Why India and EU plan to roll out a global infrastructure deal

Why India and EU plan to roll out a global infrastructure deal
Open for business. The Srinagar-Leh highway reopened for vehicular traffic. India and the EU have agreed to a new connectivity partnership on energy, digital and transportation projects in Europe, Asia and Africa.Courtesy: ANI

Connectivity partnership to focus on energy, digital and transportation projects in Europe, Asia and Africa.

A new connectivity partnership on energy, digital and transportation projects in Europe, Asia and Africa – that’s the focus of a new infrastructure agreement that’s building up between India and the European Union, offering exciting new opportunities for investors from both geographies.

Although both sides have swiftly clarified that the new global partnership won’t attempt to “compete” with China’s Belt and Road Initiative (BRI), the efforts clearly point to building an effective counter against Beijing’s rapid inroads made across three continents, the Financial Times reported on Wednesday.

According to India’s Ministry of External Affairs, Prime Minister Narendra Modi had been scheduled to travel to Portugal for a summit with European Union leaders next month for discussions on trade and security issues – which has now been converted into a virtual event because of the Covid-19 pandemic.

Europe wants to work with democratic partners – including India – to establish open and transparent standards as nations prepare to move to the new security protocol that should be part of every 5G value chain.

“In view of the Covid-19 situation, it has been decided, in consultation with the EU and Portuguese leadership, to hold the summit in a virtual format on May 8,” the MEA announced earlier this week.

The 27-member bloc of nations is India's largest trading partner, and it is during this summit that both sides are looking to unveil the new infrastructure-building deal, the FT reported.

A petrol pump attendant at a fuel station. India and the EU will be exploring avenues on how to bring in private sector involvement into the energy sector.
A petrol pump attendant at a fuel station. India and the EU will be exploring avenues on how to bring in private sector involvement into the energy sector.Courtesy: ANI

Active role for private sector

The US and EU have consistently lashed out at the so-called Chinese model of providing infrastructure support for developing nations – whereby Beijing offers ready help for expensive projects that the host country ends up not being able to pay for.

From Sri Lanka’s Hambantota Port – which added to the country’s debt-servicing problems and has been taken by the Chinese on a 99-year lease – to Montenegro’s massively expensive loan from China to build a highway which has compelled it to raise another collateral with the EU to repay it – the footprints of that Chinese model everywhere has caused widespread alarm among the international community.

According to Indian and European diplomats, that’s exactly the kind of alarm both sides want to avoid in rolling out their partnership – ensure that their projects do not impose a heavy debt burden on the host country.
EU and Indian officials told FT that this would be facilitated through the active involvement of the private sector from both sides, along with entrepreneurs and start-ups – of course with public sector companies providing backbone support.

Workers are seen on a jetty at a construction site of Hambantota port in Hambantota, about 240km (150 miles) south of Colombo. The EU’s agreements with China has run foul due to European sanctions imposed in response to the discrimination against Uighurs and other human rights violations China is accused of.
Workers are seen on a jetty at a construction site of Hambantota port in Hambantota, about 240km (150 miles) south of Colombo. The EU’s agreements with China has run foul due to European sanctions imposed in response to the discrimination against Uighurs and other human rights violations China is accused of.Courtesy: Reuters

Action against dominating Chinese investments

Even though the EU is simultaneously looking to bolster its economic relations with China and signed the EU-China Comprehensive Agreement on Investments (CAI) last December, that has now run into bad weather due to European sanctions imposed in response to the discrimination against Uighurs and other human rights violations China is accused of.

“The EU and its allies have a common interest here, in presenting an alternative to the Belt and Road Initiative, rather than allowing Chinese investments to dominate,” an EU diplomat told Financial Times.

Indian external afairs Minister Dr. S Jaishankar with his Sri Lankan counterpart Dinesh Gunawardena. India has teamed up with Japan to provide infrastuructural support to Colombo.
Indian external afairs Minister Dr. S Jaishankar with his Sri Lankan counterpart Dinesh Gunawardena. India has teamed up with Japan to provide infrastuructural support to Colombo.Courtesy: ANI

India and Japan have already teamed up to develop infrastructure projects in Sri Lanka, Myanmar and Bangladesh. The partners had been scheduled to build Colombo’s East Container Terminal but the Sri Lankans suddenly pulled permission when it was about to be signed last year.

A teacher shows a student how to operate a smartphone at a mobile library. India and many EU countries have sought to distance and safeguard their next generation telecom infrastructure over concerns of privacy, data security and their links with the Chinese government.
A teacher shows a student how to operate a smartphone at a mobile library. India and many EU countries have sought to distance and safeguard their next generation telecom infrastructure over concerns of privacy, data security and their links with the Chinese government.Courtesy: ANI

Securing 5G security standards

The India-EU initiative comes at a time when the EU is also set to discuss 5G technology rollouts and the establishment of global security standards when its leaders interact with PM Modi next month during the summit, as concerns grow about the dominance of Chinese telecom giants.

Europe wants to work with democratic partners – including India – to establish open and transparent standards as nations prepare to move to the new security protocol that should be part of every 5G value chain, Margrethe Vestager, the European Union's antitrust chief told Bloomberg in an interview. “When we have a systemic rivalry, then we must come together to protect what is really important,” Vestager said. “The way tech is used is a reflection of the system that we prefer, which is democracy.”

India and many European countries, along with the US, have sought to distance their next generation telecom infrastructure from companies including Huawei Technologies Co. and ZTE Corp. amid concerns over privacy, data security and their links with the Chinese government.

Red flags about 5G networks

Countries such as the US, UK, Australia and India have raised red flags about Chinese majors participating in building the 5G networks, and Chinese suppliers have been shut out of recent telecom auctions in India. While the US and Japan have announced plans to invest in 5G research, the UK plans to build an alliance of democracies for safer adoption of the technology that’s expected to spur growth post-pandemic and add $1.3 trillion to the global economy by 2030.

The EU needs to invest $355 billion while India would need to invest over $70 billion to build its 5G network, according to the government.

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