Author:
Mark Furness
Senior Researcher, German Institute for Development and Sustainability (IDOS)
Date: 30.11.2023
Reading: 13 min.
Introduction
The 2011 Arab uprisings promised political, economic, and social change throughout the Southern and Eastern Mediterranean. Since then, the Arab world has changed, but not as many had expected. The region’s authoritarian political systems proved resilient. Political and economic turbulence driven by wars, geopolitics, a global pandemic, and climate change has led international partners to adjust their strategies for engagement with the many development and sustainability challenges facing Middle East and North African (MENA) countries.
This paper discusses the engagement strategies of two of the most important international partners for most Southern and Eastern Mediterranean countries: the European Union (EU) and China. China has supposedly been able to step into a geostrategic space left by the withdrawal of the United States and the relative weakness of European former colonial powers, mostly in terms of economic engagement but also as a security actor (Ghafar & Jacobs, 2020). Chinese economic cooperation with MENA countries has been conducted under the auspices of the Belt and Road Initiative (BRI), launched in 2013 to build a ‘new Silk Road’ connecting the world with China.
For the EU’s Mediterranean policy, the years since the Arab uprisings have raised dilemmas created by an endlessly unfolding complex of real and perceived threats and opportunities. The EU has moved from supporting democracy to managing migration to promoting renewable energy to investing in infrastructure without fully convincing regional actors and outside observers that it had a comprehensive grip on its neighbouring region’s challenges or even on its own interests. Its Global Gateway investment strategy represents a renewed effort to increase European influence in the Southern Mediterranean by working as ‘Team Europe’ to build ‘connectivity’ (EC/EEAS, 2021a).
This paper discusses the implications of the BRI and Global Gateway strategies and realities for each other and for states and societies in the Southern and Eastern Mediterranean. The BRI has already had a significant impact in the region. The Global Gateway is still an unknown quantity but has the potential to make a big impact as well. The two investment strategies are essentially mechanisms for building influence and accessing resources in a competitive global geostrategic environment. There are nevertheless important overlaps and potential synergies that could be exploited for the benefit of MENA societies as well as the EU and China. There are also potential negative implications for people in MENA countries and dangers for foreign investors who help finance the prestige projects of autocrats. European policymakers need to decide how far they can go, and unlike Chinese leaders, their decisions will be publicly scrutinised by European researchers, civil society organisations, and the media.
The Belt and Road and the Global Gateway: Two Strategies for Building Connectivity in the Mediterranean Basin
The BRI and the Global Gateway are distinct investment strategies, but there are many similarities regarding their approaches and methodologies.
The BRI
China’s Arab policy paper notes that “Friendship between China and Arab states dates back to ancient times … [when] land and maritime Silk Roads linked the Chinese and Arab nations” (PRC, 2016).
China’s Arab policy paper stresses the BRI’s centrality to its regional strategy:
“Joint efforts will be made by China and Arab countries to promote the “Belt and Road” initiative under the principle of wide consultation, joint contribution, and shared benefit. China and Arab countries will adopt the “1+2+3” cooperation pattern to upgrade pragmatic cooperation by taking energy cooperation as the core infrastructure construction and trade and investment facilitation as the two wings, and high and new technologies in the fields of nuclear energy, space satellite and new energy as the three breakthroughs (PRC, 2016).”
China is interested in deepening cooperation with Southern and Eastern Mediterranean countries as a means of connecting Asia and Europe, a key objective for the BRI. As Ghafar and Jacobs (2020) note: “North African countries are especially attractive prospects due to their proximity to European, African, and Asian markets, high number of industrial zones, and high levels of investment in infrastructure development.” Devonshire-Ellis (2021) adds that North African countries’ Free Trade Agreements with the EU and deepening ties to sub-Saharan Africa have increased their attractiveness as a destination for Chinese investment. As Savic (2021) foresees, “the next phase of the BRI will not, therefore, be solely as an international supply chain centre for goods and raw materials, but as a hub for Eurasian tourism and travel enabling global visitors to explore the fusion of the modern and original Silk Roads with the cradles of European civilisation”.
