Fri. Jul 12th, 2024
Why is this Communication proposed now?

The COVID-19 pandemic has harshly exposed the impact of today’s incomplete, incompatible or disconnected global infrastructure. The lack of digital connections, the disruption to supply chains and the scarcity of medical goods has tremendous human and economic consequences.

Furthermore, the increasingly complex global landscape has highlighted the EU’s vital interest to ensure that global connections and networks develop in line with democratic values and high standards, ensuring a level playing field, while at the same time supporting sustainable development in our partner countries, fully in line with the UN’s 2030 Agenda and the Paris Agreement. Global Gateway takes an ethical approach so that infrastructure projects do not create unsustainable debt.

According to G20 estimates, the global infrastructure investment deficit will reach 13 trillion by 2040. Bridging the world’s infrastructure gap and achieving the infrastructure-related Sustainable Development Goals (SDGs) in partner countries, while staying on track to limit climate change and environmental degradation will require an estimated investment of 1.3 trillion per year.

In this context, the Foreign Affairs Council of 12th July 2021 requested the Commission and the High Representative to prepare an EU global connectivity strategy.

With Global Gateway, the EU, in a Team Europe approach, will offer its partners a response to the urgent needs to develop sustainable and high quality digital, climate and energy and transport infrastructures and strengthen health, education and research systems across the world, taking into account their needs and the EU’s own interests.

We will invest in projects that can be delivered with high standards, good governance, transparency, while ensuring financial sustainability at the same time.

 

What is new in this Communication and how does it relate to previous initiatives in Connectivity? 

Global Gateway is global in scope, adapting to the needs and strategic interests of different regions. It builds on the achievements of the 2018 EU-Asia Connectivity Strategy, the recently concluded Connectivity Partnerships with Japan and India, as well as the Economic and Investment Plans for the Western Balkans, the Eastern Partnership, and the Southern Neighbourhood, but paying also particular attention to Africa, Central Asia and Latin America.

Global Gateway will be implemented in a Team Europe approach, that brings together funding by the EU, its Member States and European financial institutions, ensuring that investments can be targeted and more effective, strengthening existing initiatives and fostering new ones.

Global Gateway is values driven and based on the Union’s high social, environmental, fiscal and labour standards. It will focus on physical infrastructure – such as fibre optic cables, transport corridors, clean power transmission lines – to strengthen digital, transport and energy networks. It will also provide an enabling environment to make sure projects deliver, by offering attractive investment and business-friendly trading conditions, regulatory convergence, standardisation, supply chain integration and financial services. The EU has put in place financial and other tools to address the investment needs in sustainable infrastructure development across the world.

In terms of new financial tools, the Neighbourhood, Development and International Cooperation Instrument (NDICI-Global Europe), adopted in June 2021, has an overall budget of 79 billion, and a number of tools to enable the EU to leverage our investments, in particular the European Fund for Sustainable Development plus (EFSD+). In addition, the Instrument for Pre-Accession Assistance (IPA) III (with an overall budget of over 14 billion) , as well as Interreg, InvestEU and the EU research and innovation programme Horizon Europe, will allow the EU to leverage public and private investments in priority areas, including connectivity.

 

Is Global Gateway a response to the Chinese Belt and Road initiative and how does it relate to others?

We are living a key moment in our history. The challenges of the post-Covid recovery need to be addressed in the context of the post-COP26 consensus on sustainability.

Low and middle-income countries face a significant infrastructure-financing gap – the World Bank estimated it at over USD 2.7 trillion in 2019, and the Covid-19 crisis has worsened since. More and better development finance from all donors is crucial for advancing the implementation of SDGs in partner countries.

By offering an innovative choice for global infrastructure development, based on the needs of our partners, Global Gateway will be an investment in international stability and cooperation. Global Gateway can demonstrate how democratic values provide certainty and transparency for investors, sustainability for partners and long-term benefits for people around the world.

The EU will offer its financing under fair and favourable terms in order to limit the risk of debt distress.

We want to deliver mutual benefits through quality infrastructure, based on our values and principles, that work for people and planet, whilst also defending our interests and strengthening the rules-based world.

With Global Gateway, Europe will play its full part in narrowing the global investment gap. But meeting this objective will require the concerted effort of like-minded partners and support work started within the G7.

Initiatives such as the Build Back Better World and Global Gateway will mutually reinforce each other. This commitment to working together was reaffirmed at COP26, the 2021 United Nations Climate Change Conference, where the EU and the United States brought together like-minded partners to express their shared commitment to addressing climate crisis through the development of infrastructure that is clean, resilient, and consistent with a net-zero future.

 

What is Global Gateway’s approach and how will it support Human Rights in the world?

The EU’s external action contributes to the promotion of its values and principles and is rooted in the respect for democracy, human rights and fundamental freedoms as well as the rule of law.

