by the BRI, especially India and Eastern Europe.
