The multi-million dollar investment plan with which Europe seeks to compete with the New Silk Road

The European Union has unveiled the details of a US $ 340 billion global investment plan, which was described as a “true alternative” to the Belt and Road Initiative. China, also known as the New Silk Road.

The president of the European Commission (EC), Ursula von der Leyen, said that the Global Gateway scheme (Global Portal) should become a brand of trust, according to the BBC.

With the aforementioned strategy, China has provided funds for railways, roads and ports in different places, but it is accused of having left some countries drowning in debt.

The head of the EC pointed out that countries need “reliable partners” to design projects that are sustainable.

The EU is now looking at how it can raise billions of euros, from its member countries, financial institutions and the private sector, which would come in the form of guarantees or loans, rather than donations.

A different approach

President Von der Leyen said that the EU wants to show that a different, democratic approach can translate into projects focused on tackling climate change as well as global health security and sustainable development projects for developing countries.

The projects have to be of high quality, with a high level of transparency and good governance, and they have to offer tangible results for the countries involved, he explained.

An EU official told the BBC that the plan will have a big focus on Africa.

The Chinese strategy, meanwhile, has also reached Africa, Asia, the Indian-Pacific region and the EU.

The Chinese company Cosco owns two-thirds of the large Greek container port in Piraeus and the China Highways and Bridges Corporation has built a key bridge in Croatia.

The Peljesac Bridge in Croatia was funded by EU taxpayers, but built by the China Bridges and Roads Corporation.

Global Gateway, a new alternative

“As regards investment preferences,” said the president of the EC, “the options that exist come too often in small print, which implies great consequences, be it financial, political or also social.”

Andrew Small, senior transatlantic partner at the German Marshall Fund, told the BBC that the initiative marks “the first serious effort on the European side to put together packages and seek financing mechanisms, so that countries that are considering receiving a loan from China have an alternative ”.

In a report last month, China’s ambassador to the EU, Zhang Ming, said Beijing welcomed the Global Gateway strategy if it was an open initiative and could “help developing countries.”

But he also warned that “any attempt to turn infrastructure projects into a geopolitical tool would fail the expectations of the international community and affect self-interest.”

The Belt and Road initiative

The Belt and Road initiative has become a centerpiece of Chinese foreign policy.

And while it has developed business ties by pouring money into new roads, ports, railways and bridges, it has also come under fire for facilitating “predatory lending” in what has been called “debt trap diplomacy.”

There are also others who argue that the picture is more complicated and that receiving large loans rarely comes without risk. And beyond this, China has filled a need that others have not offered.

Either way, the economic and geopolitical impact has grown as tensions with the West mount.

Competition or more options?

The question is whether the EU can really act in this geopolitical space, says Andrew Small.

“Or is it too rigid or too diluted by bureaucratic infighting? If they fail in this, it would be a big mistake, “he argued.

One diplomat said: “It is a good sign that Europe is finally exerting its influence in this area.”

“It is a common interest that we share with our transatlantic friends in the United States and the United Kingdom.”

But a common interest could also create more competition, according to Scott Morris, a senior partner at the Center for Global Development.

In fact, the US has its own Build Back Better World initiative that it launched at the G7 meeting in June. “It’s a noisy space with a lot of brands bumping into each other,” says Morris.

However, he is “hopeful” about the success of the Global Gateway initiative. He says that “more important” than competing with China, it is an opportunity for Europe to “reach a scale of financing that can benefit developing countries.”

The EU has strongly emphasized its ‘values-based’ and ‘transparency’ approach, arguing that it wants to create linkages and not dependencies.

But this is also an issue of influence, as the EC continues to look for ways to show its strength on the geopolitical stage.