At the G20 minus Xi, EU looking to further its China+1 strategy—partnership with Asia

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New Delhi is hosting the largest gathering of world leaders in recent times. The European Union will be represented by its Commission chief Ursula Von der Leyen who is no stranger to India and also by the EU Council chief Charles Michel. As far as geopolitical signaling is concerned, relevant EU officials have confirmed that Ukraine will top the agenda for the bloc. There is little doubt that lack of convergence on the Ukraine issue shall be a dampener when it comes to the joint statement. However, there is more to analysing what the EU wishes to get from its G20 outing at New Delhi where the absence of Chinese President Xi Jinping and Russian President Vladimir Putin has opened up space for a stronger pitch for the bloc’s larger connectivity endeavours with Asia, Africa and Latin America.

The real takeaway for the bloc at the G20 would be to posit and reiterate itself as a development partner to the Global South in the larger dynamic of its ambitious Global Gateway strategy as an alternative to China’s BRI.

The importance of Asia

Discussions and disagreements around Ukraine have dominated the G 20 agenda to such an extent that it is often forgotten that the EU has developed a solid schema to engage emerging markets, including those in Asia. The complex connectivity matrix that the bloc has worked out now had, in fact, started from Asia, a region that has been significant for the bloc for increasing its international profile traditionally. Deliberations and delivering on Single European Market (SEM) were a major drain on EU’s capabilities in the late eighties and early nineties. Perhaps the first outward strategy that the EU pursued for a bigger international role was through the 1994 New Asia Strategy, which had then followed the US model of pursuing Asia under its Big Emerging Markets (BEM) strategy. Several of those countries, including China, are now members of grouping such as the G20.

A lot of water has flown under the bridge since then, and the EU’s early approaches to engage Asia and other developing economies have matured. China’s asymmetric rise and systemic rejection of political reform along with Brussels’ complicated economic relationship with Beijing has been the prime driver for the strategies that the EU has pursued lately. Having burnt its fingers in Trump-era trade wars and China’s unjust retributive policies toward Lithuania, the bloc has been keenly studying the complex terrain of coercive economic statecraft by refining its economic toolbox . Outwardly, the pursuit of economic security has pushed prominent member countries such as France, Germany, Italy, the Netherlands and the bloc itself to come out with detailed Indo-Pacific strategies to uphold a ‘rules-based order’ in a region that is critical for its trade routes and remains marred by China’s wolf warriorism. As a logical derivative of the latter have emerged the connectivity and infrastructure projects from Brussels that offer a viable, trustworthy and sustainable alternative to China’s BRI tentacles not only in the Indo-Pacific but also across the globe. The changing times have necessitated that the EU re-assess its earlier strategies to Asia. In 2018 the EU produced a joint statement on connecting Asia (EU-Asia connectivity). It also promoted the Asia-Europe Meeting (ASEM) and established five strategic partnerships that include India, Japan and the Association of South-East Asian Nations (ASEAN). The bloc has even negotiated or concluded free trade agreements with several Asian countries. The EU has officially highlighted active engagement with foras such as the G7 and the G20 to drive its connectivity and investment projects in Asia and Indo-Pacific by focussing on existing partnerships with India and Japan and forge newer ones with ASEAN and the US.

Currently, in the Indo-Pacific these projects operate on two parallel verticals.

First comprising additives of  EU-Asia connectivity, bilateral connectivity partnerships and a holistic economic vision as envisaged under the 2022 Global Gateway.

Second, on connecting these initiatives with other G7 economic strategies such as the US-led Blue Dot Network and Partnership for Global Infrastructure and Investment (2022), a repackaged version of Build Back Better World Initiative by the  Joe Biden administration in 2021. All of these aim for variety of deliverables but complement each other in providing a viable infrastructure network, standards and developmental aid to partner countries to counter the BRI.

Brussels bureaucracy in overdrive

As activity has buzzed relentlessly in the power corridors of New Delhi with regards to its historic G20 presidency, the Brussels bureaucracy too has seldom seen a busier time. From delving strategies to support Ukraine in a painfully protracted war with Russia, to developing a resilient economic toolbox, to making its global economic and investments partnerships more substantive and sustainable, the bloc has undertaken several arduous tasks simultaneously. The year 2023 has been called the year of delivery  for the Global Gateway where several flagship programmes and investment packages have been announced for the emerging economies from Asia, Africa, the Caribbean and Latin America. The total number of these priority projects for 2023 is an impressive eighty-seven.

The external affairs wing of the EU, the European External Action Service (EEAS) has developed one set of general and five sets of regional Global Gateway narratives (Africa, Asia-Pacific, Central Asia, the Eastern Partnership, the Southern Neighbourhood), which have been deliberated upon time and again to make the EU-Global South engagements more holistic. The Commission has been engaged in mapping EU financial tools to support the implementation of EU’s external policies by pondering over the best ways to involve the EU private sector in investment opportunities in partner countries. The G 20 summit in New Delhi provides a wonderful window of opportunity for the bloc to introduce these initiatives to member states and pontificate on their sustainability in contrast to many of BRI projects that have started to backfire worldwide.

The Chinese absence

The EU would capitalise on Xi Jinping’s absence at the G20 summit by fuelling the US’ view that China is prioritising the now-expanded BRICS while undermining the G20. From the EU’s calculus, the G20 summit at New Delhi will be a platform for Brussels to review its progress and re-iterate its commitment to the emerging economies.

The bloc’s USP is to build sustainable linkages with emerging economies and not create risky dependencies. And in many ways, this remains the sine qua non of the EU’s economic de-risking towards a more comprehensive economic security in the 21^st century. Contrary to the popular view, this de-risking is not aimed at ending trade ties with a formidable trade partner such as China, but rather to aim for a ‘China-plus-one’ diversification that can render global economic connections more resilient. From India’s perspective, the natural question is – how far can India benefit from policies such as ‘China-plus-one’ and ‘de-risking’?

India is already an important strategic and economic partner for the EU. It is also one of the few countries with whom the EU has both a strategic and a connectivity partnership and the dots have started to connect further. EU and India have been brainstorming to join hands in Global Gateway developmental projects in third parties such as Nepal, Bhutan and Bangladesh. That said, the bilateral potential is far from utilised. Despite significant improvement in FDI flows and progress in bilateral trade talks through the Trade and Technology Council , India’s legislative and bureaucratic hurdles limit more foreign investment by players such as the EU that are looking for safer connections across the globe.

At the G20 this year, however, the two sides will push for economic multilateralism and support the entry of African Union which is a priority region for both.

The writer is an Associate Fellow, Europe and Eurasia Center, at the Manohar Parrikar Institute for Defence Studies and Analyses. She tweets @swasrao. Views are personal.

(Edited by Anurag Chaubey)