Hungary Spat Imperils EU’s Answer to China’s ‘Belt and Road’
(Bloomberg) -- The European Union’s global flagship infrastructure program is at risk of being undermined by Hungary’s moves to block a separate, but key, legal agreement.
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Budapest has been blocking the renewal of the EU’s broad legal arrangements with countries in Africa, the Caribbean and the Pacific. That pact, however, provides the essential legal basis for the bloc’s investment bank to mobilize billions of euros for projects in those countries, a key plank of Global Gateway.
If Hungary doesn’t budge, its veto could jeopardize up to a third of the €300 billion ($317 billion) in investments that Global Gateway intends to mobilize by 2028, according to people familiar with the matter.
The Global Gateway program, the EU’s answer to China’s Belt and Road Initiative, aims to help fund projects around the world in sectors like transportation, digital tech and the green transitions. At least three dozen of the approximately 70 projects identified so far are in African, Caribbean and Pacific countries, and many of those are delivered with the involvement of the European Investment Bank.
But the EIB’s legal ability to operate in those countries is based on provisions contained in what is known as the Cotonou Agreement, the overarching framework for EU relations with 79 African, Caribbean and Pacific countries, the people said.
That agreement is set to expire at the end of June and would be succeeded by a new treaty that was agreed in 2021. But Hungary continues to block the new pact.
Without the new Cotonou deal, it would be extremely complicated for the EIB to be involved, one of the people said. A spokesman for the EIB said the bank operates in Africa, the Caribbean and Pacific countries under the Cotonou arrangement and is following the ongoing discussions inside the EU closely.
Budapest has been blocking the agreement over some sections, including related to migration, the person said.
Hungary backs economic cooperation between the EU and countries outside Europe as laid down in the post-Cotonou agreement, but opposes its sections on migration and gender, Foreign Minister Peter Szijjarto said in a Facebook post in November of last year.
“The direction is clear: yes to economic cooperation, no to migration,” he wrote.
The Foreign Ministry didn’t respond to a Bloomberg comment seeking an update on its position on the agreement.
--With assistance from Zoltan Simon.
(Updates with EIB comment in the seventh paragraph)
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