The aim of this brief is to explore the challenges and opportunities entailed in the Global Gateway initiative, partly designed as a response to China’s BRI in a geopolitical context. We also offer a series of recommendations in order to enhance the Global Gateway’s development impact, geostrategic potential, innovative capacity and possibilities as a platform for coordination and coherence.
Despite the crises of recent decades, the aid given by donors from the Organisation for Economic Co-operation and Development has kept up a steady rate of growth, surpassing historical records every year, with European Union (EU) aid at EUR 70 billion annually. Added to this are the redoubled efforts of emerging donors, notably China, through its Belt and Road Initiative (BRI) and the recently launched Global Development Initiative (GDI).
In parallel, the global development agenda has shifted from a rather technical and technocratic perspective on development aid, focused on achieving a series of local-level social goals (specified in the Aid Effectiveness Agenda and in the Millennium Development Goals) to another, broader perspective that acknowledges the challenges of development in all their breadth and complexity, expanding their scope to the economic, climate, environmental, political, institutional and security dimensions (all of which are given explicit manifestation in Agenda 2030).
Thus, both traditional and emerging development aid are increasing while the challenges and goals of development are multiplying. The necessity of supplying a development financing agenda that transitions ‘from billions to trillions’ is giving way to the creation and strengthening of mechanisms and instruments that increase public (refundable aid, blending) and private development funding (guarantees, public-private partnerships for sustainable development). Such is the case with the EU Global Gateway initiative, launched in September 2021, aimed at – according to the European Commission – underpinning the role of the EU in the world order by presenting its multiple pre-existing development efforts as part of one common and coordinated strategy, thereby responding to the rise in the worldwide presence of China, especially in sectors related to infrastructure and digital connections.[1]
The aim of this brief is to explore the challenges and opportunities entailed in the Global Gateway initiative, partly designed as a response to China’s BRI in a geopolitical context. We also offer a series of recommendations in order to enhance the Global Gateway’s development impact, geostrategic potential, innovative capacity and possibilities as a platform for coordination and coherence.
Recent developments in China´s development policy
Despite the fact that Global Gateway has been portrayed somehow as a response to the BRI, paradoxically, its launch coincides with a downturn of the latter, both financially (funding levels peaked in 2016 and 2017) and diplomatically (no high-level BRI Forum has been held since its second edition in 2019). With investment commitments over USD 1 trillion, the BRI will remain the largest connectivity initiative, but recent financial flow figures have stabilised around USD 60-70 billion annually, similar to the annual levels of European Official Development Aid. After its initial momentum, the BRI has stalled and it remains to be seen whether the holding of a third forum in autumn 2023, on the occasion of its 10th anniversary, could foster a new impulse. An eventual revival of the BRI would be limited in scale as the appeal for the initiative both outside and inside China has waned.
Countries that have signed memoranda of understanding on the BRI have been disappointed with it. Some lament the lack of projects while others face debt problems. It has also become apparent that the lack of adequate normative and good governance standards has generated serious implementation problems for a significant share of projects – 35% by 2020 – related to public protests, corruption scandals, labor law violations or environmental issues. In addition, many projects have generated dubious economic returns for China and Chinese authorities have become less inclined to finance large infrastructure projects and more cautious in managing the economic and reputational risks arising from project failures. Before the COVID-19 pandemic, data from the American Enterprise Institute indicated that the BRI had accumulated USD 100 billion in stranded assets. This is compounded by a 60% exposure to countries facing debt crises in its international credit portfolio in 2022, along with the issuance of more than USD 200 billion in bailouts since 2016. This has prompted the publication of a plethora of official strategies aimed at making the BRI a more sustainable initiative with higher-quality projects. In addition, Chinese authorities consider that the international context experiences increasing geopolitical risk, which makes it less conducive to investments in large infrastructure projects and requires prioritising greater industrial and technological autonomy for China.
The case of the Bi-oceanic Corridor in South America is a clear example of the reduced level of ambition of Chinese-funded infrastructure projects. This pharaonic project is now conceived from a more modest perspective, focusing on the gradual development of infrastructure at the national level where possible, and postponing intraregional connectivity to a time when favorable political conditions will be in place. The South American case demonstrates the limits of a top-down approach based on agreements with central governments at the time of implementing projects, given the difficulty of bringing all stakeholders into agreement, from subnational governments to local communities. Consequently, the emphasis of the BRI has shifted from more traditional large infrastructure projects to smaller ones or projects linked to the digital and green transition; and from loans to investments.
At the same time, China has launched the Global Development Initiative (GDI) in September 2021 to strengthen its profile as a donor of development aid. Although it has yet to materialise, this new initiative is already supported by more than 60 countries within the Group of Friends of the GDI at the United Nations. The GDI is much closer than the BRI to the ‘traditional’ approach to development cooperation. Financially, the GDI is funded through the China International Development Cooperation Agency and Chinese contributions to international programs and initiatives. Thematically, its eight priority areas of cooperation are: poverty alleviation, food security, COVID-19 response and vaccine, development financing, climate change and green development, industrialization, and digital economy and connectivity. The GDI is another example of the EU’s so-called systemic rivalry with China, as it legitimises a development model decoupled from governance considerations and civil and political rights.
