Quite open about its stance promoting domestic economic interests, the EU off-late seems increasingly keen to assert its place in the emergent geopolitics of digital value chains. To this end, a salient development has been the bloc’s recent initiatives seeking to position itself as a steward for the digital ambitions of the developing world. Indeed, it is clear that Europe feels the imperative to embark on international development projects of its own, in an effort to confront China’s growing global influence through its Belt and Road Initiative (BRI). The form this has taken is the so-called ‘Global Gateway,’ a campaign that aims to extend Europe’s international presence across the developing world. The Global Gateway initiative was announced towards the end of 2021 by Ursula von der Leyen, the European Commission President. The stated plan, as of now, is to spend 300 billion Euros between 2021 and 2027 on connectivity projects, notably in the digital, climate and energy, transport, health, education, and research sectors. Of this, the EU has already committed 150 billion Euros to Africa alone.
The digital component of this package is couched in the language of an enlightened ‘third way’, between the extremes of the American Laissez-faire model and China’s authoritarianism. Instead, the EU offers a path to digitalization that seems to champion regulatory oversight through the creation of adequate guardrails to protect privacy and other civic rights, as well as curb the disruptive potential of digital technology. While ostensibly gesturing to its own proactive legislation and investment around the digital economy domestically, the idea that Europe can provide assistance to fashion similar infrastructural and regulatory models across the developing world has been rightly met with considerable skepticism.
From a glance at the details, it appears that much of what is promised is simply a collection of existing initiatives, repackaged to try and win a publicity battle with China’s more prominent BRI.
Given the sordid history of colonial and neocolonial extraction, Europe has always had a complicated relationship with the Global South, in particular, with Africa. The key challenges highlighted in the discourse of the Global Gateway project—climate change, the digital divide, and acute forms of inequality—are truly global and address humanity collectively. A genuine attempt to engage with these problems in collaboration with the Global South could have been an undertaking of momentous significance. Yet, dismayingly, this opportunity seems to have been squandered. Indeed, from a glance at the details, it appears that much of what is promised is simply a collection of existing initiatives, repackaged to try and win a publicity battle with China’s more prominent BRI. Moreover, the larger-scale infrastructure commitments seem geared much more toward expanding Europe’s digital prospects than those of the developing world.
The Global Gateway as a Response to BRI
Before assessing the Global Gateway’s contents, it is worth addressing the larger geopolitical narratives that circulate through such initiatives. Indeed, while von der Leyen stopped short of singling out China in her launch address, commentators have noted the clear efforts to position these projects within the context of a growing (and deliberate) polarization between the West and China, particularly on the frontiers of technology markets.
While there may well be legitimate grievances about Chinese investment and the power relations they bring with them, the bluster with which narratives about China’s supposed ‘debt-trap diplomacy’ have been propagated in recent years ought to give one pause. To begin with, many allegations of such behavior—for instance, the widely discussed Hambantota Port in Sri Lanka—have proven hollow upon an examination of the facts. In fact, an expert in the domain has even forcefully argued that China’s financing strategies are more revelatory of inexperience rather than cynicism. Similarly, reports have argued that part of the BRI’s rapid expansion and success is down to the flexibility and leniency that China has been willing to uphold as a creditor, allowing various forms of restructuring and deferment as economic conditions are transformed—for example, through large shocks such as the pandemic.
The larger-scale infrastructure commitments seem geared much more toward expanding Europe’s digital prospects than those of the developing world.
Given this, the polarizing tendencies inherent in such discourse are both unhelpful and disingenuous. As we see later, there are aspects of the EU’s own proposals that can be interpreted as self-serving or predatory. Indeed, there seems to be a persisting tension in these undertakings, between the adoption of a calculated posture of political realism, and the bombastic language of ‘European principles’ and developmentalism. This is a tension that marks the handling of the project at the administrative level as well. While its framing originates from more politically-minded factions of the Commission, its implementation has been delegated to a department traditionally responsible for EU development policy. As even close observers within the EU note, “On the one hand, Global Gateway promises to do things differently than the BRI in terms of sustainability and promotion of EU values. On the other hand, it also seems to move closer to the BRI in terms of pursuing strategic investments and EU interests. This suggests a conflict of interest between these objectives.”
Rebranding and Repackaging – All there is to it?
Moving on to the EU’s more concrete plans, a look at the actual structure of the investments and proposed models of financing reveals a good deal about the commitments being made and why many in the developing world remain skeptical regarding their seriousness.
Firstly, the proposed 150 billion Euros over the course of seven years is quite a small amount. For comparison, China’s spending has averaged nearly 100 billion Euros annually in recent years. Secondly, of the money that is allotted, much is not a new investment per se. The initiative operates through the ‘Team Europe’ approach, which involves collaboration between the EU, its Member States, and financial institutions like the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD). This setup essentially repackages existing development funds. Notably, the primary investment commitments underlying the Global Gateway consist of loans and guarantees, with only 18 billion Euros in grants allocated through the EU’s external assistance program.
