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EU Global Gateway chief calls for more development aid amid race for investment

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NAIROBI, KENYA – Europeans must keep investing in development aid and infrastructure projects as competition from China, Russia and the United States mounts, International Partnerships Commissioner Jutta Urpilainen told Euractiv in an interview.

Urpilainen has been charged with heading Global Gateway, the EU’s programme to invest EUR300 billion into infrastructure development worldwide, launched almost two years ago.

“We are more and more talking about competition of offers, not only competition of narratives,” Urpilainen said, adding that “we see a competition very strongly, especially in Africa, which is a kind of geopolitical hotspot for the actors.”

“So from my perspective, it would be a geopolitical mistake if we now turn our back to the rest of the world and only focus on Ukraine,” Urpillainen said.

The Commission’s umbrella for sending development aid is seen as an alternative to China’s Belt and Road Initiative (BRI) launched ten years ago to link the world to Beijing in the same style as the ancient Silk Road.

Urpilainen was in Nairobi to meet with activists, business leaders, school children, and Kenyan leaders to forge relationships, promote European investment and get a feel of the situation on the ground.

Strategic autonomy

In Kenya, Europeans vy for businesses alongside Beijing when it comes to developing large infrastructure projects.

Asked what is the added value of EU investments over Chinese, Turkish, or Russian, the Commissioner answered that “our point is that we don’t want to create dependencies”.

“One of our main discussions in Europe is strategic autonomy; we need to be more strategic autonomous. And when I talk to leaders in Africa, including Kenya or Ethiopia, they have similar objectives: they don’t want to be dependent on aid, on import, in terms of vaccines, in terms of fertilisers, in terms of food, or whatever.”

She said, shooting at the “debt trap” many countries found themselves in when dealing with Beijing, that one of the main reasons for Kenya’s “very high debt level is huge infrastructure projects, which have been funded by Chinese loans”, while the Europeans invest with grants.

“Now they need to pay $1 billion annually to China, so 60% of this country’s budgetary expenditure or budget expenditure goes to debt service, so the fiscal space [left for other investments] is very, very limited”, the Commissioner said.

China has invested in Kenya via major projects via loans: the expressway in the capital city of Nairobi linking the airport to the city centre, the Standard Gauge Railways between the large harbour of Mombasa and Nairobi, and put up 5G connection via its state-affiliated Huawei.

But Kenya is one of many benefiting from Beijing’s investments, targeting 150 countries worldwide, which shows developing countries’ interest in bringing in new investors.

Faced with fierce competition everywhere she travels, Urpilainen called on the member states to devote more money to development aid.

“My message has been clear: we are in the geopolitical competition,” she told EU governments. “It’s not only competition of narratives, but competition of offers,” which became “very visible” after the Russian attack on Ukraine and the Covid-19 pandemic.

“Russia is offering its security services through the Wagner group, China has a Belt and Road Initiative, the US has it on Africa strategy”.

She called for the member states to be “committed, and to be also financially ready to contribute, otherwise, we cannot succeed,” after qualifying as “unfortunate” some EU governments’ decisions to cut development aid as Germany proposed, or redirect it to Ukraine.

“From my perspective, it would be a geopolitical mistake if we now turn our back to the rest of the world and only focus on Ukraine,” she said, asking to “keep the promises” made to the south regarding access to business and finance.

De-risking the business environment

The Europeans’ offer, Urpilainen said, works around a “360 degrees approach”. As an example, she said, “It is not about this route, this rail, this is the stadium… we now want to invest in, but it’s more into this E-bus line, and at the same time, educate the labour force for that, as well as maintenance, … otherwise it doesn’t work”.

Another point she made is that the Global Gateway investments work as “de-risking guarantees, to leverage and attract private investment” into developing countries.

That also goes into working “with the governments, on anti-corruption or some other regulatory issues, which are very much impacting and influencing the business environment (…) to make it more attractive”.

She also underlined that developing third countries could help curb irregular migration to Europe.

“We support our partners to develop their societies in a sustainable manner, so young people – in Kenya, 20% of the citizens are between 15 and 24 years old – have more opportunities, so they don’t need to go to Europe, to look for prospects or opportunities.”

[Edited by Alice Taylor]

 

 

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