EU's £250billion bid to tackle China
Europe has announced a £250 billion investment in infrastructure around the world to tackle ‘s rising influence globally through its Belt and Road strategy.
EU Commission President Ursula von der Leyen told a news conference: ‘Indeed, countries …need better and different offers (to China’s initiative).’
The bloc wants to invest in next-generation infrastructure including fibre optic cables, 5G networks and green energy plants to strengthen ties with poorer countries.
Brussels says the ‘Global Gateway’ can offer transparent contracts, rigorous construction standards and eco-friendly projects that cannot.
The plan comes no less than eight years after China started expanding its influence around the world at break-neck speed, throwing up bridges, motorways and telecom networks in Africa, Latin America and Asia.
Critics say Beijing’s strategy makes developing countries debt dependent through murky loans offered for projects which are completed to dubious engineering standards.
But perhaps more dangerous are the ‘data traps’ which the boss of MI6, Richard Moore, has said countries risk falling into if they allow the Chinese Communist Party to hold the keys to their 5G networks.
EU Commission President Ursula von der Leyen rings the bell at the beginning of the College of Commissioners in Brussels, Belgium on Wednesday (left) and Chinese President Xi Jinping speaks in Beijing on Monday (right)
MONTENEGRO: Part of a new highway meant to connect the city of Bar on Montenegro’s Adriatic coast to landlocked neighbour Serbia, (Bar-Boljare highway) on May 11, 2021, near Matesevo, which is being constructed by China Road and Bridge Corporation (CRBC), the large state-owned Chinese company
PAKISTAN: A massive construction site near Gwadar Port, operated by China Overseas Ports Holding Co., in Gwadar, Balochistan, Pakistan
Moore told Radio 4 this week that Beijing is ‘trying to use influence through its economic policies to try and sometimes, I think, get people on the hook.’
‘If you allow another country to gain access to really critical data about your society, over time that will erode your sovereignty, you no longer have control over that data,’ Moore said.
The EU Commission has said its Global Gateway strategy will start investing in 2027.
A statement today touted the bloc’s financial repute, democratic values and green credentials, as opposed to the infrastructure projects offered by China.
‘The EU will offer its financing under fair and favourable terms in order to limit the risk of debt distress,’ the Commission said.
‘It will focus on physical infrastructuresuch as fibre optic cables, clean transport corridors, clean power transmission lines — to strengthen digital, transport and energy networks.’
Digs at Beijing aside, the EU needs to get its project into gear quickly if it has any hopes of catching up with China.
The first issue could be the £250 billion euros it has pledged which is dwarfed by China’s own Belt and 코인카지노 Road spending, which could rise to £975 billion by 2027, according to Morgan Stanley.
A further advantage for Beijing is that it bankrolls the initiative through its own state-owned banks, whereas the EU will have to rely on cobbling together the funds from private financial institutions.
This will involve convincing the banks that spending money for the political benefit of Europe is a worthwhile investment.
The EU will also want to sign agreements based on fair play and transparency — requirements which drove many poorer countries into the no-strings-attached financing offered by China to begin with.
Since 2005, China’s three largest state investment banks have loaned some $140 billion to countries in Latin American to pay for everything from nuclear power stations to dams, roads to railways, ports and phone networks.
In 2018, President Xi announced the creation of a $60 billion pot of Chinese money specially ear-marked for development projects in Africa.
