Connecting the dots: Eurasian transport in 2030

#CriticalThinking

Asia

Picture of Ramon Pacheco Pardo
Ramon Pacheco Pardo

Senior Lecturer in International Relations in the Department of European & International Studies at King's College and KF-VUB Korea Chair at Vrije Universiteit Brussel’s Institute for European Studies

Can you imagine travelling by rail, road or ship from Lisbon to Busan? From Glasgow to Sapporo? Or perhaps from Palermo to Chennai? Then you are not alone, as a growing number of governments, development banks and businesses are working on fundamentally transforming transport networks all the way from Western Europe to East and South Asia. The 21st century Eurasia could see terrestrial networks join maritime routes as a realistic and relatively cheap means to connect this huge landmass.

The idea of building and upgrading the necessary infrastructure to link Eurasia is of course not new. The ancient Silk Road served to transport clothes, gold and countless other goods for centuries. Only in recent years, however, have megaprojects such as China’s Belt and Road Initiative, the European Union’s Transport Corridor Europe-Caucasus-Asia (TRACECA) and South Korea’s New Northern Policy started to converge and bring new life to the possibility of vast transport networks connecting the different parts of Eurasia. What is positive is that today’s Eurasian leaders see opportunities where others see obstacles.

Developing and upgrading a Eurasian transport network by 2030 would only be the reflection of a crucial geopolitical shift taking place across this landmass

Building infrastructure is, above everything else, costly. The Asian Development Bank (ADB) estimates that developing Asia alone will need $26tn in infrastructure over 15 years between 2016 and 2030 simply to fill its existing infrastructure gap. Thankfully, several governments are willing to put their money where their mouth is. The €315bn Investment Plan for Europe – also known as the Juncker Plan – has infrastructure at its core. Beijing has committed $40bn to its Silk Road Fund, mainly to upgrade transport networks across different parts of Asia. The Chinese, Japanese and South Korean governments are providing support to their domestic companies, as they upgrade railroads and ports across Southeast and South Asia. Funding is flowing across Eurasia on a scale probably never seen before.

Add to this the role that development banks are playing in building or upgrading transport networks across Eurasia. The launch of the Asian Infrastructure Investment Bank (AIIB) in 2016 sparked fears of full-blown competition and a race to the bottom among development banks. This has not happened – in fact, the opposite is true. The AIIB follows the standards of pre-existing development banks such as the ADB and World Bank. If anything, the AIIB has spearheaded a degree of ‘healthy’ competition, whereby borrowers have a growing range of options at their disposal and can build infrastructure more cheaply than they have ever been able to.

Crucially, the private sector is involved in this boom in infrastructure lending. This brings credibility, expertise and a welcome attention to the bottom-line – as well as some extra funding. European construction firms, Japanese keiretsus and South Korean chaebols have to make a profit. Their shareholders or owners demand as much. They thus have to pay attention to maintaining standards while reducing costs in a way that state-owned enterprises or publicly-funded development banks, for example, might not have to.

What do governments need to do to maintain momentum and develop a state-of-the-art transportation network by 2030? To begin with, governments and development banks need to work together. Despite initial hesitations, it seems that many in Brussels now accept that Chinese investments in European railroads or ports can be beneficial to member states as well. Beijing, meanwhile, has been more than willing to allow global standards to be the de facto starting point for the AIIB and much of Silk Road Fund lending. India has become the largest recipient of AIIB funding, despite alleged mistrust between Chinese President Xi Jinping and Indian Prime Minister Narendra Modi. South Korean President Moon Jae-in is looking for Chinese, Russian and European investment to be part of its New Northern Policy – particularly as it pertains to rebuilding North Korea’s infrastructure. These positive developments need to be maintained into the future.

Crucially, the private sector is involved in this boom in infrastructure lending

ASEM should become the focal point of these and other projects and establish an effective and permanent infrastructure working group that could serve as an unintrusive contact point to discuss ongoing and planned projects, funding needs and other important issues related to the transport networks being built across Eurasia. Development banks, key governments and even big construction firms could send staff to this working group. This would allow for institutional memory not to be lost as governments inevitably change and development bank and private sector staff move jobs or institutions. The EU should seriously work towards this end in the light of the 12th ASEM Summit.

Ultimately, developing and upgrading a Eurasian transport network by 2030 would only be the reflection of a crucial geopolitical shift taking place across this landmass. People across Eastern Europe, Central Asia, China, Southeast Asia and parts of South Asia have become richer and less willing to fight against their neighbours. The real possibility of building bridges, railroads, roads and ports connecting the whole of Eurasia attests to this shift for the better.


This article is from Friends of Europe’s discussion paper ‘My ASEM wishlist: how Asia and Europe should really be working together’, in which we go beyond officialdom and seek out ‘unusual suspects’ – students, teachers, activists, journalists, think tankers, etc. – who consider where they would like the state of Asia-Europe relations to be by 2030 and what the two continents should do to get there.

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