China’s authoritarian development model carries considerable legitimacy among Southern Mediterranean elites (Ghafar & Jacobs, 2020). China has stressed the difference between its “no strings attached” policy and European conditionality, which resonates in MENA countries even if it is not completely true. Many Arab political and business elites welcome Chinese finance, technology, consumer goods, expertise, and markets without accompanying lectures about human rights and democracy. Khurma (2023) goes further, arguing that China’s “complete disregard for human rights and individual freedoms seems to attract many regional governments”. Indeed, for some regional authoritarians, the relationship with China provides weapons and surveillance technology that can be used to suppress opposition movements in their countries. Khurma (2023) adds that “many Arabs see China as a friend” and that China has cultivated its soft power by investing around $ 4 billion in CGTV Arabic, a UAE-based streaming platform providing Chinese news and other shows to millions of homes.
The Global Gateway
As its title suggests, the EU’s Global Gateway is designed to reach far beyond the Mediterranean basin and builds European influence globally. When the connectivity strategy was officially launched in December 2021, the European Commission said that it would look to compete with the BRI and balance Chinese influence, especially in Africa and the Middle East (Liboreiro & Pitchers, 2021). The Commission has since played this aspect down, instead stressing the benefits of engagement on the basis of European standards and democratic values (Furness & Keijzer, 2022).
The EU’s cooperation strategy towards its ‘Southern Neighbourhood’ has changed in emphasis since the Arab uprisings. The EU’s initial reaction to the protest wave across the region was to offer “more for more”: increased support in return for deeper governance reforms (EC/EEAS, 2021b). European development aid to European Neighbourhood Policy (ENP) South countries increased sharply in the wake of the Arab uprisings (Bodenstein & Furness, 2023). In recent years, EU engagement has become conditional on security and anti-migration cooperation (Del Sarto, 2021). This change in emphasis was seen in the EU-Africa migration trust fund after 2015 and in the comprehensive deals with Tunisia, Egypt and Morocco that have made aid and, to a lesser extent, investment conditional on migration management (Tocci, 2023).
Given the lack of success of nearly 30 years of ‘positive conditionality’ in the Southern Neighbourhood, there is a sense that the EU’s change in strategy is partly the result of frustration. The EU has realised that incentivising change in non-EU countries is both difficult and questionable from a legitimacy perspective. The Global Gateway represents a step back from the traditional EU cooperation model based on supporting and rewarding reforms. The EU has been explicit about its more ‘geopolitical’ focus on European interests and mutually beneficial projects. Support for democracy and social justice in neighbouring countries has become a second-order priority.
Analysts have argued that the Global Gateway has the potential to have more success than earlier strategies. Rizzi and Varvelli (2023) consider that the EU should prioritise the Southern Neighbourhood for Global Gateway projects. They point out the potential for investments in green energy projects, better infrastructure connections between MENA countries and Europe, and manufacturing sectors with shorter supply chains, which could make the region a nearshoring hub for the EU. While democracy is no longer on the agenda, the EU still has ambitions to export economic governance norms and standards via financial regulation rules underpinning investment projects (Prontera & Quitzow, 2023).
The Belt and Road and the Global Gateway: A New Reality for the Southern and Eastern Mediterranean?
The BRI
Figures from the Chinese foreign ministry reveal that China-Arab states’ economic and trade cooperation has increased dramatically since the Arab uprisings. In 2021, China’s FDI stock in Arab states topped $23 billion, an increase over 10 years of more than 260 per cent. Trade volumes reached $330.3 billion, 1 ½ times more than in 2011, making China the largest trading partner for several ENP-South countries (PRC MFA, 2022).
As Chinese investment in the MENA has increased, the BRI has become a vital tool of Beijing’s foreign policy. According to a Chinese report on BRI investment, the majority of BRI investment projects in 2021 were in the MENA region. In 2022, MENA countries expanded their cooperation with China and received about 23% of Chinese BRI engagement, up from 16.5% in the previous year. Projects included the TEDA area of the Suez Canal Authority and the operation of the new port terminal in Haifa Bay (Nedopil-Wang, 2022).
