The European Commission has announced a new infrastructure investment strategy aimed at mobilizing up to €300 billion in global development investments by 2027.
The Global Gateway approach will strive to develop physical infrastructure in five major sectors around the world: digital, climate and energy, transportation, health, and education and research.
Global Gateway makes use of new financial tools included in the EU’s multi-year financial framework 2021-2027. These instruments enable the EU to mobilize public and private investment in key areas.
Between 2021 and 2027, the European Fund for Sustainable Development+ will make up to €135 billion available for guaranteed investments in infrastructure projects. The EU budget will provide up to €18 billion in grant money, with European financial and development finance institutions planning to invest up to €145 billion.
The EU is also considering establishing a European Export Credit Facility to supplement existing export credit arrangements at the member state level. It stated that such a facility would ensure a more equal playing field for EU enterprises in ‘third-country’ markets, where they increasingly had to fight with foreign competitors that receive significant government support.
The strategy is values-driven, which means that projects that are funded must adhere to the rule of law, human rights, and international norms. They must also be environmentally friendly, display good administration and transparency, and prioritize security.
The EU projects would address the demands of partners as well as the EU’s strategic interests, while also catalyzing private sector investment.
The declaration was noteworthy because it might provide an alternate source of infrastructure funding to China’s One Belt, One Road (OBOR) policy. The EU plan would invest roughly $50 billion per year, whereas China’s foreign financial commitments under OBOR to middle and lower-income nations are anticipated to be $85 billion per year.
Fiber optic connections, transportation routes, and clean electricity transmission lines might all be part of the initiatives. If this infrastructure could be installed, it would significantly improve the deliverability of related projects such as generation facilities in countries such as Kenya and Nigeria, where there is plenty of finance available.
The Global Gateway initiative will use a ‘team Europe’ approach, bringing together the EU, member states, and financial and development institutions such as the European Investment Bank and the European Bank for Reconstruction and Development. EU delegates and ‘team Europe’ will assist in the identification and coordination of Global Gateway initiatives in partner nations.