Devex Newswire: Europe wades into the Pacific

The European Union is trying to go on the offensive in its “Global Gateway” efforts to counter China’s influence with plans to finance the study of a potential multipurpose port on Kiribati’s Christmas Island.

Also in today’s edition: MDBs — and their shareholders — respond to recommendations for getting more money out the door, and the U.K.’s Labour leader says his party would bring back DFID.

“There is a sense that something needs to be done,” Frédéric Grare, a senior policy fellow at the European Council on Foreign Relations, tells my colleague Vince Chadwick of the EU’s plan to study the feasibility of a port on the island of Kiritimati — also known as Christmas Island.

“It's not, a priori, hostile to China. It's just basically a way to be there, occupy the field,” he adds, noting that the security pact signed this year between China and the Solomon Islands had been a “wake-up call for everybody, including in Europe.”

U.S. aid officials were reportedly caught off guard by that agreement, prompting U.S. lawmakers to call for a rethink of U.S. development engagement in the Indo-Pacific region.

So far the EU has allocated just €2.5 million ($2.6 million) for a detailed engineering design and cost estimates for building, operating, and maintaining the port. A spokesperson from the European Commission tells Vince that the study is also needed to attract other investors and unlock private sector support for the project.

Vince writes: “Brussels has made no secret of its desire to use its foreign aid budget to compete with China for investments in low- and middle-income countries. Launching the concept of the Global Gateway in December 2021, the commission stated that its aim was to ‘demonstrate how democratic values provide certainty and transparency for investors, sustainability for partners, and long-term benefits for people around the world.’”

Read: EU makes Pacific power play in Kiribati

Big spender

UNICEF spent more than any other United Nations agency in 2021 — $7.2 billion, up 60.7% from its spending the year before. That major increase was driven largely by the agency’s central role in COVID-19 response, with vaccine purchases being a major factor, my colleague Miguel Antonio Tamonan reports.

Read: How UNICEF spent $7.2B in 2021 (Pro)

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Changing course

If the United Kingdom’s Labour party retakes control of government, it will seek to restore the Department for International Development, according to party leader Keir Starmer.

The next U.K. general election is likely still way off — no later than January 2025. But the Labour party’s leader is already signaling that the government would change course under new leadership by restoring an independent development department and acknowledging its importance to U.K. foreign policy, William Worley reports.

“I think the wrongheadedness of not seeing [the effectiveness of DFID in global development] as a massive asset is huge,” Starmer says.

Read: UK Labour leader Keir Starmer backs restoring DFID

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‘Carefully as appropriate’

This week my colleague Shabtai Gold brought you a leaked report detailing how multilateral development banks could lend hundreds of billions of dollars more if they made “strategic shifts” in their risk management calculations. The day after Devex’s story, the G-20 made public the official version of the report, which was produced by an independent panel of experts.

There was one notable difference between an earlier draft and the final one: A section was removed in which the panel acknowledged that “even a modest shift in risk appetite may in exceptional circumstances — such as responding countercyclically to an unforeseen crisis — result in an MDB facing downward pressure by one of the three rating agencies, while remaining solidly at AAA with the other two.” The experts had also suggested ways to prevent this.

In response to the final report, nine MDBs issued a joint statement thanking the independent panel and promising to “consider its recommendations carefully as appropriate including those that have already been implemented by some MDBs.”

The panel’s recommendations have garnered support among key MDB shareholders. A separate joint statement from Senegal, France, Mexico, Italy, Spain, and the U.S. called the package “actionable, practical and interdependent.” They added that the changes “would allow MDBs to substantially increase available funding while protecting the MDBs’ AAA credit ratings that underpin their business models.”

ICYMI: G-20 report says MDBs are holding back hundreds of billions

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Risky business

Speaking of AAA credit ratings, the New Development Bank — also known as the BRICS bank for its founders Brazil, Russia, India, China, and South Africa — is one step farther from that gold standard. 

Fitch Ratings downgraded NDB’s rating from AA+ to AA, citing the fallout from Russia’s war in Ukraine and the fact that even though the bank halted its project in Russia, it has been unable to “break the Russian nexus,” given that Moscow owns almost 20% of the bank’s capital.

Read: BRICS-led development bank takes credit ratings hit over Russia links

In other news

Some 60 officials from Central America were added to the U.S. State Department's “Engel List,” a compilation of “corrupt and undemocratic” actors named after former U.S. lawmaker Eliot Engel, who sponsored the law that created the list. [Reuters]

The spokesperson for the U.N. peacekeeping mission in Mali has been asked to leave the country because of his social media posts about the arrest of 49 peacekeeping soldiers from Côte d'Ivoire who were accused of planning to stage a coup. [Deutsche Welle]

The U.S. will host a major summit with African leaders in December to strengthen the country's relationship with the region and discuss global priorities. [Al Jazeera]

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