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Japan and EU ink infrastructure cooperation pact in counter to China's Belt and Road

AFP-JIJI, Bloomberg

The EU and Japan on Friday signed an infrastructure agreement to link Europe and Asia as a counter to China’s ambitious Belt and Road strategy.

Prime Minister Shinzo Abe and European Commission chief Jean-Claude Juncker inked the accord to coordinate infrastructure, transport and digital projects.

The deal is part of the bloc’s “Asia connectivity” strategy, launched last year amid growing international concerns about Beijing’s vast “new Silk Road” of railways, roads and ports across the globe using billions of dollars in Chinese loans.

The EU-Japan agreement repeatedly stresses the importance of projects being sustainable both environmentally and fiscally — a veiled swipe at the Belt and Road initiative, which critics say saddles countries with vast debts to Chinese companies that they cannot repay.

“Connectivity must be sustainable in financial terms — we must bequeath to the next generation a more interconnected world, a cleaner environment and not mountains of debt,” Juncker said before the signing ceremony.

“It’s also a question of creating interconnections between all countries in the world and not merely dependence on one country.”

Abe said that together Japan and the EU could build “sustainable, comprehensive and rules-based connectivity.”

“Of course it goes without saying that in order to make the connectivity linking Japan and Europe something rock solid, the Indo-Pacific — the sea route that leads to the Mediterranean and the Atlantic — must be free and open,” Abe said.

He was alluding to concerns that China is seeking to use the Belt and Road strategy, particularly with regard to port projects in Asia, to dominate navigation routes.

As part of growing EU-Japan cooperation, Juncker said the commission was recommending opening talks with Tokyo on sharing air passenger data to improve aviation security.

While the EU insists its push on infrastructure connections to Asia is not intended as a rival to China’s initiative, senior officials privately acknowledge that it was a factor that pushed them to act.

China says its trade with Belt and Road countries has exceeded $5 trillion, with outward direct investment surpassing $60 billion.

The “soft power” clout it has brought Beijing has drawn envious looks from Brussels.

“China woke us up to realize that there is something that we’re already doing but they are using it for their geopolitical objectives,” one senior EU official said.

The EU provides huge sums in loans, grants and development assistance around the world, but it has had limited success in converting this largesse into influence.

Japan released its annual defense white paper Friday, saying it believes China could use the Belt and Road strategy to push its People’s Liberation Army into the Indian and Pacific Ocean regions, a move that could shake up regional security.

The “Defense of Japan” white paper said, “China engages in unilateral, coercive attempts to alter the status quo based on its own assertions that are incompatible with the existing international order.” Tokyo also stood firmly behind its top military ally, the U.S.

Japan’s worries about one of the signature projects of Chinese President Xi Jinping come as other major powers, including the U.S., have raised concerns that Belt and Road port construction in places such as Djibouti and Cambodia could have a dual military use.

“It is possible that the construction of infrastructure based on the initiative will further promote the activities of the PLA in the Indian Ocean, Pacific Ocean and elsewhere,” the paper said. Japan and China, the two largest economies in Asia, have long been rivals in terms of economic and strategic influence.

Since 2013 more than 130 countries have signed deals or expressed interest in Belt and Road projects geared to spurring trade along routes reminiscent of the ancient Silk Road. The World Bank estimates some $575 billion worth of railways, roads, ports and other projects have been or are in the process of being built.

Critics contend projects can be debt traps that leave host countries with white elephant infrastructure and bills they can’t repay.

As for the EU, Juncker’s replacement Ursula von der Leyen takes office in November on a pledge to make the EU a bigger player geopolitically, and the Asia connectivity plan is seen as a significant plank of this ambition.

“In a bifurcated world dominated by the U.S. and China, a lot of places around the world are looking for European leadership to present an alternative,” another senior official said.

“We have heard that call and we are now putting the various strands and elements together in a more comprehensive strategy.”

Even in its own backyard the EU has sometimes struggled to be heard, with the Cooperation between China and Central and Eastern European Countries group — dubbed the “17+1” — making a splash with a series of high-profile investments and summits.

EU officials admit they need to do more to counter the narrative of Chinese generosity in eastern Europe, pointing out that in fact the bloc’s funding to the same area of €230 billion dwarfs what Beijing has invested in the same period — €600 million.

“The EU can be accused of many things but not of selling itself effectively,” one official quipped.

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