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

The EU has already signed partnerships with Japan and India to coordinate projects linking Europe and Asia.
The EU has already signed partnerships with Japan and India to coordinate projects linking Europe and Asia.PHOTO: REUTERS

BRUSSELS (REUTERS) - European Union foreign ministers agreed on Monday (July 12) to launch a global infrastructure plan linking Europe to the world, its latest step after deals with India and Japan and a similar pledge by the Group of Seven (G-7) richest democracies.

Suspicious of Chinese President Xi Jinping's Belt and Road Initiative to link Europe to Asia via infrastructure in a bid for greater influence, the EU set out a formal path for an ambitious "connectivity" plan from 2022.

"We see China using economic and financial means to increase its political influence everywhere in the world. It's useless moaning about this, we must offer alternatives," German Foreign Minister Heiko Maas told reporters at a meeting with his EU counterparts in Brussels.

"It is important that the European Union ... coordinates them very closely with the United States," he said.

The EU has already signed partnerships with Japan and India to coordinate transport, energy and digital projects linking Europe and Asia.

Both Tokyo and Delhi are worried about Chinese largesse that officials say makes poorer countries beholden to Beijing because they are forced to take on such large debts.

Through development banks, first-loss guarantees to private companies and by offering Western government know-how, the G-7, whose leaders met in England in June, also want to provide more transparency in infrastructure partnerships.

Montenegro, a member of the Nato military alliance and an aspirant to join the EU, is the highest-profile casualty of Chinese debt, Western officials say.

Montenegro borrowed nearly US$1 billion (S$1.4 billion) from China in 2014 to fund a 41km stretch of road, an amount that has threatened to bankrupt the country. It is now negotiating with Western banks to swap or refinance the debt, Reuters reported this month.

The EU strategy, called "A Globally Connected Europe", makes no mention of China and Luxembourg's veteran Foreign Minister Jean Asselborn cautioned on Monday about making China an adversary, noting that German carmakers sold more vehicles in China every year than in Germany.

But one EU diplomat involved in drafting the strategy said the eight-page document had "China written all over it".

Since 2013, China has launched construction projects across more than 60 countries, seeking a network of land and sea links with Southeast Asia, Central Asia, the Middle East, Europe and Africa. Beijing denies any intention to project power and has said the infrastructure corridor focuses on the needs of ordinary people.