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Belt and Road

EU to rival China's Belt and Road with overseas infrastructure plan

27-nation bloc to focus on digital connectivity in the Indo-Pacific region

GLASGOW, Scotland -- The European Union will soon announce a new overseas infrastructure investment framework to compete with China's Belt and Road Initiative.

The "Global Gateway" will emphasize sustainability and the EU's values to strengthen ties with partners. In the Indo-Pacific, the framework is set to focus on digital connectivity as the 27-nation bloc looks to increase engagement with the region.

According to a draft of the "European Strategy of Global Gateway Partnerships" seen by Nikkei Asia, the framework will focus on five areas, with the emphasis dependent on geographic region: digital transition, clean energy transition, transport, people-to-people connections, and trade and resilient supply chains.

"These investments must be comprehensive, secure and sustainable, with the aim of bringing countries, societies and people closer together, enabling the twin green and digital transitions in line with the EU's values, especially democracy, rule of law and human rights," the draft states.

The flagship of the framework for the Indo-Pacific region will be "digital partnerships with key like-minded countries," such as on promoting regulations around artificial intelligence. The EU will also explore a potential connectivity partnership with the Association of Southeast Asian Nations similar to ones already in place with Japan and India.

The initiative comes as the EU pushes to implement its recently announced Indo-Pacific strategy, which underscores deepening engagement with like-minded partners in the region for the bloc's security and prosperity, including ensuring robust supply chains for semiconductors.

A spokesperson for the European Commission said their proposal is currently under preparation and they cannot comment on the details.

The draft states it is in the EU's interest to ensure global connectivity develops "in line with Europe's norms, standards and values."

The bloc also wants to "reduce strategic dependencies," likely a reference to easing its reliance on some countries in key sectors such as semiconductors, which have been exposed by the COVID-19 pandemic.

The draft is due to be discussed further internally, meaning the final content and wording could still change. The publication date has yet to be confirmed.

The EU also made a thinly veiled expression of skepticism toward Beijing's overseas infrastructure investment model, and the bloc's intention to offer an alternative option for sustainable development. The EU "seeks to promote transparency and balance increasing investments from other players, which use connectivity to promote their own different economic and societal model and advance their political agenda," the draft says.

The initiative will be backed by resources from the EU, its member states, and development finance institutions.

European public funds are expected to leverage further financing for the initiative in low- and middle income countries, mainly through the EU's new investment framework, the European Fund for Sustainable Development plus (EFSD+).

The EFSD+ makes available several billion euros in blended grants, and can provide 40 billion euros ($46 billion) of guarantees for investments.

By way of comparison, although there is no official or definitive number on the financial scale of the BRI, Chinese President Xi Jinping pledged $124 billion to that initiative in 2017.

The BRI's waves are being felt in the EU, with investments into the Western Balkans and Eastern Europe.

The EU is also being pulled into the problem of large loans made for economically unviable projects -- a characteristic that has been associated with the BRI. In April, Montenegro asked for help from the EU in paying off a $1 billion loan to China over a highway construction project.

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