Challenges and opportunities of Global Gateway
Development impact
The initiative comes with a series of opportunities. Firstly, the integration of development cooperation into the rest of the EU’s activities may amplify the attention paid to development and, if it manages to mobilise the additional (private) financing being hoped for, its resources too. Secondly, the focus on connectivity could have ramifications on economic growth, resilience and supply chain efficiency, which would contribute to the attainment of various Sustainable Development Goals. In that line, Global Gateway could be meeting needs not being covered by other instruments. Moreover, it could facilitate the export of European values and priorities, the green agenda being a case in point.
In contrast to all the above, concerning the combination of development instruments with broader political objectives, while it reflects in part the complexity of the current international situation and its trends, it also raises concerns about a possible diversion of attention and development resources towards geopolitical interests and goals that are more aligned with the private sector’s economic and commercial ambitions than with European development priorities and values. As well as infringing the partners’ democratic ownership by not involving them in setting priorities, the vague mandate of the Global Gateway could lead to the further instrumentalisation of European development cooperation.
Geostrategic potential
Global Gateway, particularly at first by means of its flagship projects, can boost the EU’s visibility as a partner and ally for developing countries, as well as the value of its external action. It could thus constitute an engine for the EU’s foreign policy and its private sector, something that would enable it to export its values and interests, including among the latter those related to security, access to raw materials markets, the export of its industrial policy and its positioning in the global infrastructure and connectivity race. It could also be argued that the initiative entails an opportunity to secure closer cooperation with other global actors, such as the United States (US), and thereby contribute to maintaining the world order, currently shaken by the Russian aggression in Ukraine.
However, there is a lack of clarity and definition in the way the initiative is communicated by the European Commission, and this affects various aspects such as its exact goals and priorities (given, particularly, the lack of additional funding); the terms of its co-existence with pre-existing instruments (Global Europe: Neighbourhood, Development and International Cooperation Instrument, European Fund for Sustainable Development Plus, Team Europe Initiatives); or why, if, how and to what end it is proposed to rival China.
Innovative financing
There are reasons for thinking that the strategy’s financing goals, while ambitious, are also feasible: past experiences in which the EU has managed to involve development banks and private financing institutions in mobilising resources; the existence of part of the funds in the Global Europe-NDICI instrument, yet to be assigned; or the additional funds that each member state and the private sector can mobilise.
Despite these opportunities, one of the main concerns about Global Gateway is its doubtful capacity to mobilise and incentivise the promised funds given that it needs to attract a myriad of institutions (development finance institutions, national export credit agencies, private companies, for instance) with different times, processes and even mandates (oriented towards commercial profit or development).
Coherence and coordination
Global Gateway, appropriately executed and with a Team Europe approach, could become the pioneering driver of coherence throughout Europe’s external action, and between the latter and its internal action. It could represent the chance to overturn the fragmentations, inefficiencies, gulfs and overlaps between the various member states’ cooperation (and financing) programmes and the Commission, exploiting the comparative advantages of each and thereby enhancing the visibility and the impact on development of European cooperation throughout the world.
This level of coordination requires two major challenges to be overcome, however: a common set of strategic objectives actively owned by the 27 member states and aligning practices and processes of all actors involved (various ministers in the member states, diverse levels and departments within the Commission itself, the rest of the European institutions, partner governments and civil society and the private sector in both the North and the South).
Conclusions and recommendations
An improved governance
It would thus be advisable (1) to establish transparent processes for coordination between all the stakeholders, elucidating the exact role of the various actors; (2) holding the Global Gateway board meetings on a more frequent basis; (3) addressing the lack of an intermediate level in its management, between the board and the implementation level; and (4) defining the Global Gateway’s complementarity with other EU tools (such as Team Europe) as well as with similar initiatives of other donors (the US, Japan or China).
For a greater development impact
Ensuring the alignment of private participation and interests, of vital importance given the experience and technological potential they bring, with the sustainable development goals would enable the EU to be viewed more clearly as an all-round donor, one that addresses development processes in all their political, social, economic and environmental complexity.
In addition, assessing the development impact of Global Gateway requires facilitating the participation of companies from the Global South and, also, establishing clear monitoring and evaluation mechanisms and procedures.
More ownership
There is a certain perception that the initiative is unilateral, belonging to the European Commission. This could be addressed with additional rounds of contacts in European capitals, or by formalising a process that involves the member states to a greater extent in the strategic definition and setting of Global Gateway projects.
The links with Latin American, Asian and African capitals, private companies and civil society organisations could also be strengthened and formalised so that partner countries’ needs and priorities are better incorporated.
And better communication
Communication efforts therefore need to be put into clarifying (1) what the methodology for monitoring the impact on development and the projects’ additionality will be; (2) how ownership among partners and member states will be promoted; (3) the manner in which priorities will be identified; (4) how the sources of funding will be ensured, including the manner, the rationale and the timing with which the private sector is expected to participate; (5) the strategy’s operational criteria; and (6) its alignment with other tools, and with the sustainable development goals. Lastly, (7) it would also be advisable to modify the message from an emphasis on competition to an emphasis on cooperation. In this context, putting the Global Gateway forward as a response to China’s BRI could cause it to suffer a lack of credibility and above all emphasise confrontation with China rather than collaboration with its African, Asian and Latin American partners.
[1] This brief is based on Olivié, Iliana & María Santillán O’Shea (cords) (2023). “Development aid and geopolitics: the EU’s Global Gateway initiative”, Policy Paper, Elcano Royal Institute, August. This larger study incorporates the full list of references consulted for elaborating this analysis.
