EU makes Pacific power play in Kiribati

The European Union is studying a possible port for fishing, container vessels, and cruise liners on the Pacific atoll of Kiritimati as part of its “Global Gateway” investment plan, meant to rival China’s Belt and Road Initiative.

A European Commission spokesperson told Devex that the EU recently signed a financing agreement with the Republic of Kiribati — of which Kiritimati is a part — for a study on the possible construction of “a multi-purpose port.”

Kiritimati — also known as Christmas Island — is the largest of the 33 coral islands that make up Kiribati. Boasting abundant coral reefs, it was also the site of nuclear testing by the U.K. and U.S. in the 1950s and 1960s.

More recently, Kiritimati has become strategically significant in the struggle for influence between China and the United States in the Pacific. Kiribati’s President Taneti Maamau told the Guardian in 2020 that he would not accept large loans “from any country,” nor would he allow China to build a base on Kiritimati.

“There are clearly geopolitical calculations behind this,” Frédéric Grare, a senior policy fellow at the European Council on Foreign Relations, told Devex of the EU’s Kiritimati port plan. “This is all about being present. This is all about not letting China be the sole interlocutor of all these countries.”

Grare added that a security pact signed this year between China and the Solomon Islands had been a “wake-up call for everybody, including in Europe.”

“There is a sense that something needs to be done,” Grare said. “This is a way to answer a problem, which is real, answering the needs of a country, which is asking for it. So it goes in the right direction. It's not, a priori, hostile to China. It's just basically a way to be there, occupy the field.”

For now the EU has allocated €2.5 million to complete a detailed engineering design, which will include an estimated cost for the port, operation, and maintenance.

“This study will help Kiribati to kick-off the construction of a multi-purpose port in full respect of environmental constraints,” the commission spokesperson wrote. “The port will accommodate requirements for transshipment by fishing vessels, container vessels for commercial trade, and cruise liners for tourism and, as such, contribute to the economic and social development.”

The spokesperson added that the study is needed to attract other investors and unlock private sector support. The study will also assist in the creation of a tender for the construction of the port.

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.”

Translating that rhetoric into reality will be more complicated.

If construction of the port goes ahead, it will likely be co-financed with international financial institutions, such as the Asian Development Bank — of which China is a shareholder — and the European Investment Bank.

Though wholly EU-owned, EIB can only finance at most 50% of the total project cost. And EIB President Werner Hoyer warned in an interview with Devex in early 2020 that Europe needs to lose its “naiveté” on open procurement rules which often see Chinese firms win construction contracts for projects financed by EIB and other multilateral development banks.

A spokesperson for EIB Global, EIB’s new development branch, told Devex by email that once the engineering study is completed, “the question on how best to implement this large construction project will be considered including the possible participation of EIB Global and/or other financing institutions and donors.”

The government of Kiribati did not immediately respond to requests for comment.