Global Gateway will channel EU spending on global infrastructure development in accordance with the following key principles:

– Democratic values and high standards

Global Gateway will offer a values-based option for partner countries to choose from when deciding how to meet their infrastructure development needs. This means adhering to the rule of law, upholding high standards of human, social, and workers’ rights and respecting norms from international rules to intellectual property and open public procurement. It means selecting investments that are sustainable – for local people, local environment and local economies. It means taking an ethical approach so that infrastructure projects do not create unsustainable debt or unwanted dependencies.

– Good Governance and Transparency

Delivering projects that work for people will require transparency, accountability and financial sustainability. It will need open access to public procurement and a level playing field for potential investors and a clear set of agreed deliverables to ensure that Global Gateway projects say what they will deliver – and deliver what they promise. Those most affected by potential projects – local communities, businesses and partners – must have their full say through proper public consultations and civil society involvement. Projects should ensure affordable and equal access to the services and benefits they will deliver, notably for women and girls and those at risk of disadvantage or exclusion.

– Equal partnerships

Global Gateway projects will be designed, developed and implemented in close cooperation and consultation with partner countries. Infrastructure projects will be based on the needs and opportunities that they identify for their local economies and local communities, as well as the EU’s own strategic interests. This means developing partnerships with countries at eyes-level and ensuring that project planning takes into account the capacity of host countries to manage and maintain the infrastructure in a sustainable way after it has been completed.

– Green and clean

The Global Gateway is a climate-neutral strategy to speed up sustainable development and recovery, create inclusive growth and jobs and transition to a cleaner and more circular global economy. It will invest in developing infrastructures that are clean, climate-resilient and aligned with pathways towards net zero emissions. Projects will live up to the European Green Deal oath to ‘do no harm’ and ensure the use of environmental impact assessments and strategic environmental assessments.

– Security-focused

Secure infrastructure underpins the resilience of global economy and supply chains– be it on digital, health, transport or energy. Global Gateway projects will invest in infrastructure to plug vulnerabilities, provide trusted connectivity and build capacity in the face of natural or man-made challenges, physical, cyber or hybrid threats, and economic coercion for geopolitical aims. They will ensure that citizens are shielded from unwarranted surveillance by public authorities or private companies.

– Catalysing private sector investment

Europe’s world-leading industry, private sector knowledge and investment capacity gives us a unique competitive advantage around the world and Global Gateway must make full use of it in order to be a viable and attractive alternative for partner countries. The Global Gateway will combine and leverage resources from the EU, its Member States, financial institutions and Multilateral Public Finance, and use these public resources to crowd-in private capital.

 

What are the key sector for investments priorities under Global Gateway?

Global Gateway will strengthen the people-to-people connections between Europe and its partners and will channel its investments where infrastructure gaps have been exposed or exacerbated in recent years in digital, climate and energy, transport, health and education and research.

 

A digital transition in line with European values and standards

The EU will work with partner countries to deploy digital networks and infrastructures such as submarine and terrestrial fibre-optic cables, space-based secure communication systems as well as cloud and data infrastructures, which together provide a basis for exchanges of data, cooperation in high performance computing, Artificial Intelligence (AI), and earth observation. We will prioritise underserved regions, countries and populations, with the aim of tackling the global digital divide and strengthening secure digital connections within them and between Europe and the world. The EU will minimize the environmental footprint of digital infrastructure, by promoting green data centres and deploying underwater cables equipped with ocean monitoring sensors.

 

Energy connectivity in support of the green transition

EU will invest in infrastructure and supporting regulation to pave the way for the clean energy transition in partner countries. Together they provide a unique opportunity to transform economies, create employment and strengthen energy security. We will cooperate with partner countries to enable their just energy transition and to diversify our clean energy supply at the same time. The EU will support regional energy integration, promote energy efficiency, renewable energy (including smart grids) and just transition. We will work with partner countries that have the potential to develop their renewable hydrogen production, and promote the creation of competitive markets to enable such hydrogen produced outside the EU to be traded internationally without export restrictions or price distortions. The EU will also work with partner countries to invest in infrastructure for developing sustainable and resilient raw materials value chains.

 

Sustainable, smart, resilient, inclusive and safe transport networks

Global Gateway will promote worldwide infrastructure investments that create sustainable, smart, resilient, inclusive, and safe transport networks in all modes of transport, including rail, road, ports, airports, as well as logistics, and border-crossing points, in a multimodal system. We will implement transport infrastructure projects that foster the sustainable development of partner countries and reduce greenhouse gas emissions, as well as enable the diversification of their supply chains. We will also seek to build on our position as the world’s transportation hub.

 

Health

Global Gateway will prioritise the security of supply chains and the development of local manufacturing. As regards the security of supply chains, the EU will be working with partner countries to diversify their pharmaceutical supply chains. The Health and Emergency Preparedness and Response Authority (HERA) will also contribute to addressing international supply chain bottlenecks and establish close collaboration with global partners to prevent future health emergencies and strengthen global surveillance.

 

Education and research

The EU will invest in quality education, including digital education and work with partner countries to strengthen cooperation on research and innovation.

