For some time now, the EU has been developing a politically rounded Asia strategy, based on two pillars. First, we are re-balancing our relations with China based on a strategy of treating China as ‘partner, competitor and rival’. At the same time, we are investing more in scaling up our relations with the rest of Asia, especially with like-minded partners.
Work is underway on both axes. With China we have a complex and demanding agenda, mixing cooperation on global issues with pushback where needed and a focus on reciprocity and strengthening EU resilience. We need to engage China because it does not make sense to ignore this great power. However, we need to engage while keeping our eyes wide open. I remain in close contact with State Counsellor/Foreign Minister Wang Yi to pass EU messages and expectations on the bilateral and multilateral agenda. And together with President von der Leyen I will submit a report on the state of implementation of the EU’s China policy to the March European Council. Fundamentally, our China strategy is about engaging in matters of global interest, upholding our interests and values, while also recognising that we need to increase our own leverage and reduce certain vulnerabilities. Ultimately, the choices that Beijing makes will influence the nature and the depth of our relationship.
But Asia is big and diverse and should not be reduced to looking only at China, quite the opposite. In recent years, we have strengthened and diversified our ties with Japan, India, South Korea, ASEAN, Australia and New Zealand, complementing our traditional strong economic relations with more cooperation on foreign and security policy. Let me recall some of the milestones:
It is important that this year we build on this progress and intensify our work. In this respect, I see three priority areas:
In many ways, the Indo-Pacific now represents the world’s economic and strategic centre of gravity. This was already the case before the pandemic and it is even more the case today. The confluence of the Indian and Pacific Oceans, stretching from East Africa to the Western Pacific represents an integrated strategic region. Crucially, as EU we are connected to the region in numerous ways: through trade, investment and security links.
The Indo-Pacific is home to the world’s fastest growing economies, representing 62% of global GDP; it is the second largest destination of EU exports and is home to four out of the top ten EU trading partners. So, the EU has a big stake in the Indo-Pacific region and has every interest that the regional architecture remains open and rules-based.
As EU, we want to work with many partners to promote fundamental values and principles that we share. A good example was the recent participation of Japanese Foreign Minister Motegi at the EU Foreign Affairs Council in January. He gave a very interesting presentation on Japan’s vision of a ‘Free and Open Indo-Pacific’ and the scope for EU-Japan cooperation on numerous issues, from maritime security to rules-based trade and investment, to quality infrastructure and the avoidance of ‘debt traps’. Many EU Foreign Ministers echoed the main message that in a world of great power competition and the erosion of the rules-based order, the EU and Japan have a strong interest to intensify their cooperation.
Since several EU member states (for instance France, Germany and the Netherlands) have adopted a national strategy or guidelines on the Indo-Pacific, the time has come for the EU as such to do the same. The intention is for the EU to set out, in the coming months, a common vision for its future Indo-Pacific engagement. For sure, we will apply a broad and inclusive prism, putting the accent on our support for regional and multilateral approaches. And we should keep in mind this is as much about what we do as EU in the Indo-Pacific as what we do with the countries of the region on trade and investment, on climate and biodiversity, on emerging technologies or on new security threats. The common denominator will be our interest in upholding and devising rules-based approaches.
Within the Indo-Pacific, India certainly plays a pivotal role. The EU and India have long shared a commitment to the rules-based international order and democracy. But, if we are honest, relations have historically tended to operate below their potential. Fortunately, in recent years, there has been a serious attempt by both sides to give a new impetus.
The reasons for doing this are clear: in the next decade, India will become the country with the world’s largest population, with 50% of Indians being under the age of 25. For the EU there is a need to intensify relations with such a heavyweight country. India has also decided to invest more in its relations with the EU, driven in part by China’s growing assertiveness and Brexit, requiring New Delhi to no longer see London as its sole entry point into dealing with ‘Europe’. So there is a convergence of interest at the top level on both sides and this is translating into progress at the operational level.
Last year’s EU-India Summit confirmed the interest in increased cooperation on key bilateral and multilateral fronts like the clean energy transition, the digital economy, connectivity as well as security and foreign policy, where India is starting to see the EU as an important partner. There is a lot of scope to do more in this domain now that India is a non-permanent member of the UN Security Council (2021-2022), sits on the UN Human Rights Council (2019-2021), and will hold the G20 presidency in 2023.
The next big opportunity to take EU-India cooperation forward will come in May, in Porto, when we should have a Summit with all EU27 Heads of State and Government attending, together with Prime Minister Modi, the President of European Council and the President of the European Commission. At that occasion, we hope to launch an EU-India Connectivity Partnership. It should cover the areas of digital, energy, transport and human connectivity, with the EU and India working bilaterally, but also by converging our efforts to better connectivity with third countries and regions. At the Summit we also hope to affirm ambitious climate change related commitments ahead of COP26. Finally, boosting trade and investment relations will be important too, with high expectations from both sides to make real progress also on this dimension.
For years, connectivity has been a buzzword in strategic discussions in the Indo-Pacific region. The pandemic has reinforced the sense how connected and interdependent we are in strategic domains. As ever, the key question is: who controls these flows and who will set the rules and standards?
Many Asian partners welcome greater European engagement. The European approach to connectivity with its emphasis on rules, sustainability and local benefits and ownership matches how many in the region want to proceed. But this is a competitive field: some big players are moving in a determined way. There is a battle of standards underway. Therefore, as the post-pandemic regional order is being shaped, the EU will need a pro-active approach and to leverage its economic and other assets, working with like-minded partners wherever this makes sense.
For example, the need for sustainable connectivity was emphasised by Minister Motegi in his presentation to EU Foreign Ministers at the Foreign Affairs Council, adding that the EU and Japan ought to work closely together. Indeed this was the main reason why already back in 2019, the EU and Japan signed a Connectivity Partnership. Since then we have advanced with our common principles of sustainability and quality infrastructure, but also with concrete operation on the ground, be it in the energy sector in Kenya and working on transport corridors in Africa, or with cybersecurity cooperation together with partners in ASEAN. We are already doing a lot to support ASEAN’s own Masterplan on Connectivity and, as stated, hope to launch a Connectivity partnership with India in May.
In the field of connectivity, popular perception and reality are two very different things. This perception gap matters as connectivity is very much part of the geo-political landscape. Let me recall that in the six years between 2013 and 2018, the EU provided €410 billion in official development assistance world-wide compared to China's €34 billion in the same period. Even under China's flagship BRI projects funded by public debt - not grants - stood at €464 billion in the same period, as estimated by the World Bank. The EU is by far the largest source of Foreign Direct Investment, with a total stock of €11.6 trillion, compared to China’s €1.9 trillion. The EU has been and remains a Connectivity super power, both at home and abroad. But we do need to think of ourselves in these terms and draw on these strengths to frame and execute a strategic approach, working with the private sector, EU development banks and other public financial institutions and EU member states.
Connectivity means connecting people, and discussions on it can be abstract or discursive. Being strategic means defining priorities in terms of regions, sectors and above all deciding on a handful of flagship projects. People should be able to see, in a very concrete way, what the EU and its partners are doing.
We often complain that the EU is seen as a payer and not as a player. Or that we may have a big market and standard setting power, but that we do not see these as tools to promote EU strategic goals. The Connectivity field is ripe to change this impression. It is a good example of geo-economics and geo-politics merging into one and we need to treat it as such. As someone whose job it is to coordinate the foreign policies of the member states in the Council and ensure coherence of the external policies of the Commission, I am well aware of the need to think and act in a joined-up manner. We must make connectivity a priority work strand, both for the post-pandemic recovery and for our overall foreign policy, in the Indo-Pacific region and beyond.