The EU Sets Out to Challenge China’s Belt and Road Initiative

The EU’s Global Gateway scheme means to upstage Beijing’s efforts in emerging economies
February 2, 2022 Updated: February 2, 2022

News Analysis

Just as Beijing’s Belt and Road Initiative (BRI) has begun to run into rough sledding in Africa, the European Union (EU) has launched its own initiative.

Brussels’ so-called Global Gateway scheme would, like China’s BRI, offer developing economies financing for infrastructure projects and help with realizing them. According to the announcement from European Commission President Ursula von der Leyen on Dec. 1, 2021, the program would have an initial funding of  300 billion euros (about $340 billion). It clearly aims at offering competition for the BRI and could have favorable effects even if the European scheme is less successful than Brussels hopes.

Much like the BRI, Europe’s Global Gateway would offer few, if any, grants. Mostly it would work through loans and guarantees. Unlike the BRI, which focuses on basic infrastructure, such as roads, bridges, rail links, ports, and the like, the EU’s Gateway scheme would focus on climate change, health, and sustainable development. The EU has also indicated that its efforts would focus chiefly on Africa. Although the BRI does a lot in Africa, it has more of a global reach, with its biggest projects in Southeast Asia, Indonesia in particular, and Central Asia, Pakistan, and Kazakhstan in particular.

The Europeans have made no secret of their intent to offer China competition. On one level, it is purely a question of influence. The BRI has greatly increased Beijing’s diplomatic and economic footprint, including even in Europe. China’s Cosco company, for instance, owns two-thirds of the huge Greek container port in Piraeus, while China’s Road and Bridge Corporation has built a key bridge in Croatia. Since both Greece and Croatia are EU members, Brussels no doubt feels threatened. But beyond that, Brussels wants the global stature that China has acquired through the BRI.

Epoch Times Photo
A view of old warehouses in the port of Piraeus, which will be transformed into 5-star hotels, on Oct. 18, 2018. Chinese shipping giant Cosco said it has ambitious plans for the Greek port of Piraeus, including a boost on the already-bustling container and car piers and expansion of five-star hotels. (Louisa Gouliamaki/AFP via Getty Images)

Beyond profile raising, the Europeans clearly want gain at the expense of the BRI’s less savory associations. China’s program has increasingly been accused of making “predatory loans” and seducing poor economies with “debt-trap diplomacy.” These accusations are not entirely undeserved.

Through the BRI, China identifies attractive infrastructure projects for less developed economies and lends them the money for financing. The terms of the loan insist the Chinese companies, usually state-owned enterprises (SOEs), do the construction, and the operation once the project is done. So the recipient country bears the financial obligation, but the bulk of the gains go to Chinese lenders and contractors. That seems pretty predatory. If this were not enough, the arrangements usually allow China to take ownership should the recipient country default. Already, there are suggestions that some African participants in the BRI are close to default.

The Europeans have presented their Global Gateway as something entirely different. Von der Leyen described Europe’s desire to become a “trusted partner” that creates “links and not dependencies.” It is not entirely clear whether Europe’s promise to pursue “sustainable” projects refers to environmental or financial matters, but if the latter, it is a direct contrast to the “debt-trap diplomacy” of which China has been accused.

In blunt language, especially in the world of diplomacy, von der Leyen referenced how the alternative to Europe’s scheme (clearly the BRI) too often carries “a lot of small print which includes big consequences, be it financially, politically, but also socially.” Now, she asserted, “countries considering loans from China have an alternative option.”

Beijing immediately showed that it is well aware of the EU’s intent. China’s ambassador to the EU, Zhang Ming, officially “welcomed” the Global Gateway scheme, expressing hope that it would “help developing countries.” But, at the same time, he issued a warning, saying “any attempt to turn infrastructure projects into a geopolitical tool would fail the expectations of the international community and harm one’s own interest.”

Since the BRI is using infrastructure projects in just this way, Zhang’s comments clearly express Beijing’s distaste for competition in the game.

Though the EU’s scheme might take advantage of the less than attractive aspects of the BRI, it is not apparent that the Global Gateway will offer China as much competition as Europe expects it will. Andrew Small, senior transatlantic fellow at the German Marshall Fund, warns how Europe’s tendency to get bogged down in bureaucratic infighting could make the Gateway scheme much less responsive to the needs of developing economies than the Chinese are, or at least seem to be at the start of their projects. There is already a hint of the kind of problem, Small referenced.

Von der Leyen’s emphasis on climate change, health, and sustainability (especially if it is of the environmental sort) suggests that Europe is more focused on the concerns of fully developed economies than on those of less developed economies, which tend to run toward the roads, bridges, rail links, and ports that the BRI emphasizes.

Even if the EU’s Global Gateway scheme fails to offer China’s BRI as much competition as the Europeans expect, it could nonetheless have beneficial effects. Any competition, even if limited, should discipline Beijing’s dealings within the BRI and make the arrangements less predatory than they would be otherwise and have been to date.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Milton Ezrati is a contributing editor at The National Interest, an affiliate of the Center for the Study of Human Capital at the University at Buffalo (SUNY), and chief economist for Vested, a New York-based communications firm. Before joining Vested, he served as chief market strategist and economist for Lord, Abbett & Co. He also writes frequently for City Journal and blogs regularly for Forbes. His latest book is "Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live."