International Relations
Global Gateway Plan: EU
- 02 Dec 2021
- 5 min read
Why in News
Recently, the European Commission has announced a plan, called Global Gateway, to mobilise EURO 300 billion by 2027 in public and private infrastructure investment around the world.
- Although the plan doesn’t mention China, it is seen as a response to China’s Belt and Road strategy.
Key Points
- About Global Gateway Plan:
- Developmental Dimensions: With Global Gateway, the EU, in a Team Europe approach, will offer its partners a response to the urgent needs:
- To develop sustainable and high quality digital, climate and energy and transport infrastructures.
- Strengthen health, education and research systems across the world.
- Funding: To finance the project, the EU will use its European Fund for Sustainable Development Plus.
- Under this, 40 billion euros are made available in guarantee capacity, and will offer grants of up to 18 billion euros from external assistance programs.
- The plan will need funding from international institutions and from the private sector if it is to get anywhere near its target.
- The financing will be done under fair and favorable terms in order to limit the risk of debt distress.
- Offshoot of B3W Project: The EU strategy is an offshoot of the Build Back Better World (B3W) Initiative.
- B3W is an international infrastructure investment initiative announced by the Group of Seven (G-7) richest democracies in June 2021.
- Developmental Dimensions: With Global Gateway, the EU, in a Team Europe approach, will offer its partners a response to the urgent needs:
- About China’s Belt And Road Initiative:
- About: The BRI project was launched in 2013, it broadly aims to facilitate cross-border transportation of goods, access to energy, creating demand for existing excess capacity in Chinese industries.
- Officially, it aims to develop land and sea infrastructure to better connect China to Asia, Europe and Africa for trade and development, and it has found many partners around the world.
- China had an overall exposure of investment of around USD 750 billion between 2013 to mid-2020.
- China argues that it respects its partners’ sovereignty while providing loans that benefit joint projects, while critics say Beijing’s contractual terms ignore abuses of human, labour and environmental rights.
- BRI’s Criticism: BRI project has been heavily criticized by the western world for the following reasons:
- China’s Debt Trap Policy: BRI is being seen as a part of China’s debt trap policy, wherein China intentionally extends excessive credit to another country with the intention of extracting economic or political concessions from the debtor country.
- The western countries see it as a tool for China to influence poorer countries.
- They criticise China for inciting emerging economies to take on too much debt, and allege the secretive tender process is prone to corruption.
- New Colonialism: They have attacked the initiative as new colonialism, or the Marshall Plan for the 21st century.
- Dual Nature of Product: Also, projects like China-Pakistan Economic Corridor (CPEC), building of Colombo Port City Project in Sri Lanka are not only commercial in nature but have strategic implications too.
- China’s Debt Trap Policy: BRI is being seen as a part of China’s debt trap policy, wherein China intentionally extends excessive credit to another country with the intention of extracting economic or political concessions from the debtor country.
- India’s Stand:
- India has repeatedly said it will not join BRI because it’s key component – the China-Pakistan Economic Corridor (CPEC) – passes through PoK, which is disputed territory between India and Pakistan.
- Further, in order to counter China’s aggressiveness, India has initiated Act East Policy, SAGAR vision and is part of multilateral projects like Asia-Africa Growth Corridor (AAGC),and “Free and Open Indo Pacific” initiative.
- About: The BRI project was launched in 2013, it broadly aims to facilitate cross-border transportation of goods, access to energy, creating demand for existing excess capacity in Chinese industries.