Opinion of the European Economic and Social Committee on The Global Gateway

(own-initiative opinion)

(JOIN(2021) 30 — final)

(2022/C 323/05)

Rapporteur:	Dumitru FORNEA
Co-rapporteur:	Violeta JELIĆ

Plenary Assembly decision	9/12/2021
Legal basis	Rule 32(2) of the Rules of Procedure
	Own-initiative opinion
Section responsible	External Relations
Adopted in section	12/4/2022
Adopted at plenary	19/5/2022
Plenary session No	569
Outcome of vote (for/against/abstentions)	206/1/3

1.   Conclusions and recommendations

1.1.

The European Economic and Social Committee welcomes the launch of the Global Gateway initiative, as it is convinced that the investments and cooperation projects of EU and non-state actors in the EU need to be better known and promoted around the world.

1.2.

The EESC is aware that there is a huge need for financial resources to effect the interconnection of critical global infrastructure and, in this respect, firmly believes that it is in the EU’s interest to coordinate investment and development cooperation through the Global Gateway with similar programmes of countries with which we share values and common strategic interests. Synergies with the EU Strategy for Cooperation in the Indo-Pacific region (1) must be also achieved.

1.3.

The EESC notes the importance of communicating calls for tender, related administrative procedures, the implementation stage of projects and the results of EU and Member States’ action, and in this regard, in order to better understand the objectives and added value of this initiative, it is important that the European Commission propose a set of tools to enable access to key data, as well as parameterisation of relevant indicators to measure progress in implementing this strategy.

1.4.

The EESC believes that the relevant European institutions, in cooperation with the Member States and partner countries, will have to carry out an analysis of the priority needs for global infrastructure investments, taking into account the EU’s strategic and economic interests, but also having regard to the social, climate and ecological commitments of the EU.

1.5.

The EESC believes it is important for the EU to focus on maintaining the functioning and development of physical connections between Europe and other parts of the world. Infrastructure that provides access to water, food and energy for the population is essential, and the entire ecosystem that makes it possible to achieve food security at global level must be given priority in the actions of the EU institutions and the Member States.

1.6.

The EESC notes with concern that the dramatic situation of the war in Ukraine requires us to adapt the EU’s financial instruments so that they are flexible and comprehensive enough to be used much more quickly when global crises arise, especially in the EU’s neighbourhood.

1.7.

The EESC urges that investments in priority corridors for transport, energy and electronic communications infrastructure be based on impact assessments that assess not only strategic considerations, including lessons learned from armed conflicts in Ukraine, Nagorno-Karabakh, Syria, Ossetia, Libya, etc., but also other issues relating to climate change, environment protection, human rights and social responsibility.

1.8.

The EESC recommends improving the reporting system for activities and projects implemented by EU state and non-state actors, by encouraging investment and project promoters to voluntarily register in the Global Gateway Portal, which will have to be designed on the basis of the latest digital technological solutions for data processing and communication.

1.9.

The EESC has emphasised in its opinions the importance of transnational partnerships between equals, which can limit dependencies, create links and provide lasting economic and social benefits for local communities in partner countries. This is only possible if the bottom-up approach is used to build strong local value-added production chains and to strengthen domestic markets in partner countries by creating high quality jobs as well as sustainable know-how transfers.

1.10.

The EESC welcomes the aim of offering fair financing on favourable terms in order to limit the risk of debt distress. To achieve this goal in a sustainable way, it has to be ensured that other kinds of dependencies will not arise.

1.11.

The EESC calls on the European institutions and the governments of the Member States to ensure that European values are respected and promoted through the implementation of projects registered under the Global Gateway brand. The respect for fundamental human rights, social and environmental impact assessment and compliance with transparency and due diligence procedures must be found in the sine qua non conditionalities for launching any project funded by EU state and non-state actors.

1.12.

The EESC agrees with the idea that companies interested in getting involved in the Global Gateway must have effective collaboration with Member States’ and the EU’s diplomatic corps, simplified access to financial resources and relevant information at regional level, as well as, wherever possible, one-stop-shop offices, to ease the EU private sector’s investments worldwide.

1.13.

The EESC welcomes the European Commission’s intention to set up a board to coordinate the Global Gateway initiative. Professional management is necessary for achieving the complex proposed objectives of this investment strategy; in this connection, in order to improve the quality and relevance of the decisions that will be taken by this board, other members representing civil society organisations, including social partners, especially trade unions, as well as representatives from the world of business have to be involved.

1.14.

The EESC notes the need for a clearer presentation of the multiple funding instruments that will be made available to beneficiaries by 2027. Given the complexity of the description of the funds that will be under the Global Gateway brand, made in the document published by the High Representative of the Union for Foreign Affairs and Security Policy, it seems that a comprehensive and intelligent schematic representation of them is needed in order for them to be understood by all those interested.

