April 13. 2024. 5:15

The Daily

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Global Gateway as new approach, not simple funding pot

For the EU’s Global Gateway to work, it requires a radical shift in the way the EU, member states and private sector actors work together outside the bloc, writes Chloe Teevan.

Chloe Teevan is head of digital economy and governance at the European Centre for Development Policy Management (ECDPM).

There seems to be an expectation both from many commentators in Europe and in partner countries that the Global Gateway strategy should be perfectly formed and begin to deliver yesterday. Policymakers and analysts complain that up front it appears to be a recycling of existing development funds and that many projects were already in the works.

Others argue that it is not a coherent strategy and is unclear on all the details of how it will actually work. Both of these points are to a large extent true, but they miss the point… and ultimately limit the potential for the Global Gateway to be a truly strategic external investment strategy rather than just a short-term development cooperation programme.

The success of the Global Gateway should be marked by a complete shift in the way the EU, member states and private sector actors work together outside the EU. The ambition should be to support holistic economic transition at home and abroad over the medium to long-term period, rather than simply building a few roads and cables in the short term.

Only this will have the real economic impact partners expect and thus raise the EU’s status as a strategic investment partner for countries around the world, thereby contributing to the EU’s geopolitical goals.

It is certainly true that a large number of the projects on the recent list of 87 agreed by EU member states are not entirely new. Some have been under discussion for some time. Further, there is currently little public detail about the projects, the amounts of funding that each will receive, or from where that funding will come.

Many of the initial projects will be funded by a combination of existing funds under the EU’s 2021-2027 budget, coupled with funds from EU member states and private sector investment. Most of the EU funding will come from the NDICI-Global Europe external financing instrument, which includes the European Fund for Sustainable Development Plus (EFSD+), a development finance tool that includes blending, guarantees and other financial operations. This was agreed upon as part of the EU’s current budget long before the Global Gateway strategy was announced in December 2021.

What the development of this list does reveal is the will to begin to deliver on the promise of the Global Gateway with a scaling up of major infrastructure projects. It also reflects the desire to speed up the pace of implementation, announcing projects that will get underway quickly and can be delivered in the short term.

While some of this is a case of rebranding, there is also a real effort to develop a more coordinated approach across “Team Europe” – the EU institutions, member states and development banks. The real innovation that the Global Gateway can potentially deliver is in changing the long-term approach of the EU and member states to how they approach external investment, and how they bring private sector actors on board.

The desire is to bring on board a wide range of relevant public and private sector actors across the EU member states so as to progressively scale up external facing investment. That will not happen overnight, but real steps are being taken to get there and more can be done.

The strategy is certainly not a perfectly formed plan and is without doubt many things to many people. But that is not a problem, as it means that it can and should still become much more than it currently is. EU member states have the opportunity to play a role in co-creating that vision and plan, bringing in their own networks and experiences in partner countries, as well as their own private sectors.

This includes building the Global Gateway beyond an initial strong focus on hard infrastructure to include more investments in services and industry. There are already some projects that bring in industrialisation and soft infrastructure, but with time it will be important to expand on these, thereby complementing the strong rollout of quality infrastructure to deliver both economic growth and the wider aims of the Sustainable Development Goals (SDGs).

China’s Belt and Road Initiative is often referred to both by way of inspiration and as the model with which the Global Gateway hopes to compete. Yet, those making these comparisons often forget that the Belt and Road Initiative did not emerge fully formed, and indeed that even today China does not necessarily have one perfect all-encompassing strategy. Many authors have indeed shown that part of China’s success is that their initiative adapts to local government’s needs and wishes, rather than offering a one-size fits all approach.

The Global Gateway needs to start somewhere, but must grow in ambition with every passing year. What matters now is to build on the initial list of projects, adding further depth to the strategy with each passing year. The success of the Global Gateway will be marked not by massive increases in official development assistance spending on infrastructure projects, but rather by a manifold increase in combined outward public and private investments in the medium term.

The initial goal announced by the European Commission president Ursula von der Leyen was to reach a goal of €300 billion of combined public and private investment by 2027, but ultimately the ambition should be not just to reach this goal, but to set in place the structures that will allow for European external investment to be exponentially increased in the years to follow, reflecting a complete shift in the way of working.

The ambition should thus not be simply about delivering short-term infrastructure projects funded by development budgets. Rather, the Global Gateway needs to create an investment ecosystem that will advance ongoing investments in infrastructure, industry and services, thereby supporting much longer-term economic transformation in Europe and in partner countries.