A Globally Connected Europe: The EU’s Answer to the Belt & Road Initiative?

On July 12^th, 2021, the European Council approved conclusions on “A Globally Connected Europe”, highlighting the need for the EU to pursue ”a geostrategic and global approach to connectivity.” Such a large-scale infrastructure plan seeks to develop new links between Europe and the rest of the world which combines regional & economic initiatives developed in recent years such as the Connecting Europe and Asia plan proposed by the EU in 2018 and the Build Back Better World (B3W) launched at the 2021 G7 summit.

The EU has already formed partnerships with both Japan and India on the areas of transportation and energy, with this newly announced strategy going beyond Asian borders in expanding to both Africa and South America. The adoption of such a far-reaching connectivity strategy, has been seen as the EU’s counter to China’s grandiose Belt and Road Initiative (BRI) launched in 2013.

BRI & A Globally Connected Europe

Since the launch of the Belt & Road Imitative in 2013, approximately 2 Trillion Euros has been invested in BRI projects across 138 countries. within the energy, transport, real estate and metals supporting China’s efforts to increase its network across the globe.

The BRI has often been described as an open plan in order to promote inclusive cooperation, therefore with the EU now launching its own infrastructure plan, cooperation opportunities as opposed to unnecessary competition may be sought between Brussels and Beijing in regards to the establishment and coordination of rules for such connectivity schemes and information sharing in order to achieve a predictable international norms and standards

The EU’s History of Connectivity Globally

In reality, the EU has engaged in infrastructure projects across the world for decades and according to data from the European External Action Service, EU development assistance between 2013 and 2018 stood at EUR 414 billion, only slightly lower than EUR 434 billion of Chinese financing for BRI projects within the same period. In order to remedy this misconception regarding the EU’s connectivity work globally, the Council has sought a “unifying narrative” as well as a “recognizable brand name and logo” in order to embellish the proposed scheme and work of the EU with purpose and visibility.

Implementation

The Connectivity plan is set to be launched in 2022, with “high-impact and visible projects” to be identified by the end of the first quarter of next year. (e.g.) deep-sea digital cables, infrastructure connections to Africa and financing renewable energy projects.

In terms of financing, the Council will call for a mix of public financing and private investment, with EU and member-country-level financial instruments, export credits, loans and guarantees, as well as engaging the European Investment Bank and European Bank for Reconstruction and Development.

Conclusions

At this stage, specifications regarding to the budget of such an initiative, incentives for EU private businesses and the means in which they may tap into the financing, will need to be developed further in order for the EU to “go global” on such an expansive project. With “Connecting Europe Globally” the EU hopes that better connectivity globally will result in a diversification of supply chains and a reduction of strategic dependencies (in terms of infrastructure & trade) upon China and the Belt & Road Initiative.

As an investment project alternative to the BRI, “Connecting Europe Globally” offers development banks, first-loss guarantees to private companies and know-how derived from across the European Union and it’s decades of development assistance, while also incorporating more transparency in infrastructure partnerships.

Relations between the EU & China remain in flux, however as recently as July 5th, leaders of France, Germany and China jointly expressed their support for the EU-China Comprehensive Agreement on Investment (CAI) over a formal phone call. As the implementation of Connecting Europe Globally takes shape in the coming months and while several European institutions have taken steps recently in protecting European values in relations with China, a more nuanced and balanced approach is to be expected from both sides as both Brussels and Beijing seek a find unified on a myriad of evolving issues.