The reasoning offered by the EU is that the 150 billion Euros that they aim to spend will spur private investment as well, so the final stimulus generated will be of a significantly greater magnitude. While this may be true, private investors generally charge higher interest rates with less agreeable terms. The Global Gateway initiative also places heavy emphasis on sustainable development and addressing climate change but this would be hard to enforce in Africa if these initiatives exacerbate the continent’s debt burden. African countries end up relying on the income they generate from natural resources such as oil and petroleum in order to pay off the interest on their current loans. This reliance will likely only grow under the form of financing it is currently being offered.
“On the one hand, Global Gateway promises to do things differently than the BRI in terms of sustainability and promotion of EU values. On the other hand, it also seems to move closer to the BRI in terms of pursuing strategic investments and EU interests…
Moreover, even for what has been promised, the financial commitment of European Member States to the Global Gateway remains unclear, raising doubts about the EC’s ability to achieve its funding target. The level of political support from all Member States is also uncertain, with some waiting to see how the initiative evolves beyond existing Team Europe initiatives. The Gateway’s operational framework may also add another layer of bureaucracy, potentially leading to duplication of decision-making and tensions between the Commission and Member States.
As already mentioned, the Global Gateway represents a move towards the conflation of development assistance with commercial interests under the questionable claim that such a marriage would lead to mutually beneficial outcomes. The EU is attempting to help countries integrate themselves into global value chains, but it must be noted that this will also serve to benefit EU businesses. This is highlighted in the EU’s proposal to establish an export credit agency (ECA) which would essentially provide credit to developing countries to purchase goods and services from EU businesses, potentially at the expense of local competitors. Involving ECAs as a part of the larger Global Gateway plan makes it much harder to separate development aid from commercial investments. Both types of financing have their specific targets, with the former meant to uplift the recipient country, while the latter is tasked with creating financial gain for the donor country.
This seems to follow the World Bank’s International Development Assistance (IDA) body creating and utilizing a ‘Private Sector Window’ (PSW) in order to finance development projects in fragile and conflict-affected states (FCS). This essentially mobilizes private sector investments in infrastructure projects but does so in a manner that has raised concerns amongst even World Bank experts. For instance, infrastructure projects are non-competitively awarded, as well as the allocation of subsidies. PSWs have also been found to be poor at actually spending money, with only a third of the committed amount having been spent as of mid-2023. There is also a lack of transparency regarding the impact of PSW-backed projects, making the evaluation of outcomes a challenge for researchers.
The Global Gateway also allows for the formation of public-private partnerships when it comes to infrastructural projects, however, such arrangements usually prioritize the growth of the private sector in the long term, especially in developing countries. Workers’ rights tend to take a back seat as labor standards are ignored in preference to short-term results.
Studies show how GVC-related trade primarily benefits higher-income countries in terms of income per capita and productivity, and amongst developing nations, the benefits mainly accrue to a small group of highly productive firms, with limited opportunities for the rest. Overall, while the Global Gateway aims to address infrastructure financing gaps, its emphasis on private sector involvement and commercial interests raises concerns about its developmental impact and long-term sustainability.
The Global Gateway initiative also places heavy emphasis on sustainable development and addressing climate change but this would be hard to enforce in Africa if these initiatives exacerbate the continent’s debt burden.
A simultaneous emergence in European development financing is the continued cuts in the national budgets toward ODA funds. EU countries had committed 0.7% of their revenue to ODA in 2021 to commence by 2025, however, nations such as France, Germany, etc.—who are amongst the largest donors in the world—have repeatedly decreased the amount they are putting aside for development aid. The EU has in recent years turned its attention towards Ukraine, sending financial aid for military and humanitarian purposes, while countries like Germany are also beginning to implement austerity-adjacent measures amidst a contraction in economic growth.
Digital Infrastructure and Value Capture in Africa
Large digital infrastructure projects feature prominently in the Global Gateway’s designs, and a closer examination of these is instructive. While there is much that remains provisional on the specifics of these initiatives, the first wave is clearly centered around Africa and building connectivity. To this end, large-scale undersea cable projects have been launched to expand the frontiers of connectivity to Africa, and to significantly upgrade the bandwidth available, so as to increase the speed and cost-effectiveness of internet access across the continent.
Exemplary instances of such projects involve, for instance, the MEDUSA undersea cable, which seeks to bolster the capacity of African research networks. It involves “installing a 7,100 km state-of-the-art submarine optical fiber cable in the Mediterranean to connect Northern African countries with Cyprus, France, Italy, Portugal, and Spain. The aim is to increase by 200 times the speed of the internet in Northern African universities.” There is also the EurAfrica Gateway Cable, which connects the EU with Africa along the Atlantic Ocean coast, as well as the Africa-1 Cable that links Europe with East Africa. Additionally, there are plans to enhance overground connectivity, particularly across the more digitally remote parts of the continent: “The Global Gateway Africa-Europe Investment Package will scale up regional connectivity and enable the deployment of digital services, digital businesses, and innovation by supporting the construction of networks of fiber-optic cables across Sub-Saharan Africa.”
