Members' Research Service By / May 18, 2022

Future Shocks 2022: Consolidating strategic ties with democracies

Democracy and the interests of democratic states face multiple threats.

Written by Matthew Parry and Ionel Zamfir.

This paper is one of 11 policy responses set out in a new EPRS study which looks first at 15 risks facing the European Union, in the changed context of a world coming out of the coronavirus crisis, but one in which a war has been launched just outside the Union’s borders. The study then looks in greater detail at 11 policy responses the EU could take to address the risks outlined and to strengthen the Union’s resilience to them. It continues a series launched in spring 2020, which sought to identify means to strengthen the European Union’s long-term resilience in the context of recovery from the coronavirus crisis. Read the full study here.

The issue in short: The challenge and the existing gaps

Democracy and the interests of democratic states face multiple threats. Increasing geopolitical competition among major powers has driven democratic and undemocratic governments apart, both in bilateral relations and in multilateral forums, and also created tensions between fellow democracies beset by the rise of populism and nationalism. Yet global military, economic, social, sanitary, environmental or other challenges require multilateral governance more than ever. After the severe blows dealt to international cooperation by the actions of then US President Trump and the 6 January 2021 attack on the US Congress, Joe Biden’s election opened a window of opportunity for democracies to work together in both informal coalitions and multilateral settings.  

The EU and other democratic players also face direct threats from non-democracies, chief among them Russia and China, which increasingly act in concert. Russia has begun a war to challenge the existing security order in Europe and democracy in its neighbourhood, and also in Africa, while China uses trade restrictions to bully democracies in Europe and elsewhere that criticise it or offer support for democratic Taiwan. Both Russia and China are leading sources of disinformation aimed at democratic societies in the EU and elsewhere. In developing economies, China challenges EU interests first by using its Belt and Road Initiative (BRI) to draw developing countries into debt traps in order to acquire rights to infrastructure and resources beyond its borders, and second by providing an alternative, authoritarian model of development. In a world in which hard power still matters and national self-interest prevails, the EU – which is centred around soft power and is bound to balance the pursuit of its own interests with respect for international values – has constantly aimed to better leverage its economic and diplomatic influence, coordinate more effectively among its members, and build strategic partnerships with other major democracies and international regional organisations such as the African Union and ASEAN, which commit to democratic principles in their founding treaties.

Existing policy responses

Cooperating with other democracies is an important axis of the EU’s engagement in multilateral settings. The EU action plan on human rights and democracy 2020-24 and the 2021 joint communication on strengthening the EU’s contribution to rules-based multilateralism highlight the need to build and strengthen coalitions of like-minded partners on key priorities in multilateral forums. The EU supports the strong pro-democracy orientation of G7 policies, as defined during the 2021 Summit and ministerial meetings. Given its weight as a trade bloc and its full membership in the World Trade Organization (WTO), the EU has an important role to play in preserving and reforming the multilateral trade system and continuing its values-based trade policy. EU cooperation with democratic partners, chiefly the United States, but also Japan, remains crucial in this respect.

Strengthening democracy is a key objective of EU bilateral engagement with both developing and industrialised countries. In 2021, the EU launched the new Global Europe Instrument for 2021‑2027. Its geographical programming covering the entire world includes an objective of strengthening good governance, democracy, rule of law and human rights in cooperation with partner countries’ governments. The thematic part – much smaller in financial terms – provides support to civil society globally, as well as direct support to democracy and human rights actions circumventing governments. In addition to this type of aid, the EU has provided substantial macro-financial assistance to fragile democracies in its neighbourhood encountering economic difficulties, such as Ukraine and Moldova, conditional on fighting corruption and respecting judicial independence. The recently upgraded European Peace Facility (EPF) provides funding to strengthen partners’ capacities in military and defence matters. The first measure adopted is directed at Ukraine. The EU includes democratic objectives in its human rights dialogues and political dialogues with partners.