2.   Background

2.1.

In 2013, on visits to Kazakhstan and Indonesia, the President of the People’s Republic of China, Xi Jinping, launched two initiatives for transcontinental interconnections of the land and sea infrastructure: the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Later, in 2014, after several attempts to create an integrated brand, it came to be known as the Belt and Road Initiative (BRI) (2). As it was initially described, the BRI was not just a transport corridor, but also an area where Chinese investment was promoted in the states participating in this initiative.

2.2.

A first response to the Chinese initiative came from Japan, which in 2015 proposed the Partnership for Quality Infrastructure (PQI) (3), an initiative dedicated to beneficiaries in Asia, with a 5-year budget of USD 10 billion. In 2016, the PQI was expanded globally, and the allocated budget was raised to USD 200 billion.

2.3.

The European Union and the major industrialised democratic states in the G7 have for seven years helplessly witnessed, without any reaction, the continued strengthening of China’s economic and political relations around the world through the BRI. By the time of the June 2021 G7 meeting in Cornwall, UK (4), where it was decided to create a global alternative — the Build Back Better World Initiative — China had already invested more than half of its total BRI funds earmarked for between now and 2027, i.e. USD 1,2 — 1,3 trillion, as estimated by Morgan Stanley Research.

2.4.

In the context of the 26th Conference of the Parties to the UN Framework Convention on Climate Change (COP 26), held in Glasgow in November 2021, the Prime Minister of the United Kingdom launched the Clean Green Initiative (5), which doubled the UK’s aid-funded green investments to more than GBP 3 bn over five years, as well as providing new guarantees to support clean infrastructure projects, including GBP 200 m for a new Climate Innovation Facility. The UK has announced a package of guarantees to multilateral development banks that are supposed to provide a major boost to investment in climate-related projects in India and across Africa. A new ‘Room to Run’ guarantee for the African Development Bank (6) is expected to unlock up to GBP 1,45 billion worth of new financing for projects across this continent, half of which will help countries adapt to the impact of climate change.

2.5.

Back in the EU, on 12 July 2021 the Foreign Affairs Council decided to take action following the G7 meeting and called on the Commission to prepare a Global Connectivity Strategy (7), under a Team Europe banner, pulling together Member States and the EU, the EU institutions, and national financial institutions in a joint effort. This strategy was published on 1 December 2021 as the Global Gateway.

2.6.

The European Commission document states that the Global Gateway supports investment in hardware and software infrastructure that respects key principles for the European Union: democratic values and high standards; good governance and transparency; equal partnerships; green and clean; security-focused; catalysing private sector investment.

3.   General comments

3.1.

The European Union made the decision to raise the profile of its investment in non-Member States, worldwide, by creating the Global Gateway initiative — an economic and investment strategy designed to be a diplomatic and communication instrument.

3.2.

The aim of this initiative to offer fair financing on favourable terms in order to limit the risk of debt distress is welcomed by EU civil society organisations. To achieve this goal in a sustainable way, it has to be ensured that other kinds of dependencies will not arise.

3.3.

This is not an additional structure; it is neither administrative nor financial. It is a BRAND that must be accepted by all European financial institutions, development agencies and private companies in the Member States when creating investment projects in non-European Union countries, and they must comply with a system of requirements based on the EU’s core values. The conditions for use of the brand name, including cases where it is prohibited, need to be worked out, and the EESC is ready to contribute here.

3.4.

Unlike China’s Belt and Road Initiative (BRI), which implements a Chinese international infrastructure plan with mainly national funding, with Chinese firms and in the framework of a top-down strategy, the Global Gateway is a bottom-up approach. It consequently starts from the genuine investment needs of non-EU partner countries that are willing to develop their infrastructure while respecting the key principles that underlie this strategy.

3.5.

Only quality projects are promoted, following an environmental and social impact assessment, at the same time taking into account the quality level of the equipment throughout the latter’s life cycle. This quality concept covers both the material aspect of each project (hardware components, engineering, construction process, skilled labour, etc.) and the financial aspect, through transparent tender procedures and an ethical financial process, together with the appropriate guarantees.

3.6.

The Global Gateway is an equivalent to the American Build Back Better (8) and British Clean and Green initiatives. It remains to be clarified whether these two initiatives are to be considered in competition with or complementary to the Global Gateway, or in cooperation with both initiatives. From a civil society perspective, it is quite clear that coordination should be encouraged between the Global Gateway and other international cooperation for development strategies that are based on the same values.

3.7.