Apart from cables themselves, the EU is notably also investing in the construction of ‘green data centers’ for Africa, setting up the Africa-Europe Digital Innovation Bridge (AEDIB), which will act as an advisor and incubator for African enterprises. It is also creating a Team Europe Initiative on Data Governance in Africa, intended to assist in developing adequate regulatory frameworks for Africa’s emergent data economy.
Taking a look at these projects, one can discern a clear strategic pattern at play across the board. While these infrastructures may genuinely increase and improve internet access across the continent, and even foster certain local enterprises, they are also positioned to feed into channels of economic value that ultimately augment the EU’s digital industries. The absence or weakness of net neutrality or data ownership legislation within these jurisdictions means that controlling the fiber-optic/undersea cables gives one ultimate control of data flows around the continent. This can, for instance, allow for favoring traffic of European companies to give them a competitive advantage, gaining access to data itself to train its own AI models, and leveraging this dependency towards shaping internal decisions within African digital policy. Indeed, as one analyst put it, “99% of global data traffic passes through the submarine cable network, an infrastructure that spans about 1.2 million kilometers and through which $10 trillion financial transactions pass every day…The cables carry everything from streaming videos and phone calls to credit card and ATM transactions. Controlling and managing the cables—and therefore the data that passes through them—provides crucial economic and political leverage.”
Similarly, the other listed EU interventions reveal a similar consolidation of power at key layers of the data value chain. For instance, by plugging African universities into the EU’s connectivity network (as the MEDUSA cable will do), it will be possible to track important frontier innovations within the digital and AI economy that are being developed in Africa, and then be the first to invest or partner with key actors, providing EU firms with key stakes in the right businesses. The same can also be said about the Africa-Europe Digital Innovation Bridge’s start-up incubation. It is now well-established that one of the most important strategic factors in the rise to dominance of Big Tech companies (both in the US and China) has been the targeted use of investments, mergers, and acquisitions to establish dominance in particular markets.
While these infrastructures may genuinely increase and improve internet access across the continent, and even foster certain local enterprises, they are also positioned to feed into channels of economic value that ultimately augment the EU’s digital industries.
Perhaps the most far-reaching of the EU’s interventions however is its push to establish a single market for digital innovation between both continents. This involves, first, providing assistance to ensure that a single digital market can be integrated within the African continent itself. The Centre for Global Development provides an apt overview of the situation: “The largest barrier to developing a single African digital market is inconsistent national rules across all facets of digital governance, including e-commerce laws, consumer protection laws, privacy and data protection laws, and cybercrime laws. Inconsistent rules are a problem for African tech companies seeking to expand beyond their domestic markets, which puts them at a competitive disadvantage. The challenge for the AU will be to harmonize laws in these areas while accounting for the differing aims and levels of digital development of its 55 Member States.” Yet, while streamlining regulations could help African companies scale, it would require a whole host of policies to prevent the capture of such a unified market from foreign competitors that have significant head-starts.
While one may accuse this of being an uncharitable reading of these maneuvers, it is hard not to detect a somewhat predatory streak to their framing, particularly as the same access and openness are unlikely to flow the other way. Rhetorically, the EU says it will also open up its markets for African countries to compete in. However, to fully make use of these markets, such companies would require EU data and would need to have their countries ratified as GDPR-adequate by European authorities. Yet, as critics have already pointed out, “To date, no African country has received an adequacy determination and digital policy experts from the continent have expressed concern that the process for determining adequacy is excessively opaque and often appears to be driven by political and economic considerations, rather than the fitness of a country’s data protection regime.” Such a double standard is particularly egregious when the EU is actively advocating against ‘data localization’ requirements by other countries in other multilateral contexts.
The Infrastructural Turn and its Discontents
Looking at these digital connectivity projects, and the Global Gateway proposals more broadly, it is clear that infrastructures in the Global South are fast becoming key sites of contestation for the industrial windfalls to come. The green and digital transitions underway in these parts of the world are where the prize is perceived to be, and this is where the battles are likely to be fought.
Yet, the Global Gateway appears to signal a fractured consensus rather than a clear-sighted agenda. The focus on performative gestures and rebranding, the stringing together of lofty and ambitious principles with hesitant realpolitik, and the failure to mobilize sufficient resources to be a significant force; all betray a lack of cohesion within the EU’s political machine. With new European Parliament elections near on the horizon, this internal crisis may well become more acute, as predictions indicate a surge for far-right populists. If this comes to pass, it is not clear what it would mean for projects like the Global Gateway. The rhetoric around ‘universal values’ would become impossible to sustain in such conditions, given the sharp dissonance with the brand of politics that would gain ground. Also, it is likely that political exigencies would curb the expansion of such policies and push toward a more insular and self-contained EU.
Meanwhile, with looming debt crises, democratic backsliding, and extremely volatile political tensions all shaping the landscape of the Global South, the degrees of freedom needed to properly address the urgent needs of the digital transition and climate change seem to be receding further away. Unfortunately, large parts of the developing world still need productive investment from abroad to be able to participate in the digital revolution. To wean themselves off of such dependencies should be a goal for South-South cooperation over the medium to long term, but an engagement with today’s hegemons cannot be avoided. Unless it does so, these games of geopolitical pageantry risk dooming us all to an increasingly dark future.
