The EU is investing billions in infrastructure investments in developing countries. The initiative is seen by many as a challenger to China's project "New Silk Road" - also known as the Belt and Road Initiative (BRI). Pictured: one of the terminals of a high-profile BRI-funded railway project in Laos, which was inaugurated two days after the launch of the EU initiative. Photo: Pakopakopapa. Source: Wikimedia Commons.


EU invests billions in developing countries - seen as a challenger to China

The EU promises multi-billion sums in infrastructure investments to developing countries under the heading "The Global Gateway". Many see the initiative as a direct challenger to China's similar giant project "The New Silk Road", while others question the EU's ability to compete with China.

At a press conference in Brussels in December last year, European Commission President Ursula von der Leyen presented plans for a new major global investment in infrastructure in low- and middle-income countries under the name The Global Gateway. A sum of 300 billion euros was promised until the year 2027, which will be invested in everything from digitalisation and transport to health and education.

Although China was not mentioned by name in the press release, few have missed the similarities with "New Silk Road"- China's comprehensive infrastructure project with the goal of connecting the world with fiber cables, railways and Chinese financing. Global Gateway is seen as a challenger cast in Western values.

The EU is launching its initiative at a time when the New Silk Road, also known as the Belt and Road Initiative (BRI), has faced increasing criticism, with accusations of everything from unsustainable loans and debt traps to forced labor and “white elephants”- that is, prestigious but ill-considered and unprofitable construction projects. Here, many see the opening for the EU.

- Beijing has created space for alternatives through its own mistakes, says Jonathan Hillman, head of Reconnecting Asia, a project run by the American think tank Center for Strategic and International Studies (CSIS) which maps BRI-related infrastructure projects.

He believes that the EU is trying to differentiate itself from what China offers.

- When it comes to environmental issues, transparency and sustainability, the EU has a strong and attractive brand that they can use.

And that's exactly what you seem to be doing. The strategy should according to the European Commission's website promote smart, sustainable and secure relations - adjectives that allude to both China's shortcomings and the EU's strengths.

Despite this, there are many who have doubts about the EU's ability to compete for influence in the global south, a doubt that was most clearly expressed by The Economist as called the project for "bullshit".

So why this strong criticism? It is sometimes said that the devil is in the details, and details are still scarce. The article in The Economist points to the fact that the greater part of the sum promised by the EU is nothing more than repackaging previous commitments - an accusation that has certainly been made against BRI. The rest of the money will consist of private funds, but details about how the financing will go are still shining with its absence.

Frederick Kliem, a researcher in international studies at Nanyang Technological University (NTU) in Singapore, is one of the skeptics.

- While China is mobilizing its state-owned banks, it is unclear whether the EU will succeed in gaining access to private capital. Infrastructure projects are costly and provide uncertain returns, he writes and The Diplomat.

China has invested almost twice as much money in Asia as the EU promises in its investment. Photo: Pakopakopapa. Source: Wikimedia Commons.

In this light, Global Gateway looks more like a letter of intent or a marketing ploy than a real action plan. And if one were to still achieve the, according to the doubts, optimistic figures, it would only be about a fraction of the resources that China mobilizes. Only in Asia does China already have invested almost twice as much as Global Gateway promises.

Even the potential strengths of EU projects are potential weaknesses. Many low- and middle-income countries are governed by corrupt regimes that are not easily charmed by Western values ​​and that like to avoid high demands on transparency and close scrutiny of where the money goes. These regimes have reason to prefer the type of unconditional financing that China offers. High quality and sustainability also mean a larger price tag, while China can discount inputs that they have in abundance, such as labor and building materials.

So is Global Gateway a good idea? After all, most people seem to agree on that point. Even The Economist admits it's a great idea (albeit "bullshit"). Above all, leaders in developing countries are given an alternative. It gives them an advantage at the negotiating table, and the EU could make a difference by setting an example and gradually raising the bar for all. 

Global Gateway should be seen as a complement rather than a competitor, many point out. For the needs are there. Asian Development Bank appreciated for example, that Asia's need for infrastructure investment amounts to 26 trillion US dollars - almost 000 trillion euros - by 24.

- In other words, even if China doubled its investment volume, there would still be room for ten Global Gateways, writes Frederick Kliem.

The EU is facing a steep task with the implementation of the new initiative. But there is no doubt that developing countries are in desperate need of infrastructure.

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