EU’s Global Gateway ‘risks diverting aid budget to big business’

Big companies in the European Union are the winners from the bloc’s flagship development program at the expense of poverty reduction in low-income countries receiving investments, a new analysis argues. The study by civil society organizations steps up persistent criticism of the €300 billion ($330 billion) Global Gateway scheme, warning it “risks diverting the aid budget to big business” in breach of the poverty-fighting pledge in the EU’s founding treaties. It finds that in 25 of 40 projects examined — more than 60% — European firms including Siemens, BioNTech, car giant Möller Group, and utility company Suez are beneficiaries, some enjoying seats on the Gateway’s business advisory group. Only 16% of all schemes invest in the key development areas of health and education, with priority given instead to the energy, transport, and digital sectors, the report by the Eurodad and Counter Balance networks states. The European Commission also comes under fire for projects providing loans rather than grants, or risking water shortages in water-scarce countries — and for alleged secrecy surrounding contracts, financing, and scheme assessments. “Global Gateway projects are being rolled out to boost EU business in the global south, despite serious social, economic, and environmental risks,” said Alexandra Gerasimcikova, Counter Balance’s head of policy and advocacy. Farwa Sial, Eurodad’s senior policy and advocacy officer, added: “When we tried to look into the projects, we found an extremely worrying lack of information. We are concerned that what we have been able to uncover and analyze is only the tip of the iceberg.” The Commission has made no secret that the intention behind the Gateway is to compete with China’s Belt and Road initiative for opportunities, largely in infrastructure, while “giving choices to countries — better choices” its president Ursula von der Leyen argued at a forum a year ago. Launched in 2021, it is “Europe’s largest global investment programme ever,” using the EU’s development budget — plus member states budgets and development finance — to mobilize an intended €300 billion by 2027. The authors of the report analyzed 40 of 225 projects started in 2023 and 2024, “covering different regions and sectors,” where “detailed information” was available. They included energy transition schemes in Vietnam, Indonesia, Senegal, and Bangladesh; solar power plants in Benin, Ivory Coast, and Niger; a data center in Mauritania; a housing scheme in Peru; and a critical raw materials project across Central Africa. The report argues: “The presence of European companies in the majority of analysed projects points to a high risk that the Global Gateway prioritises the promotion of opportunities for European businesses in the Global South over development objectives such as poverty reduction.” “The EU’s actions to implement the Global Gateway risk contradicting its own commitments to upholding high standards of human, social, and workers’ rights, transparency, creating equal partnerships instead of dependencies, and offering a democratic investment agenda.” The study takes aim at a Peru project encouraging lower-income families to make “green” mortgage downpayments for encouraging debt, at water-intensive hydrogen projects in water-scarce Namibia, Chile, and South Africa, and at a Rwanda hydropower project that “risks forcing at least 4,500 people to leave their homes.” It calls on the Commission to: • Publish detailed information setting out how each project is “contributing to the reduction of poverty and inequalities,” as well as who benefits. • Release minutes of meetings of Global Gateway discussions between its officials and the 59 “mainly European” members of the Business Advisory Group. • Require all companies implementing projects to meet due diligence requirements and high labor standards, as well as ensure collective bargaining rights and alignment with the Paris Agreement to cut carbon emissions. • Ensure alignment with the EU’s development objectives — “the reduction and, in the long term, the eradication of poverty” — for the post-2027 period, with an evaluation carried out by the European Court of Auditors. The Commission declined to respond to the report’s criticisms ahead of publication. It has argued the Gateway “helps to tackle the most pressing global challenges, from fighting climate change to improving health systems, and boosting competitiveness and security of global supply chains.”