Commission wants to invest abroad, so there will be a counterpart for New Silk Road

The European Commission wants to invest more and more strategically abroad. With around 300 billion euros, the European Commission hopes to offer a sustainable and transparent alternative to Chinas global billion-dollar investment in the coming years. Thats what Commission President Von der Leyen said at the presentation of the Global Gateway.

According to Von der Leyen, the corona pandemic has shown how much we are connected worldwide. Because countries are all in the same boat, Europe wants to invest in the recovery of countries outside the EU. With the money, the Commission hopes to invest in renewable energy, infrastructure and education over the next six years, among others.

For example, the development of green hydrogen in North African countries is considered. A country like Morocco is already generating a lot of green energy with solar panels. With the EU money, it could make green hydrogen, something that the EU will have a huge need for in the coming years.

China

The committee speaks of a new Silk Road, similar to the Chinese Belt & Road initiative, which has been working on for years. It is not clear how much China has invested in that project. Some estimate that it is a whopping 4.5 trillion euros.

According to the World Bank, China invested around 500 billion between 2013 and 2018 in countries such as Sri Lanka and Kazakhstan, but also, for example, in European countries such as Serbia and Macedonia.

See what Chinas plans are in two minutes here:

More and more countries are coming home from a cold fair. If the loans are not repaid to China on time, the price is high. For example, Sri Lanka lost control of a port because it did not pay off its debt in time.

The G7 recently came up with the Build back better plan as an alternative to the Chinese Silk Road. The US, in particular, hopes to fight the billions that China is pumping into developing countries with this plan. The EU is now also participating in this fight with the Global Gateway plan.

Where does the money come from?

Not all the money comes from the EUs budget. The Commission puts only 18 billion euros as a gift in the project. More than 145 billion comes from the development banks of the EU countries. About 135 billion must come from the private sector. In order to make it more interesting for companies to invest in countries such as Congo or Sri Lanka, the Commission will guarantee.

Moreover, its not all newly released money either. For example, previously promised billions of Balkan countries should be removed from the Global Gateway game.

Moderately positive reactions

The European Parliament responds mostly positively. โ€œDevelopment assistance has been provided for a long time, but no investments were made that serve our interests. We live in a world where we need to think more strategically,โ€ says CDA MEP Tom Berendsen.

Thijs Reuten (PvdA) is satisfied that it does not only benefit the EU. โ€œI am moderately excited that an integrated strategy has been created that is good for Europe but also for the countries outside the EU.โ€

Yet both MEPs question the plan. Chances are small that the plan will have a lot of impact, think Berendsen and Reuten, if the amount is distributed over too many different projects. In the coming months, it will be clear how the money from the Global Gateway plan will be spent.