China’s state banks have loaned some $140billion to Latin American and Caribbean countries since 2005, which is thought to be just a fraction of the money that has flowed to the region when private deals are taken into account.Beijing is also involved in major infrastructure and energy projects in most countries, including transport networks and power stations
In 2000, most countries in Latin America shared more trade with the US than they did with China (left).But by 2019, more than half — including three of the region’s four largest economies in Brazil, Argentina and Colombia had flipped red (right)
China has lent billions of dollars to African nations (shaded red showing which countries have accepted cash, with darker colours indicating higher levels of debt) while building ports, power stations, railways and roads.Beijing has also built a military base in Djibouti (right), but is planning more — with ‘likely sites’ in Angola, Kenya, Tanzania, and the Seychelles (blue pentagons). But is is the possibility of a new naval base on the west coast (shaded blue) that has caused fresh alarm in the US
China has pumped at least $7billion in investment into the Caribbean since 2005, records show, though the true figure — when taking into account soft loan deals and private investment — is thought to run well into the tens of billions.Showpiece projects have included a cricket stadium in Grenada, a casino and resort in the Bahamas, and acquiring Jamaica’s largest port
And in America’s backyard, Beijing has invested at least $7 billion in six Caribbean nations since 2005 — with roads, ports and the five-star Baha Mar casino and resort in the Bahamas — though the true figure is thought to run well into the tens of billions.
All of which gives China leverage that it uses to get its own way on the international stage, from winning votes at the UN to isolating its enemies — most notably Taiwan, as Beijing often requires countries to cut diplomatic ties with the island before it will hand over money.
Europe’s efforts to challenge the Belt and Road comes after the US started pushing back.
In September, Joe Biden dispatched diplomatic teams to South America with the aim of taking his Build Back Better initiative — which began as his plan to rebuild the US after Covid — global under the tag Build Back Better World or BW3.
The ‘listening tours’ were designed to identify projects where America could involve itself, offering to out-compete China with better quality products and a better record of delivery.
For example, China helped Ecuador build two hydroelectric dams during the last decade — but the Coca Codo Sinclair Dam has since run into major problems, including causing oil spills and suffering cracks.
‘Very few of [China’s] projects make economic sense and they often have very poor labor and environmental standards,’ a Biden administration official said at the time.
A BW3 event is planned for early next year where more details will be announced including project funding, though so-far no commitments have been given about the amount of cash that will be spent.
A major battleground is set to be Latin America’s 5G network.China is lobbying hard to have Huawei technology built into it, while America is trying to force countries to ban it — arguing it will be used to spy by Beijing.
Brazil, Chile and Ecuador have been delaying major decisions over who will help build their networks for years, trying and failing to find a middle-ground between the US and China.
China’s current military base in Djibouti (pictured) houses some 2,000 troops along with armoured vehicles and gunboats, with a pier constructed to allow aircraft carriers to dock (top left) along with helipads and a runway (centre)
Chinese troops and armoured vehicles parade at the base in Djibouti, located at a strategic bottleneck leading to the Suez Canal, in 2017 as the base was first opened
China also helped Ecuador build two large dams, including the Coca Codo Sinclair project (pictured) — which quickly ran into trouble.Washington hopes that China’s patchy record will allow it to recover some lost ground
China is in talks with Argentina to build a new nuclear reactor at its Atucha complex (pictured) and is building two more hydroelectric dams in Patagonia
Perhaps the most-prominent example is Jair Bolsonaro — Brazil’s president a major ally of Donald Trump — he agreed in December last year to join a US initiative that would have effectively banned Huawei from the 5G network.
But just a month later he was forced to backtrack and tone down his rhetoric, partly due to fear that Beijing would delay a delivery of Covid vaccines to help tame the country’s spiralling outbreak.
Whatever the future holds, for the time being Europe and America are playing catch-up, and there is no certainty that it will be able to make up the lost ground.
Infrastructure projects are notoriously slow to develop and agree, and can take years — if not decades — to build.
Meanwhile, China’s influence grows by the day.As reported after a sit-down with Ivonne Baki, Ecuador’s ambassador to the US, in September: ‘[America] is losing Latin America to China without putting up a fight.’
Nicolás Santo, author of the China Notes newsletter on China-Latin America, added: ‘The way [China] has found to do this is through trade agreements, but certainly it’s interests in the region go way beyond that.
‘I am shocked by how little attention the U.S.has paid to this topic over the last 10 years, and even now.’