The EU further cooperates with partner countries and international organisations such as the Council of Europe and its bodies, particularly the Venice Commission, as well as with the Organisation for Economic Co-operation and Development (OECD) to strengthen rule of law at home and in third countries, for example in the fight against corruption or tax evasion. Coordinated sanctions by the EU and major democracies are used to respond to human rights violations in authoritarian regimes, such as Belarus. In response to Russia’s attack on Ukraine, the EU has coordinated its massive financial and economic sanctions with its democratic partners in the world.

Under the Biden administration, the USA and the EU have together launched or revived vehicles for democracy-to-democracy cooperation on the pandemic, the climate, trade, security and democracy. A new EU-US Trade and Technology Council (TTC) met at ministerial-level for the first time in in September 2021 in Pittsburgh (USA), and is expected to meet again in France in May 2022. The TTC aims to achieve transatlantic consensus fit for the democratic world on common standards, resilient supply chains, tech regulation, global trade challenges, climate and green tech, as well as investment screening and export controls. A new EU-US dialogue on security and defence is set to launch in ‘early 2022’, while a EU-US high-level dialogue on Russia was announced in June 2021 (although has yet to meet formally, possibly superseded by events). Two high-level meetings of the EU-US dialogue on China were launched in the final months of the Trump Administration. The EU and NATO are also stepping up cooperation.

Figure 44: Key measures to consolidate strategic ties with democracies
Figure 44: Key measures to consolidate strategic ties with democracies

The EU has also concluded free trade agreements (FTAs) with major democracies including Canada, Japan, South Korea and the Andean Community countries; is updating FTAs with Chile and Mexico; and is negotiating new FTAs with Mercosur, Indonesia, Australia and New Zealand. The EU is also exploring deeper trade and investment ties with Taiwan and India. Trade liberalisation with democratic partners could allow the EU to diversify its trading relationships, reducing its strategic dependence on non-democratic partners who may be unreliable and are less likely to share common interests. In Africa and the Indo-Pacific – two regions where Russia and China are increasing their influence over third countries – the EU has responded with a joint EU-Africa strategy launched in 2007, and an EU strategy for cooperation in the Indo-Pacific published in 2021. The latter strategy identifies cooperation on semiconductors with democratic Japan, Korea and Taiwan as a priority. The EU is also drawing lessons from Taiwan on combating disinformation, given Taiwan’s exemplary role in this struggle against China. In November 2021, a European Parliament delegation visited Taiwan to study its efforts to combat interference and manipulation campaigns. The Commission has also launched the ‘global gateway’ initiative to provide a source of investment in digital, climate, energy, transport, health, education and research infrastructure in developing countries, and an alternative to China’s BRI.

Obstacles to implementation

Supporting democracy in cooperation with like-minded partners in multilateral forums faces multiple obstacles. The universal values, including fundamental freedoms and human rights, on which the multilateral order is based are under virulent attack from authoritarian powers, while illiberal encroachments undermine the integrity of multilateral bodies and norms that defend human rights. To be an influential diplomatic actor, the EU needs to act as a coherent player and bring its Member States together behind the pursuit of a global liberal democratic agenda.

Global democratic alliances, such as the Summit for Democracy, must convince in terms of practical effectiveness and avoid strengthening authoritarian regimes’ resolve and coordination, particularly that of Russia and China, and endangering much-needed global collective action.

Difficult regional environments, state fragility, as well as internal polarisation and conflict, and protracted economic crises have been insurmountable obstacles in supporting transitions to democracy in Afghanistan, Mali and, to a lesser extent, in Tunisia (all countries to which the EU has provided extensive assistance). The EU makes its aid conditional on respect of democratic standards and has engaged with partners to incentivise reforms. However donors providing aid with ‘no strings attached’, such as China, undermine the effectiveness of the EU’s approach. Serious democratic backsliding in large democracies such as India and Brazil poses another obstacle to the EU’s ambitions to build values-based partnerships.

The EU-US TTC is perceived by some as a recognition of the failure of previous EU-US efforts to consolidate economic integration and set global standards jointly via the proposed Transatlantic Trade and Investment Partnership. Enduring regulatory differences between the two sides may hinder their ability to deliver ambitious common positions on such issues as data governance and technology platforms. Moreover, while the EU and the USA have made significant progress on ending or mediating disputes on the Boeing-Airbus subsidies issue, US Section 232 tariffs on EU steel and aluminium imports, and taxation of major US and EU companies, the TTC has yet to produce forward-looking deliverables from any of its sectoral working groups.