China’s investments are creating opportunities for European companies. In January 2021, Egypt’s National Authority for Tunnels signed a memorandum of understanding with Egyptian firms Orascom Construction and Arab Contractors and with Germany’s Siemens Mobility to design and build high-speed rail linking the Red Sea and the Mediterranean. According to Devonshire-Ellis (2021), these companies will be paid $23 billion for building and maintaining the network over 15 years.
Scepticism about Chinese motivations and, above all, about the effectiveness of Chinese investment may be growing. As Malik (2023) points out, mega projects in several MENA countries are demolishing homes and cultural heritage with little public consultation. The scandal in Jordan over the Attarat energy project, which promised to provide Jordan with a major electricity source and good relations with China, is providing a cautionary tale to other MENA countries. According to Debre (2023), since there are cleaner sources, the energy from the shale oil plant is no longer needed, meaning that Jordan has borrowed billions for out-of-date technology.
The Global Gateway
The Global Gateway’s key implementation tools are “Team Europe Initiatives” (TEIs) and blended finance. TEIs arose during the Covid-19 pandemic to mobilise resources for supporting neighbouring countries. After many years of efforts to integrate development financing and coordinate external cooperation, TEI has become the preferred option for EU Member States (Hodson & Howarth, 2023). TEI is an intergovernmental approach where decisions are taken on a case-by-case basis, meaning Member States have considerable influence over strategic choices under the Global Gateway. Blended finance, on the other hand, is a mechanism for increasing the European Commission’s power via financial regulations (Prontera & Quitzow, 2023). The Neighbourhood has been the testing ground for the Global Gateway, in that blended finance has been an important instrument in the ENP ‘toolbox’ since the launch of the Neighbourhood Investment Facility in 2008.
To date, the Global Gateway has made a slow but steady start in the ENP-South region. The overarching policy goals for projects in ENP countries are set by the ENP Economic Investment Plans, which aim to boost economic development and connect partner countries with each other and with the EU, targeting connectivity gaps in digital, energy and transport infrastructure (EC/EEAS, 2021c). According to available information from the European Commission, projects have been launched or are being planned in five ENP-South countries.
The highest profile project is the ‘Medusa Submarine Cable System,’ which aims to connect universities and Small and Medium Enterprises (SMEs) in Egypt, Tunisia, Algeria, and Morocco with southern EU Member States. A second cross-regional project is the ‘Global Maritime Green Corridor,’ which aims to produce six million tonnes of methanol annually for green shipping. A feasibility study for the first phase in Morocco and Egypt is close to completion, and the project will include private sector participants. Egypt is the location for the TEI ‘Connected Economy and Society,’ which includes a project to modernise the Alexandria Area Control Centre, financed by France’s French Development Agency (AFD) and an EU grant. In Tunisia, the ‘ELMED Interconnector Electricity Transmission Project’ supports the construction of an undersea high-voltage electricity cable between Italy and Tunisia. The ‘SoutH2 Corridor’ pipeline to transport hydrogen from Tunisia to Southern Germany through Italy and Austria is planned to be operational by 2030. In Morocco, a TEI plans to blend loans from AFD and the European Investment Bank (EIB) with an EU grant to finance the extension of the Rabat tramway network. In Jordan, the Aqaba-Amman desalination project aims to end the country’s water scarcity problem. The project is the largest infrastructure project in Jordan’s history, envisaged to cost €3 billion and create 4,000 jobs in the construction phase planned to begin in June 2024.
Potential synergies, potential pitfalls
When European Commission President von der Leyen announced the Global Gateway initiative during her State of the Union address to the European Parliament in September 2021, she argued that rather than “build[ing] a perfect road between a Chinese-owned copper mine and a Chinese-owned harbour”, Europe should “… get smarter when it comes to these kinds of investments”. Many infrastructure projects, particularly in the area of connectivity, aim at providing public goods which benefit everyone. The smarter option, therefore, is to explore the scope for Europe and China to work together in the Southern and Eastern Mediterranean, where it makes sense to do so. While scepticism about the others’ motives is inevitable, the EU integration experience shows how intertwined investments and mutual dependency are instrumental for maintaining long-term peaceful cooperation.