To be eligible, projects have to be designed around the idea of better ‘connectivity’ between the country concerned and the EU, among the people of that country or between the country concerned and its neighbours. This is indeed a goal that meets the modern requirements, as well as the capabilities of the Union. On one hand, the control of networks and routes is becoming increasingly more important than the control of areas. On the other hand, the EU itself can play a key role in ensuring a progressive, equitable cross-national partnership, and in achieving the Sustainable Development Goals (SDGs) (9). That connectivity will cover either just hardware — roads, railways, ports, airports, etc.; a mixture of hardware and software — communication cable networks; or mainly software — education, research and development.

3.8.

The broad concept of connectivity encompasses, for example, all type of investment in water resources — new wells, water distribution, agricultural irrigation and waste water management. Water resources will be key to an increasing number of countries, both through the effects of population growth and a warmer climate. Water connects people not only through water management infrastructures, but also, and in fact mainly, by providing waterways for maritime and inland navigation.

3.9.

The Global Gateway ‘brand’ or ‘initiative’ will not add more money to existing and diversified European financial investment funds and structures. It is expected that the EU, under this banner, will mobilise infrastructure development investment of up to EUR 300 billion in the 2021-2027 period.

3.10.

The European Fund for Sustainable Development Plus (EFSD+) (10) will be the main financial tool for mobilising investment under the Global Gateway, with up to EUR 135 billion, including a new initiative with the European Investment Bank that could bring EUR 25 billion of additional investment, in addition to grants of up to EUR 18 billion under the EU’s external assistance programmes.

3.11.

In addition to these funds are EUR 145 billion of planned investment volumes by European financial and development finance institutions. The guarantees it provides will be used for de-risking activities and the leveraging of private investment. This will be implemented through close cooperation between the European Investment Bank and the European Bank for Reconstruction and Development.

3.12.

At the sixth European Union-African Union summit (11) in Brussels on 17-18 February 2022, the Commission announced that from the total budget of the Global Gateway initiative, EUR 150 billion are dedicated to an Africa-Europe (12) investment package that will support common ambitions for 2030 and the AU 2063 Agenda (13), with the general objectives of building more inclusive, diversified and resilient economies.

3.13.

Further adding to this financial tool kit, the EU is exploring the possibility of establishing a European Export Credit Facility (14) to complement existing export credit arrangements at Member State level. The Global Gateway does not prioritise geographic investment areas. Nevertheless, main areas of interest will be the EU’s immediate neighbourhood — its Eastern flank, Mediterranean countries and Africa, the Black Sea and Central Asia and the Indo-Pacific region.

3.14.

Good projects will be given priority over location, also with regard to the PPP Risk Assessment Model (PFRAM) (15) and the Public Investment Management Assessment (PIMA) (16) based on EU institutions’ cooperation with the International Monetary Fund and the World Bank, and avoiding duplication when implementing the various initiatives.

3.15.

The Global Gateway is an EU initiative and priority, but in certain conditions might take into consideration partnership with non-EU member countries such as Switzerland, the United Kingdom and India.

4.   Specific comments

4.1.

The European Economic and Social Committee shares the rationale behind the Council’s decision to launch a European strategy to raise the profile of specific investments made, and measures taken, by EU institutional, Member State and non-state players at global level.

4.2.

The EESC understands the focus on preventing and tackling pandemics in the health-related chapters and sees the current relevance of these issues. Nevertheless, a long-lasting impact has to be a priority and building resilient and easily accessible socio-medical infrastructures is a key aspect in this field.

4.3.

The dramatic situation of the war in Ukraine shows us that these financial instruments must be designed to be flexible and comprehensive enough so that they can be used quickly in crisis situations that arise globally and especially in the vicinity of the European Union. Crises in the immediate vicinity are addressed as a matter of priority in order to minimise the threat to the security of the Member States, and this requires, among other things, the timely allocation of financial resources for urgent interventions to restore the functionality of interconnection infrastructure and of the essential public services for the population.

4.4.

The Committee considers it important for the EU to focus on maintaining the functioning and development of physical connections between Europe and other parts of the world. Infrastructure that provides access to water, food and energy for the population is also essential, and the entire ecosystem that makes it possible to achieve food security at global level must be given priority in the actions of the EU institutions and the Member States.

4.5.

The war between Russia and Ukraine is having a major disruptive impact on the supply chains of cereals and other agricultural commodities for the agri-food industry. The infrastructure developed through Global Gateway investment should also be harmonised with the EU’s strategic interests in the event of armed conflicts or other natural calamities and, from this perspective, ensuring the security of supply of essential raw materials must also be achieved through the intelligent design of distribution networks, logistics centres and warehouses.

4.6.

The EESC supports the European Commission’s efforts to strengthen mechanisms and instruments for concrete action to bring the European Union to the forefront of global socioeconomic and political developments. In this regard, various experts argue that there is a need for an internationally coordinated monetary expansion (directly and indirectly) and the utilisation of the opened fiscal space to launch global economic development by financing public infrastructure investments and public or private productive investments, countervailing spatial disparities and serving socioeconomic and environmental sustainability (17).

