EU launches major infrastructure investment strategy to support global recovery
The strategy is values-driven, which means that the projects in which we invest will have to respect the rule of law, human rights and international standards. They will also need to be environmentally friendly, demonstrate good governance and transparency, and focus on security.
The EU said the projects would meet the needs of partners as well as the EU’s strategic interests, and catalyze private sector investment.
Infrastructure experts at Pinsent Masons said the announcement was important because it could offer an alternative source of infrastructure investment to China’s One Belt, One Road (OBOR) strategy. The EU plan calls for annual spending of around $ 50 billion, while China’s international financial commitments under the OBOR to middle- and low-income countries are estimated at $ 85 billion per year. year.
Ian Laing of Pinsent Masons said there were several issues that would determine the success of Global Gateway.
“The ‘value-based’ conditions that are attached to any EU money will be an important factor. Applying Western value systems to the developing world can be difficult and will almost certainly slow progress, ”Laing said.
Laing said the EU’s plan to use innovative financial instruments to attract private capital, including guarantees to reduce project risks for the private sector, would be a “big win” if achieved. However, he said earlier attempts at similar funding models had struggled to progress.
“The reality is that there is now a huge pool of infrastructure capital and too few projects. Developing efficient, well-structured and ethical projects takes time, so the EU’s stated goal of deploying $ 50 billion per year is certainly going to be a challenge, ”said Laing.
Infrastructure expert Greg Jones of Pinsent Masons said the values-based aspect of Global Gateway may appeal to some third country governments, but not others, and therefore may slow project delivery.
“It will be interesting to see if the projects implemented will be integrated into” roads “or” hubs “which exploit the connections between the infrastructures through certain regions as in the framework of the OBOR, and which regions have priority. . Africa is mentioned as a priority, but it clearly won’t be the only show in town, ”Jones said.