The EU views its relations with China as a triptych: China is a partner for cooperation and negotiation, an economic competitor, and a systemic rival (EC/EEAS, 2021). This three-dimensional view of the relationship highlights that Europe and China are global actors with complex interests that sometimes overlap and, at other times, are in conflict with each other. China’s official narrative is one of synergy rather than competition. Whereas Western think tanks and media regularly depict the BRI as a Chinese plot to undermine European unity and create unsustainable debt burdens, Chinese state media envisage a bright future in which Europeans and Chinese are ancient civilisations coming together as strategic partners in a bright future (Savic, 2021).
The Global Gateway and the BRI have certain similarities. Both initiatives are brands that offer external economic cooperation and investment in return for access to resources and political influence. Both initiatives cover a wide and ever-expanding set of activities and include pre-existing projects. Neither initiative is “going away” in the near future.
There are key differences as well, but these appear to complement rather than contradict each other. One big difference is that Global Gateway projects are to be partly funded by grants as well as loans. Rizzi and Varvelli (2023) argue that this means that the EU can propose more attractive investment offers than China. A second difference is the EU’s intention to engage the private sector in Global Gateway projects. According to the European Investment Bank (EIB), a new Global Gateway Fund of €400 million is planned for facilitating private sector investment, which is expected to catalyse more than €4 billion in funds (Shirley, 2023). According to Nedoil-Wang (2022), the Chinese government is also interested in exploring possibilities for co-financing initiatives with the Global Gateway.
The EU’s main problem and vulnerability in relation to China remains its credibility and its commitment to deliver on high-minded promises. On the financial side, the €300 billion Global Gateway investment target by 2027 is a big number. Nevertheless, this target pales in comparison to the estimated $964 billion that China has invested in the BRI since 2013 (Scissors, 2023). Although pertinent questions about whether the EU can achieve its target have been raised, €300 billion globally, with a good proportion to be invested in North Africa and the Levant, should not be a problem for the EU as long as the political will to prioritise the Global Gateway can be found. Indeed, if the Global Gateway is to make its envisaged impact in the ENP-South and globally, €300 billion will need to be just the start.
On the values side, assurances that investments will be made in line with European values and standards raise a dilemma that has plagued the ENP for many years. The EU has long faced the reality that addressing political, social, and economic challenges in the ENP-South requires cooperation with authoritarian governments. This has meant that the EU has been vulnerable to the charge of hypocrisy, and in addressing this, has had either to moderate its language or compromise on its values. The EU has mostly chosen the latter approach, leading to accusations of acting neo-colonially by talking about superior values while practicing double standards regarding human rights (Grimm & Roll, 2023).
Conclusions
The EU is right to view China through its three-faceted prism. China is not interested in a world order based on cooperation and exchange among liberal democracies. The Chinese government does not care about the rights of ordinary citizens in MENA countries. Nevertheless, there are opportunities for cooperating with China on projects of mutual interest. These opportunities should be actively sought out and taken when they arise.
At the same time, the EU would be well advised to take its own promise to offer governments and societies in the Southern and Eastern Mediterranean with a better deal than the BRI. It will not be enough for the EU to merely talk about its values, especially participative policymaking, accountability for decisions, and transparency of processes. These values are at the heart of European integration and make Europe an attractive model for people from all over the world.
The EU does not need to take a confrontational approach towards the Chinese engagement in the Southern Neighbourhood. Europe is most likely to reach its objectives when it leads by example, offering better deals that benefit all parties. If the EU is able to demonstrate that the benefits for MENA countries in cooperating with the ‘European model’ are greater than in cooperating with the ‘Chinese model’, it is likely that China will want to cooperate with Europe as well.
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