London (CNN Business)The European Union has unveiled its €300 billion ($340 billion) alternative to China's Belt and Road initiative — an investment program the bloc claims will create "links, not dependencies."
The aim of the EU program — called Global Gateway — is to help underpin the global recovery by mobilizing investments in digital, clean energy and transport networks, as well as boosting health, education and research systems across the world. Low and middle-income countries were already facing a $2.7 trillion infrastructure investment gap before the pandemic, according to World Bank estimates.
"With the Global Gateway we want to create strong and sustainable links, not dependencies, between Europe and the world and build a new future for young people," Jutta Urpilainen, the EU commissioner for international partnerships, said in a statement on Wednesday.
European Commission President Ursula von der Leyen said the plan offered a "'true alternative" to China's global infrastructure program, which has been accused of saddling some countries with huge debts since its inception in 2013.
Von der Leyen said that countries "need better and different offers" of finance and that the EU plan — which will make investments over the next six years — will not build up "unsustainable debt levels" in partner countries.
"They know we are transparent, they know it is accompanied by good governance," von der Leyen said.
Over the past few years, China has poured billions into building roads, railways and ports worldwide to forge new trade links and diplomatic ties. As of March 2021, 139 countries had signed up to Beijing's initiative, accounting for 40% of global GDP, according to the Council on Foreign Relations, a US think tank.
The European alternative to China's Belt and Road will be financed by a mix of €18 billion ($20 billion) in grants and €280 billion ($317 billion) in investments from member states, their development banks, the private sector and EU financing bodies, including the European Investment Bank, the European Commission said in a statement.
The Commission also said that it was considering the creation of a new credit facility for European companies selling into markets outside the EU, which would help them compete with businesses receiving hefty government subsidies.
Here's how the plan breaks down.
Digitalization
The European Union will invest in fiber optic cables between countries, satellite communications and cloud infrastructure to better facilitate global cooperation, data sharing and AI development. It will provide an additional €15 million ($17 million) to a program that aims to extend work on a 35,000 km (22,000 mile) high-speed fiber optic network to the rest of Latin America.
Clean energy
The bloc plans to integrate its energy systems, transition to renewables and partner with other countries to boost renewable hydrogen production. It will also work to eliminate barriers to the international trade of hydrogen. It has committed €2.4 billion ($2.7 billion) in grants to Sub-Saharan Africa and €1 billion ($1.2 billion) to North Africa to boost renewable energy production and energy efficiency.
Transport
In perhaps the most direct challenge to China's initiative, the European Union will also invest in transport infrastructure — railways, roads, ports, airports and border crossings — to help develop countries and diversify their supply chains. It said it would provide an additional €4.6 billion ($5.2 billion) toward sustainable transport links, including establishing a trans-Mediterranean network connecting North African countries to the bloc.
Health
In response to the pandemic, the new EU plan aims to help countries develop local vaccine manufacturing capacity and diversify their pharmaceutical supply chains. It did not offer specific funding targets, but earmarked Africa as a priority, and said it would collaborate with the Africa Centres for Disease Control and Prevention.
Education and research
The European Union wants to further invest in education globally, including the expansion of online learning. Through talent partnerships, it will offer a pathway for young professionals to move to Europe for work or training, and inject an additional €400 million ($453 million) into its signature Erasmus+ study exchange program.