The strategy is values-driven, meaning projects that are invested in will have to meet rule of law, human rights and international norms. They will also need to be environmentally friendly, demonstrate good governance and transparency, and be security focused.
The EU said projects would meet the needs of partners as well as the EU’s strategic interests, as well as catalyse private sector investment.
Infrastructure experts from Pinsent Masons said the announcement was significant, as it could offer an alternative source of infrastructure investment to China’s ‘One Belt, One Road’ (OBOR) strategy. The EU plan would see an annual spend of around $50 billion, while China’s international financial commitments under OBOR to middle and lower income countries are estimated at $85bn a year.
Pinsent Masons’ Ian Laing said there were several issues that would determine the success of Global Gateway.
“The ‘values based’ conditions that are attached to any EU money will be a big factor. Applying Western values systems to the developing world can be challenging and will almost certainly make for slower progress,” Laing said.
Laing said the EU plan to use innovative financial instruments to crowd-in private capital, including guarantees to de-risk projects for the private sector, would be a “huge win” if achieved. However, he said past attempts at similar funding models had struggled to make headway.
“The reality is that there is now a huge pool of capital aimed at infrastructure and too few projects. Developing effective, well-structured and ethical projects takes time, so the EU’s stated goal of deploying $50bn per annum is certainly going to be a challenge,” Laing said.
Infrastructure expert Greg Jones of Pinsent Masons said the values-based aspect of Global Gateway could appeal to some governments in third countries, but not others, and therefore could slow project delivery down.
“It will be interesting to see if the projects taken forward will fit into ‘routes’ or ‘hubs’ which leverage the connections between infrastructure across certain regions as under OBOR, and which regions are prioritised. Africa is mentioned as a focus but it will clearly not be the only show in town,” Jones said.