Through education, training, youth and sport exchange programmes, the EU facilitates mobility of students and staff and strengthens higher education institutions and peer learning. The Erasmus+ strengthens societal links and promotes the EU’s soft power and the attractiveness of its model of society. Talent Partnerships will facilitate the mobility of partner countries’ young professionals and trainees to Europe for employment or training. The EU also seeks to reinforce global co-operation in the field of research and innovation. As reflected in the EU’s Strategy on international cooperation on research and innovation ‘the ‘Global Approach’[1], the EU is a major catalyst to increase scientific excellence and addressing global challenges while enhancing economic growth and job creation. The Horizon Europe Programme includes opportunities for collaborative research and for mobility of researchers at international, inter-sectoral and interdisciplinary level. Horizon Europe also now offers the possibility to associate countries located anywhere in the world, which share fundamental values and with a strong science, technology and innovation profile. The EU will also continue investing in cultural cooperation between Europeans and citizens in partner countries.

 

How will Global Gateway be financed? 

Global Gateway will be implemented through a Team Europe approach to scale up resources from the EU Institutions, Member States with their financial and development institutions, the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD). It will actively seek to mobilise private sector finance and expertise and support access to sustainable finance.

Using all of the financial and development tools at the EU’s disposal and supported by the strong commitment from EU Member States, Global Gateway aims to mobilise up to 300 billion between 2021 and 2027.

Under NDICI-Global Europe, with an overall budget of 79 billion, investments in building connections are expected to rise significantly. It has a 35% spending target for climate actions and an additional 10% approximately of the total funding will be dedicated to digital actions.

NDICI-Global Europe establishes the new European Fund for Sustainable Development Plus (EFSD+) as its financial arm, backed by the Union’s External Action Guarantee (EAG),of €40billion (out of a total of 53.4 billion) to de-risk investments and leverage private investments, working together with the EIB and other European financial institutions, as well as EU. Member States’ institutions (development banks, national promotional banks, export credit agencies) and capital from the private sector.

The EU can also leverage private investments by means of its Instrument for Pre-Accession Assistance (IPA) III, Interreg, InvestEU and the EU research and innovation programme Horizon Europe.

The EFSD+ will make available up to €135 billion in investments guaranteed by the External Action Guarantee for Global Gateway projects, in addition to up to €18 billion in grants and a further planned €145 billion in investment volumes by European financial and development financial institutions. Financing will rely on systematic mechanisms to filter out abnormally low tenders, and foreign subsidies that undermine the level playing field.

The EU is also exploring the possibility of establishing a European Export Credit Facility to complement the existing export credit arrangements at Member State level and increase the EU’s overall firepower in this area. The Facility would help ensure a more level playing field for EU businesses in third country markets, where they increasingly have to compete with foreign competitors that receive large support from their governments, and thus facilitate their participation in infrastructure projects.

 

How will the European Fund for Sustainable Development+ (EFSD+) be used concretely?

In partnership with the European Investment Bank (EIB), the EU will provide a total €26.7 billion guarantee to cover investments in several sectors such as clean energy, green infrastructure and health The risk coverage provided will allow the EIB to offer loans to partner countries to make sustainable investments in connectivity and other priority sectors.

As one of the sectoral windows of the EFSD+ that is open to all development financial institutions under the Open Architecture concept (13 billion), the Commission will propose a specific Global Gateway y window, which will, together with other thematic windows such as the Sustainable Finance window, focus on sectors such as sustainable energy, clean transport and digital. A dedicated sub-window will be created for digital connectivity with a country level approach to reinforce convergence with the EU’s digital economy packages.

Where projects have a public added value, which is not monetarised and that guarantees cannot address, the EU will use the EFSD+ blending facilities. These facilities offer grants to financial institutions to give loans to EU partner countries for affordable investment projects, while enhancing their sustainability, climate-proofing and development impact.

 

Who will decide the projects selected and when can we expect that the first projects take off?

The proposal for Global Gateway is underpinned by the start of implementation of the EU multi-annual financial framework 2021-2027 and the use of its new financial tools.

The projects under Global Gateway will continue to be decided in line with the respective governance mechanisms of their respective financing instruments, while a Steering Board to give strategic guidance will be established focused on its implementation, including the development of Team Europe Initiatives. The EU’s Delegations around the world will play a key role to identify and coordinate Global Gateway projects in partner countries.

 

How will you work with the private sector and civil society?

Global Gateway projects will be developed and delivered through Team Europe Initiatives. The EU institutions, Member States, and European financial institutions will work together with European businesses as well as governments, civil society and the private sector in partner countries.

The Commission will set up a Business Advisory Group on the Global Gateway to discuss the implementation of the Global Gateway strategy, ensuring private sector involvement.

A dialogue will also be set up with civil society to ensure a fully inclusive approach is taken.

 

How much money did the EU invest in the last period in connectivity  

In the years between 2014 and 2020, the EU invested 14% of its external budget – €9.62 billion – on connectivity projects. Under the 2021-2027 budget cycle, this sum will likely increase significantly, thanks to a larger external budget and increased spending in the priority areas digital, energy and climate, transport, health and education and research.

[1] Communication ‘Global Approach to Research and Innovation’, COM(2021) 252 final

Source – EU Commission

 

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