EU and India Plan Global Infrastructure Deal

The EU and India are in talks to build joint infrastructure projects around the world in the latest attempt to compete with China’s Belt and Road Initiative.

The plan, described as a “connectivity” partnership in sectors including energy, digital and transport, would aim to offer better legal safeguards and less onerous debt terms than those offered by Beijing, diplomats said.

The initiative, which India and the EU would like to unveil at a virtual summit on May 8, comes as the US seeks to spur similar efforts to counter China’s growing influence. The EU-India plan would not be branded an anti-Beijing alliance, but would be seen as part of an attempt to offer alternatives to the BRI across Europe, Africa and Asia.

However terms are yet to be finalised, including where the funds, which are intended to come from the public and private sectors, will be sourced.

“There is now a window of opportunity to team up and create the environment for a globalisation based on partnership that would be more attractive than what China can offer,” said one EU diplomat.

“The EU and its allies have a common interest here in presenting an alternative to the Belt and Road Initiative, rather than allowing Chinese investment to dominate.”

The India-EU work would focus on joint projects in their own territories, initiatives in third countries, and setting standards in areas such as financial sustainability and rule of law benchmarks, diplomats added. Another focus would be on improving co-operation in research and innovation.

The EU has previously outlined plans to deploy tens of billions of euros to leverage investments of many times that value to build ties between Europe and Asia. India has also committed to significant financing for international projects.

But on Wednesday, when EU ambassadors met to formulate a broader strategy at a closed-door meeting, the discussion lasted close to two hours and served as a “wakeup call” to step up work in the area, one diplomat said.

Brussels’ attempts to combat China’s clout come as it also tries to deepen its economic ties with Beijing, including by signing a provisional investment agreement in December.

The EU confirmed the India-EU talks, insisting plans for linking Europe and Asia were an “inclusive platform open for co-operation with all partners” and were not directed “against any other country or region”.

China’s BRI, spearheaded by President Xi Jinping’s administration in 2013, has stoked unease as Beijing pursued projects involving roads, railways, bridges and ports.

The BRI’s wide-ranging framework has been endorsed by more than 150 states and international organisations, including more than half the EU’s 27 nations. But it has also faced a backlash, including over environmental standards, the debt recipient countries take on, and penalties they face if they fail to repay.

The EU and India agreed in July to explore their own initiative to “seek synergies between their co-operation on connectivity with third countries including in the Indo-Pacific region”. The EU set up a similar partnership in 2019 with Japan to build what Shinzo Abe, then premier in Tokyo, hailed as “sustainable, rules-based connectivity from the Indo-Pacific to the Western Balkans and Africa”.

The planned EU-India co-operation comes as President Joe Biden’s administration aims to build alliances of democratic countries as a check on China’s expanding power. Biden said in March that he had proposed to Boris Johnson, UK prime minister, for such nations to set up an infrastructure effort to rival the BRI.

The plan may end up on the agenda of June’s G7 summit to be hosted by Johnson in the UK. The group — comprising the US, UK, Japan, France, Germany, Italy and Canada — has invited counterparts from India, Australia and South Korea to attend.

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Source: FT

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