President of the European Commission, Ursula von der Leyen said that the European Union will create an investment fund of up to 300 billion euros as part of a strategy to boost smart, clean, and secure links in digital, energy, and transport and strengthen health, education and research systems across the world. According to the President of the European Commission, this fund "will be better than the Chinese Belt and Road Initiative". Konstantin Soborny, a journalist and international political scientist, told Apostrophe how the new investment fund of the European Union will affect relations between countries inside the EU, and whether Ukraine should further develop strategic relations with China.
The launch of the EU Global Gateway, aimed to mobilize up to €300 billion in investments between 2021 and 2027, once again reaffirms that the controversy between the United States and China is increasingly escalating into the ‘Cold Economic War’. This manifests itself in the formation of coalitions and blocs. According to the President of the European Commission Ursula von der Leyen, the Global Gateway strategy is "in line with the EU's democratic values and international norms and standards" and "will be a better offer than Chinese investments”.
It's no secret that the economy is a continuation of politics, and the creation of the EU fund as a counterstrategy for Chinese investments is an attempt to get rid of Chinese capital in Europe. Noteworthy, so far the EU has successfully balanced between Chinese investments and American interests in the region. However, it seems that the Biden Administration raises the issue of Europe’s belonging to the American coalition.
What was worth Biden's demarche with the creation of the tripartite defense alliance "AUKUS" with the participation of Great Britain and Australia, as a result of which France lost a multibillion-dollar contract for the supply of submarines to Australia, receiving a warning signal from the White House? Moreover, the Biden Administration's decision on Nord Stream 2, which is an American concession for Germany to restore Trump's spoiled U.S.-European relations, may now well play the role of a "Damocles sword", as Washington sanctions may interrupt still unfinished certification process of the scandalous gas pipeline.
Amid the escalation of the situation in Ukraine and increased the build-up of Russian troops along the Ukrainian-Russian border, which was initially reposted by the American media, the EU countries received a clear reminder that NATO, under US auspices, continues to be a security guarantee in the region. In fact, when Biden said that America had returned, it meant not only restoring relations with European allies but also returning to the format of "patron-client" relations. Therefore, the launch by the European Union of a 300 billion fund, as opposed to the Chinese "belt", suggests that the United States can still find the necessary leverages to influence key EU players and limit Chinese investment policy in the region.
In this regard, it should be understood that until the EU finally identifies itself as a certain bloc in the U.S.-Chinese confrontation, it will maintain the most favorable position. But, taking the side of one of the great powers, the EU will have to accept its rules. Therefore, the decision of the European Commission to publicly oppose China's "One Belt One Road" will significantly reduce the scope of EU maneuvers.
In addition, the emergence of a new European investment fund will affect Eastern Europe, especially those countries that are member-states. Thus, the statement of the President of the European Commission emphasized that the strategy is based on democratic values. Given the fact that Brussels had repeating disputes with EU eastern member-states on the subject of the rule of law, the launch of EU Global Gateway may start another one. This, the unity within the EU will be tested for strength once again.
The most striking example in this situation is Hungary, which last year was the main recipient of Chinese investments, building railways, and developing a digital and green economy with Beijing. Simultaneously, Budapest has been refusing to provide asylum for Middle East migrants and therefore was being confronted by Brussels. Thus, the new investment fund of the European Union will obviously bypass Budapest, as this will affect the rating of the local ruling political party “Fidesz” led by Prime Minister Victor Orban.
However, China has been investing not only in Hungary, which is evidenced by the 17+1 format, but China has also developed for cooperation with Eastern and Central European countries. Each of these countries has certain "nuances" and issues in relations with Brussels. Therefore, if the new EU fund becomes a deterrence tool for some countries, and encouragement for others, еhe European Union risks unleashing both old and new contradictions, which will split Europe again, making it weaker in the face of external challenges.
Turning to how the EU Global Gateway can influence Ukraine, first of all, it should be understood that Kyiv will once again find itself in a position where Ukraine will have to choose between East and West. On the one hand, Ukraine has the potential to participate in the projects of the new EU investment fund. It is most likely that money from this fund can be allocated primarily for the restoration of infrastructure in the territory of the Donetsk and Lugansk regions controlled by Ukraine, but which suffered significant losses from the war with Russia. It is also possible that the EU will allocate its investment in other regions of Ukraine as well.
But there are several issues here. In the fight for EU investment, we should not forget about the European bureaucracy, the peculiarities of European legislation, and the need for reforms, including in the anti-corruption sphere. This can slow down, if not freeze, the implementation of potential projects using European investments. There is a range of different reasons for that - from simply procedural to fundamental features of our state. Solving these certain potential obstacles may take quite a long time, while the EU will simply allocate its investment to a more successful "applicant" instead.
On the other hand, there is China, which, after the emergence of the new EU fund, may lose some participants of its investment projects in Europe. This will open a window of investment opportunities for Ukraine. According to statistics, Chinese investment in Ukraine increased fivefold in the past five years and amounted to around $ 260 million. However, the main obstacle is that Ukraine’s cooperation with China is being watched cautiously in Washington, and now in Brussels. Of course, the Ukrainian side has repeatedly demonstrated its loyalty to the United States, and it is not in Kyiv's interest to take such a risk while facing Russia’s invasion.
Perhaps this is one of the key tasks of Ukrainian diplomacy - to find a constructive balance to maintain relations with the West, but also not to miss the opportunity window, opened by China, who is already skeptical of Ukraine, especially after the "Motor Sich " issue.
The practice of Kyiv's cooperation with Beijing has demonstrated that Chinese interest lies in working in two key areas - agriculture and the military. And if cooperation between Ukraine and China in the military sphere will clearly meet the resistance from Washington, the agrarian sphere has no such trends observed. The best solution in this situation for Ukraine would be to find new spheres of mutual interest with China, that would not affect US strategic interests. Of course, this will not be an easy task. But only the understanding of which new areas of cooperation may be of interest to China, and which of them will be acceptable for the United States, will make it possible for Ukraine to build fruitful cooperation with both great powers.
