Better late than never, and better something than nothing. That would be a justified, if curmudgeonly, reaction to the Global Gateway, the infrastructure investment plan the EU launched last Wednesday with the unspoken but evident intention to counter China’s Belt and Road Initiative.
The plan fulfils a promise Ursula von der Leyen, European Commission president, made in her September State of the Union address. Her rationale was that “it does not make sense for Europe to build a perfect road between a Chinese-owned copper mine and a Chinese-owned harbour. We have to get smarter when it comes to these kinds of investments.”
Back then I suggested that we should judge the initiative on three things. Was it going to be big enough to rival BRI? Would it limit itself to supporting infrastructure “hardware” or also seek to share the EU’s institutional “software”, the rules and regulations that boost economic integration? Third, the lighter but not unimportant matter of a more inspiring name. (The Marco Polo project? The Magellan network?)
The name stuck. What about the other two tests?
In terms of size, Brussels promises €300bn over seven years. Cynics have called out the financial engineering behind that number, which includes funding “mobilised” from private investors by the EU’s own much smaller stake. The objection is fair, but unimportant if €300bn worth of infrastructure does in fact get built. The problem is not the source but the amount of finance.
That sum would have been a game-changing commitment in the mid-2000s. It would have been adequate as late as 2013, when Chinese president Xi Jinping first announced “the project of the century”. Today, it looks underweight against a BRI funded by more than $100bn yearly before the pandemic.
While it is not fully up to the task, €300bn nevertheless buys you a lot if the whole amount materialises. And each euro will pack a greater punch because the EU is indeed adding its software to its hardware.
The new plans are explicit about this. Infrastructure projects will be designed “to reinforce convergence” with the EU’s data privacy and digital competition rules, and with European standards in transport.
This is as it should be. The EU has no choice but to try to mould its external economic relations in its own image if it wants to outmuscle BRI. And this is what is at stake, though European leaders rarely put it this way.
The mantra in Brussels is “links, not dependencies”. That’s understandable: dependencies are precisely what BRI projects have created in the form of indebtedness or data capture, as Britain’s new spy chief highlights. Indeed the point of Global Gateway is to give countries a “nice” alternative to those traps.
But this is misleading. The EU wants — and should want — to create dependencies. Regulatory convergence does that, as would Global Gateway’s stated aim to “strengthen digital, transport and energy networks”, and offer “supply chain integration”. That is, after all, why Beijing pursues similar aims: to make all economic relationships bend towards China and adapt to its norms.
The EU’s doctrine must be that not all dependencies are equal, and that tying yourself to Europe gives you a better shot at both freedom and prosperity than throwing your lot in with BRI.
As well as the necessary financial heft, two additional things required to make such a doctrine realistic are missing. One is an explicit vision of how the bits fit together. For now Global Gateway looks like a list of unrelated building sites. But what is the shape of the network these projects are intended to constitute — if there is such an intention at all?
If the goal is to build a deeply EU-centric international economy, then saying so would be more honest and make the initiative better co-ordinated.
That would be a good goal. But the other missing piece is a proper articulation of partner countries’ role in such EU-centric networks — a formal model for countries to link into the EU’s market physically, legally, and institutionally. An offer of a deeper tie-in than trade deals provide, yet less comprehensive than full single market membership, would be attractive enough for many countries to turn down infrastructure subsidies from Beijing.
Economic gravity is like the physical kind. For small bodies, it determines their possible orbits. For big ones, it’s the force with which it attracts others. Europe, a large bloc of small and middling countries, is still learning what economic size means.
martin.sandbu@ft.com
Source: Economy - ft.com