The EU has also shown itself willing to advance trade integration with democratic and non-democratic partners alike. In December 2020, a ‘political agreement’ was announced on a comprehensive agreement on investment (CAI) with China, shortly before the Biden Administration took office. Some observers argued that the CAI undercut transatlantic cooperation on the challenges China poses to the multilateral trading system. In addition, while the EU has successfully concluded FTAs with Japan and Canada (even if the latter awaits ratification by all Member States), progress on FTAs with other democratic partners is slower than might have been expected: negotiations with Australia were delayed by the diplomatic dispute between that country and France over the AUKUS announcement, while France reportedly sought to postpone the conclusion of negotiations with New Zealand and Chile until after its presidential election. Some analysts argue that the EU has taken a more protectionist turn since the failure of TTIP, just as the USA does the same.

The EU’s global gateway initiative may likewise fall short. Some have criticised its five-year €300 billion investment budget as a mere repackaging of existing initiatives, combined with ‘questionable’ assumptions about leveraging private investment. Others have compared the annual sum (€60 billion) unfavourably with China’s estimated €1 150 billion in foreign loans and outstanding export credits, and note that China has grown more sophisticated in its approach to investment in other countries, taking greater care to involve local workers in projects. If true, an overly confrontational approach to Chinese BRI lending may be less effective than allowing recipient countries to combine multiple sources of investment.

Policy proposals by experts and stakeholders

Proposals on formats of cooperation among major democracies include: extending the G7 to a G10 format, concluding a charter for an alliance of democracies, or creating a coalition of leading democracies on new technologies (a T‑12 Group). Such proposals include EU countries but not necessarily the EU itself. One area where democracies can do more together is the digital realm. Preserving a free and open internet and mainstreaming human rights in new technologies were among the priorities proclaimed at G7 ministerial meetings in 2021 and supported by the EU. Reducing EU dependency on energy imports from authoritarian states, especially Russia, has now become an urgent objective. Reaching it also presupposes reinforcing cooperation with democratic partners.

Rethinking EU democracy support after the recent democratisation failures appears unavoidable. Experts note that the EU needs to exercise self-criticism; draw lessons; better take local conditions into account; and make a realistic assessment of the situation on the ground when it provides democracy assistance. Improving the democratic record at home is also crucial for the EU’s global influence.

Stakeholders and think-tanks in the USA and EU are broadly supportive of transatlantic cooperation on multilateral trade policy reform and standards development. Many therefore welcome the EU-US TTC, though some would expand the scope of cooperation to other policy areas, such as space. Some suggest features that have not yet been incorporated in the TTC, such as structured involvement of the US Congress and the European Parliament, as well as NGOs and other stakeholders. Others stress that the EU should act with a sense of urgency, given the possibility of a less partnership-minded administration being voted into office in 2024.

On the broader EU trade agenda, observers recommend, inter alia, negotiating a new data transfer framework agreement with the USA, to help guard against nefarious data acquisition by authoritarian powers like China; and coordinating industrial policies and technology regulation with countries like the USA, Japan and South Korea, as well as with Taiwan. On the EU’s proposed global gateway, think-tank recommendations include combining new funding with addressing fragmentation in current EU development spending; integrating the global gateway with the external dimension of the European Green Deal; and downplaying the strategic aspects of the initiative, to avoid it becoming bogged down in geopolitical controversy.

Position of the European Parliament

In its 2022 resolution on the implementation of EU common foreign and security policy, the Parliament calls for the EU to promote an alliance of democracies worldwide, and insists on the need for better cooperation among democracies to counter malign interference and disinformation. The Parliament also recommends that the EU strengthens its cooperation on election observation with all relevant partners. In its 2022 resolution on human rights and democracy in the world, the Parliament calls on the EU and its Member States to ‘make more concerted efforts to address the challenges to human rights worldwide, both individually and in cooperation with like-minded international partners, including in the UN’. With regard to EU democracy assistance, in its 2019 legislative resolution on NDICI, the Parliament insisted on strengthening democracy promotion across EU aid, and on the consistent application of conditionality to beneficiary partner countries.

