The European Union wants to mobilize up to €300 billion in infrastructure spending and other projects for the Global Gateway Plan to respond to China’s influential Belt and Road Initiative.
The European Commission’s draft proposals, seen by the Financial Times, suggest that the EU’s ambitions will rely heavily on increased private sector spending as well as public investment, with spending selected from EU member states.
The 300 billion euros, to be invested by 2027, will include resources from the European Union, member states, European financial institutions and national development banks. According to the document, it will also seek to “mobilize private sector financing and expertise and support access to sustainable financing.” The committee will make plans on Wednesday.
Western countries are seeking to enhance their participation in projects in developing countries and to counter the Belt and Road Initiative, under which Beijing has expanded its influence and influence globally.
The Global Gateway project is not explicitly presented as an alternative to the China projects, but the draft stresses that it will provide a “values-based” option and an “ethical approach”.
“By offering a positive choice for global infrastructure development, Global Gateway will invest in international stability and cooperation and demonstrate how democratic values provide certainty, equity, sustainability to partners, and long-term benefits to people around the world,” the draft document says.
The Belt and Road Initiative has become an important strategic tool for Beijing since its launch in 2013, with dozens of countries signing on to China-backed projects such as railways, bridges and ports. These and similar initiatives have raised concerns in European capitals that the EU is far behind when it comes to infrastructure for developing countries.
However, some BRI beneficiary countries have complained that BRI debt terms are onerous and that some projects have defective environmental or construction standards.
The EU program will prioritize investment in digitalization, health, climate, energy and transport as well as education and research.
The draft says the EU plans to increase its budget spending on infrastructure outside the bloc, but plans also hinge on the use of “innovative financial tools to mobilize private capital”, including guarantees to reduce the risk of private sector investment.
About 135 billion euros of investments will be enabled by guarantees from the new European Fund for Sustainable Development Program Plus of the European Union. The Luxembourg-based European Investment Bank will also participate.
Grant funding of up to €18 billion will come from other EU programmes.
According to the project, half of the €300 billion target spending will come from European finance and development institutions.
The EU plan is designed to align with the work endorsed by the Group of Seven (G7) summit held in the UK this year, including US President Joe Biden, to rebuild a better world.