4.7.

Correct and complete reporting of all EU activities in various countries around the world has proved to be a real challenge, as long as there is no permanent, close coordination between the relevant players. In the context of the launch and implementation of the Chinese BRI, there has been a need for better communication on the EU’s contribution to the development of global interconnection infrastructure.

4.8.

In order to better understand the objectives and added value of this initiative, it is important that in the coming period the European Commission propose a set of tools to allow access to key data, as well as parameterisation of relevant indicators to measure progress in implementing this strategy.

4.9.

The Global Gateway is an initiative that will allow Team Europe to portray a better, more comprehensive image to the outside world. As a vehicle to consolidate European investment in third countries, the Global Gateway has to be equipped with a database that will ensure better access to relevant information on all the projects, budgets and partners involved. In this regard, the first step will be to design and maintain a Global Gateway website to provide a proper window for illustrating the associated measures, results and impact.

4.10.

To limit dependencies, forge links and therefore deliver lasting economic and social benefits for the local communities in the partner countries it is crucial to build a true partnership of equals. Achieving this is only possible if the bottom-up approach is used to build resilient local value-added production chains and strengthen the domestic markets in the partner countries by creating high quality jobs as well as sustainable know-how transfers. In the case of Africa, fostering the establishment of the African Continental Free Trade Area (AfCFTA) (18) could be an adequate step. To ensure that European values are respected, social impact assessments are fundamental and can be built on top of existing due diligence processes.

4.11.

The role of the private sector in co-financing Global Gateway investments is recognised by the European institutions. In order to strengthen private entities’ determination to become more involved and contribute to achievement of the specific objectives of this strategy, and to boost their interest in doing so, mechanisms should be quickly established to facilitate the certification and recognition of the efforts of private players that are involved in implementing this EU initiative.

4.12.

Companies interested in getting involved in the Global Gateway need relevant information at regional level, effective collaboration with Member States’ and the EU’s diplomatic corps and, wherever possible, one-stop-shop offices, in order to facilitate the EU private sector’s investments worldwide. Furthermore, after successfully passing the environmental and social impact assessment, as well as the PFRAM and PIMA and showing a sustainable positive economic, social and ecological value for the EU and especially for the partner countries and in their cooperation with the financial institutions involved, the private sector should have simplified access to financial resources, with the most favourable conditions.

4.13.

The European Commission has announced its intention to set up a board to coordinate the Global Gateway initiative. The EESC welcomes this proposal, firmly believing that integrated governance of this strategy is very much needed for achieving results in a relatively short period of time. To improve the quality and relevance of the decisions that will be taken by this board, other members representing civil society organisations, including social partners, especially trade unions, as well as representatives from the world of business have to be involved.

4.14.

The Business Advisory Group mentioned in the joint communication could follow a too narrow approach by leaving out experts in the fields of investment priorities in development cooperation, health care, environmental protection and education and training. To ensure effective coverage of all topics of the Global Gateway programme this group shall include experts of these relevant fields.

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(1)  https://www.eeas.europa.eu/eeas/eu-strategy-cooperation-indo-pacific-0_en

(2)  https://www.ebrd.com/what-we-do/belt-and-road/overview.html

(3)  https://www.mofa.go.jp/files/000117998.pdf

(4)  https://www.g7uk.org/

(5)  https://www.gov.uk/government/news/pm-launches-new-initiative-to-take-green-industrial-revolution-global

(6)  https://www.afdb.org/en/news-and-events/african-development-bank-launches-landmark-us-500-million-credit-insurance-deal-with-african-trade-insurance-agency-and-uk-reinsurers-18600

(7)  https://www.consilium.europa.eu/en/press/press-releases/2021/07/12/a-globally-connected-europe-council-approves-conclusions/

(8)  https://www.whitehouse.gov/build-back-better/

(9)  https://sdgs.un.org/goals

(10)  https://ec.europa.eu/eu-external-investment-plan/about-plan/how-it-works-finance_en

(11)  https://www.consilium.europa.eu/en/press/press-releases/2022/02/18/sixth-european-union-african-union-summit-a-joint-vision-for-2030/

(12)  https://ec.europa.eu/info/strategy/priorities-2019-2024/stronger-europe-world/global-gateway/eu-africa-global-gateway-investment-package_en

(13)  https://au.int/en/agenda2063

(14)  https://trade.ec.europa.eu/doclib/docs/2021/february/tradoc_159438.pdf

(15)  https://www.imf.org/external/np/fad/publicinvestment/pdf/PFRAM.pdf

(16)  https://www.imf.org/external/np/fad/publicinvestment/pdf/PIMA.pdf

(17)  https://www.longdom.org/open-access/relieving-inflation-or-palliative-selfdestruction-2168-9458-3-133.pdf

(18)  https://au.int/en/cfta