Let’s get serious about building multilateral rules for connectivity

Frankly Speaking

Global Europe

Picture of Shada Islam
Shada Islam

Managing Director at New Horizons Project

The figures are staggering, the rewards tantalising and the competition is tough. Resurrecting the dream of an interconnected Eurasia is enticingly strategic and fiercely geopolitical. It’s also very complicated.

The world needs new, sustainable, clean and green infrastructure but building infrastructure and transport links, digital and energy networks and people-to-people connections requires money. Lots of it.

Assessments of global infrastructure investment needs vary.  Asia alone needs to invest $26tn from 2016 to 2030, or $1.7tn per year, to maintain growth momentum, eradicate poverty and respond to climate change, according to the Asian Development Bank (ADB).

Quality infrastructure is indispensable for the achievement of Agenda 2030. It improves peoples’ lives, boosts mobility, makes countries competitive, and enhances trade and investments. Connectivity can help to build peace and resolve conflicts.

Connectivity is also the new geopolitical Great Game, pitting nations with competing visions of Eurasia against each other, prompting fears of connectivity conflicts caused by new rivalries or the re-emergence of old ones.

China’s ambitious Belt and Road Initiative (BRI) has captured the headlines since it was launched by President Xi Jinping in 2013. But Beijing is not alone in developing and projecting its connectivity ambitions. ASEAN’s Masterplan for Connectivity was launched in 2010. Japan, India and Europe as well as Russia and the United States are working hard to further their own connectivity agendas at home and in Asia and Africa.

The current lack of clear communication between connectivity actors is leading to a wasteful duplication of initiatives

But so far, so chaotic. The focus on linking up continents, regions, nations and communities is welcome and long overdue.  But instead of encouraging synergies and cooperation, competing initiatives are injecting additional strains in an already tense geopolitical environment.

That’s why it’s time to multilateralise connectivity. Infrastructure is a vital public good which requires responsible connectivity actors, strong governance and a rules-based multilateral framework.

Infrastructure networks should be coherent, interoperable, as well as financially and environmentally sustainable. Calls for tender should be open and transparent. There is a need for better governance, more coordination, and increased exchanges – and agreements on norms and standards, labour conditions, sustainability criteria and transparency requirements.

The current lack of clear communication between connectivity actors is leading to a wasteful duplication of initiatives. The exclusion of civil society from connectivity discussions results in projects which are not designed with the needs of people and communities in mind.

And private businesses must be part of the conversation and decision-making on establishing rules for project preparation and accountability, technical specifications and safety standards.

There is talk – along with some initiatives – to encourage cooperative approaches and synergies. These are useful but not enough. It’s time to be more daring and more creative.

This is the moment to set the bar higher – to sort out the mess. And the EU can take the lead.

As underlined by a new Friends of Europe publication, the EU in cooperation with China, Japan and key ASEAN countries, should look at three options.

First, it should create a multilateral ‘Connectivity Code of Conduct’ which lays out the rules for engaging in connectivity projects.

While Chinese President Xi Jinping responded to critics in April 2019 by promising to multilateralise the BRI, “multilateralisation with Chinese characteristics” risks splitting the world into two competing orders. This could create even more friction and confusion.

The creation of a ‘one world, two systems’ for connectivity, whether in infrastructure, digital technology, trade and investments – or for dispute settlement and arbitration linked to BRI projects – is not in the global interest.

This is the moment to set the bar higher – to sort out the mess. And the EU can take the lead. Based on a strategy paper it released last year, the EU should canvass nations to join an international connectivity code of conduct to ensure that projects are “fiscally, environmentally, socially and economically sustainable, comprehensive across sectors and financial frameworks and rules-based”.

This can be done either within the World Trade Organization (WTO) – where plurilateral agreements are already rapidly becoming the norm – or through a special body set up specifically for the purpose of enhancing connectivity governance.

This may appear too difficult and complicated at the moment. But the building blocks for such a process are already in place.

The connectivity agenda is turning into an equally chaotic and tangled web. It doesn’t have to go that route.

Second, the EU needs to reinforce and expand the recently-established Multilateral Cooperation Centre for Development Finance (MDCF) which brings together several key European, Asian and Chinese financial institutions involved in BRI.

The Centre already includes eight multilateral financial institutions such as the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).

These institutions, along with the Chinese Ministry of Finance, have jointly agreed to “foster high-quality infrastructure and connectivity investments”. Particular emphasis is put on advocating for transparency, non-discrimination and debt sustainability.

And finally, third, an International Connectivity Forum should be set up to allow for the participation of the private sector and civil society in conversations about connectivity.

This forum should include policymakers, academics and think tankers, along with independent economists, business and civil society representatives.  These representatives can share relevant information and best practices on future and ongoing projects and ensure contracts are awarded on the basis of best value and quality.

The Eurasian landscape is already littered with an expanding, overflowing, ‘noodle bowl’ of bilateral and regional trade agreements. The connectivity agenda is turning into an equally chaotic and tangled web. It doesn’t have to go that route.

The world certainly needs more connectivity. What it does not need is more connectivity confusion.

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