TRACECA could have been the backbone of Belt and Road

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

The TRACECA members. China was not included. [www.geo-ref.net]

In the early 1990’s, the EU had actually paved the way for Euro-Asian connectivity programmes with TRACECA, a programme meant to promote regional transport dialogue. However, its attention to the initiative dwindled over the years, writes Nicola Contessi.

Nicola Contessi is a member of the European Neighbourhood Council (ENC). He specialises in international relations, security, and Belt and Road Initiative.

There is little doubt that, notwithstanding its many shortcomings, the Belt and Road Initiative (BRI) is a game changer.

For one thing, it has brought infrastructure and connectivity to the fore of global affairs with the potential to reshape trade flows and deep-seated relationships. A stunning example of this was seen in 2014, when most of Washington’s closest allies adhered to and contributed to capitalise the Asian Infrastructure Investment Bank, a key plank in China’s BRI.

Moreover, having already experienced high levels of buy-in on the part of many countries, BRI has opened up a global market for public goods, prompting various similar initiatives.

In this way, though Beijing’s plan is not devoid of hegemonic ambitions, BRI may eventually succeed, as authoritative analysts have argued, in shifting the substance of globalisation narratives from an emphasis on hard security to a more inclusive one on development and co-prosperity, in a way that tests the foundations of the Euro-Atlantic pillar underlying Western supremacy.

All this while affording overflow for China’s excess capacity, and setting up a web of routes to fulfil the logistics requirements of the Made in China 2025 plan to move the country up the value chain and position it as major industrial and trading power.

But BRI is not without challenges. Two swift points can be made about the viability of China’s trillion-dollar financial commitments and the assumptions about China’s socio-economic model which is meant to underwrite the long-term sustainability of BRI.

Another problem has to do with the contracts to build BRI infrastructures, which have tended overwhelmingly to benefit Chinese companies, be manned with Chinese workers with little to no participation of local businesses or labour.

Then there’s the question of the conditions associated with China’s loans, which have allowed Beijing to seize strategic assets in beneficiary countries: the case of the Sri Lankan port of Hambantota recently making headlines.

Lastly, as is often heard at workshops in transit countries, is the question of corruption. The scandal that brought down the Najib Razak government in Malaysia appeared to show the close connection between the three latter problems, revealing concerns that public contracts may have been awarded unduly and with little scrutiny as to their affordability, utility and wisdom.

Given that Europe is the principal end-point for BRI routes, Brussels is correct in seeking coordination on rules and standards, and to demand greater transparency in awarding contracts.

However, considering BRI’s far-flung implications, the EU and its members have been somewhat reactive. While Europe has much to gain from being at the receiving end of BRI, the mere search for input on a plan that is tailored to overseas interests may not be enough.

A renewed and more creative approach, if not a strategy, would be useful – with the caveat that, given the heterogeneity of their interests, a common approach will hardly replace the individual strategies of EU member states. This being said, such a novel approach could build on the following points:

Boost the completion of all modal elements of all TEN-T Pan-European corridors ensuring their integration with intercontinental corridors, and support, harmonise and synergise the individual strategies of EU member states.

Take a more active role as public goods provider. In the early 1990’s, the EU had actually paved the way for Euro-Asian connectivity programs with TRACECA, called since that time “New Silk Road of the 21st century”.

However, its attention to the initiative dwindled over the years. One thing Brussels could do is to relaunch and revamp it to ensure a “European” perspective on global connectivity, which is currently lacking. It would make sense if such a revamped TRACECA took a more inclusive and win-win character to avoid duplication and waste.

On the East-West route, this would have to involve not only continued coordination with China and other stakeholders but probably also a dialogue on tariffs and interoperability with the Eurasian Economic Union.

Other than China and the eastern neighbourhood, the European interest would recommend a focus on Africa and the Middle East, rolling out that long-awaited Marshall Plan of sorts that the EU needs to deliver if it is to alleviate the epochal challenge that large-scale migration from that continent represents. A more inclusive TRACECA (or similar mechanism) should be extended to African countries.

Back this project mechanism with enhanced financial facilities, crafting innovative and manageable financial packages. European multilateral banks like the European Investment Bank and the European Bank for Reconstruction and Development already run infrastructure or transport programs. An option could be to repurpose them to better serve connectivity strategy, or otherwise create dedicated components within them.

Although some contend that technology will reshape existing models of industrial organization, the need to move people and goods across continents is unlikely to go away.

Moreover, the economic literature shows rather unequivocally that infrastructure investments have catalyzing effects on economic activity both directly and indirectly by spurring developments in cognate fields.

It therefore makes much sense for EU and its member states to assume a greater role in global connectivity. The inclusion of a connectivity component in the EU’s new strategy for Central Asia due in 2019 offers the first step. In the long run, a larger reflection would be worthwhile.

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