Better late than never, and better than never. That would be a reasonable, if correct, response to Global Gate, EU infrastructure investment plan released last Wednesday with unspoken intentions but clearly opposed to China’s Belt and Road Initiative.
The plan to fulfill a promise Ursula von der Leyen, president of the European Commission, make in her September State of the Union address. Her rationale was that “building a perfect road between a Chinese-owned copper mine and a Chinese-owned port makes no sense for Europe. We have to get smarter when it comes to these types of investments.”
At that time I suggested that we should evaluate the initiative on three things. Will it be big enough to compete with the BRI? Is it limited to supporting the infrastructure “hardware” or also seeking to share the EU institutional “software,” rules and regulations that promote economic integration? Third, the lighter but not unimportant matter of a more inspiring name. (Project Marco Polo? Magellan Network?)
Name stuck. What about the other two tests?
In terms of scale, Brussels promises 300 billion euros over seven years. Skeptics have pointed to the financial engineering behind that number, including funding “raised” from private investors by much smaller shares of the EU itself. The objection is fair, but it doesn’t matter if 300 billion euros worth of infrastructure is in fact built. The problem is not the source but the amount of finance.
That amount would be a game-changing pledge in the mid-2000s. It would be full by the end of 2013, when Chinese president Xi Jinping first announced the “project of the century.” Today, it seems underweight compared to the BRI that was funded by more than $100 billion annually before the pandemic.
While it’s not quite up to the task, 300 billion euros will buy you a lot if the full amount comes to fruition, however. And every euro gets a bigger punch because the EU is really adding software to its hardware.
The new plans are clear on this. Infrastructure projects will be designed “to reinforce convergence” with the EU’s digital competition and data privacy rules as well as with European transport standards.
This is because it should be. The EU has no choice but to try to mold its external economic relations into its own image if it wants to overcome the BRI. And this is what is at stake, although European leaders rarely interpret it this way.
The mantra in Brussels is “link, not dependency”. It’s understandable: dependency is what BRI projects have created in the form of debt or data collection, like Britain’s. Highlights of the new spy director. Indeed, the point of the Global Gateway is to provide countries with a “nice” alternative to those traps.
But this is wrong. The EU wants – and Candlestick want – to create dependencies. Regulatory convergence does just that, as does the Global Gateway’s stated goal of “consolidating digital, transportation and energy networks” while providing “supply chain integration”. After all, that’s why Beijing pursues similar goals: to make all economic relations tilt in China’s favor and accommodate it to its standards.
The EU doctrine should be that not all dependencies are equal, and tying yourself to Europe will give you a better chance of both freedom and prosperity than joining the BRI.
As well as the necessary funding, two things are missing to make such a doctrine a reality. One is a clear vision of how the bits fit together. Currently Global Gateway looks like a list of unrelated construction sites. But what is the shape of the network these projects are intended to form – if so?
If the goal is to build a deeply EU-centric international economy then that would be more honest and make the initiative better coordinated.
That would be a good goal. But the other missing piece is a clear demonstration of the role of partner countries in EU-centric networks – a formal model for countries to physically and legally link into the EU’s market. and institutions. An offer of deeper binding than trade deals, but less comprehensive than single market membership, would be compelling enough for many countries to refuse infrastructure subsidies from North Korea. Terrible.
Economic gravity is like a kind of matter. For small objects, it determines their possible orbits. For the great companies, it is the strength with which it attracts others. Europe, a large bloc of small and medium-sized countries, is still figuring out what economies of scale mean.