The European Parliament supports the establishment of a United Nations Parliamentary Assembly (UNPA) within the UN system, aiming to increase the democratic character of the global organisation, and has called for a stronger parliamentary dimension to the WTO.

In a resolution adopted on 6 October 2021, the European Parliament called on the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the Commission for a Stronger Europe in the World (HR/VP) to reassert the relevance of the strategic transatlantic relationship, to reinvigorate multilateralism, strengthen democracy and promote human rights worldwide. Specifically, the Parliament called for the establishment of a transatlantic legislators assembly; regular meetings between the Parliament’s Foreign Affairs and International Trade Committees and their US counterparts; strengthened interparliamentary cooperation between Members of the European Parliament, Members of Congress, members of the national parliaments of the EU Member States and members of the 50 US State legislatures. It called for a coordinated approach in bilateral FTAs and at multilateral level to address forced labour and exploitative labour conditions and to improve respect for workers’ rights and environmental standards. The Parliament also reiterated its call to consider EU support at the WTO for a temporary waiver on the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), in line with the US position (but not yet with the Commission’s).

The same resolution also calls for: a common EU-US offer of investing in global infrastructure initiatives; for the EU and the USA to jointly provide economic, political and operational support to the African Union, the G5 Sahel Force and the Economic Community of West African States; for the creation of a Transatlantic Political Council for systematic consultation and coordination on foreign and security policy, led by the VP/HR and the US Secretary of State; integration of a parliamentary dimension into the EU-US high-level strategic dialogue on China; and for collective economic defence via collaboration with like-minded democracies against China’s economic coercion. Parliament has consistently supported proposals to negotiate FTAs with democratic partners, while underlining that negotiations should be transparent and provide for parliamentary involvement. This position is reflected, for example, in the 5 July 2016 resolution on a forward-looking and innovative future strategy for trade and investment, which included a call to launch FTA negotiations with Indonesia; and in the 26 October 2017 resolution on the negotiating mandate for trade negotiations with Australia, and the 26 October 2017 resolution on the negotiating mandate for trade negotiations with New Zealand.

Parliament called for a deeper strategic relationship with India with a strong parliamentary dimension, in a 29 April 2021 resolution. In a 21 October 2021 resolution, Parliament also called on the Commission to begin a scoping exercise on a bilateral investment agreement with the Taiwanese authorities, and for the EU and Member States to deepen cooperation with Taiwan on confronting disinformation. Parliament’s 21 January 2021 resolution on connectivity and EU-Asia relations, encourages the Commission and the European External Action Service (EEAS) to create a global EU connectivity strategy aligned with regional policies, including the Eastern Partnership, the European Neighbourhood Policy. The joint communication on relations with Latin America and the Caribbean, and the Indo-Pacific strategy should be aligned with the strategy, and it should aim to strengthen partnerships with democracies around the world which share the EU’s values.

In focus: an EU global gateway to fund infrastructure development abroad
On 1 December 2021, the Commission published a joint communication on a ‘global gateway’ (GG) infrastructure funding initiative for developing countries. Building on existing EU development aid as well as previous external connectivity strategies, the initiative is meant to fund up to €300 billion in investments in 2022‑2027 in digital, climate and energy, transport, health, and education and research projects that are socially and economically sustainable, and run according to democratic and high-quality governance norms. With its focus on sustainability and social progress, the GG stands in explicit contrast to infrastructure funding originating from China via that country’s BRI, much of it apparently in the form of lending of dubious sustainability, motive and economic impact. The GG should be seen in the context of international efforts to construct a democratic-model alternative to the BRI.
The EU, collectively with its Member States, is already the world’s leading donor of official development assistance (ODA), but GG is intended to as an explicit counter-offer, not just to Chinese public and private money, but also to China as a rival authoritarian model of development in competition with the democratic model promoted by the EU and its democratic partners.

Possible action

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