Global Gateway Risks Diverting EU Aid Budget to Big Business

Only 16 percent of all Global Gateway projects invest in key development sectors such as health and education.      

The EU’s new global investment and development strategy, the Global Gateway, risks diverting the aid budget to big business, a new report by Counter Balance, Eurodad and Oxfam reveals. “Who profits from the Global Gateway? The EU’s new strategy for development cooperation” finds that over 60 percent of projects analysed benefit at least one European company. 

The report dives into 40 Global Gateway projects and shows that 25 of them - 60 percent - benefit European companies such as Siemens, Moller Group or Suez. It also finds that at least seven companies that are part of the Global Gateway Business Advisory Group - the expert group established by the EU commission - signed contracts funded by Global Gateway money.

The Global Gateway’s main funding source is the EU’s aid budget (NDICI). The EU’s rules state that the main objective of aid is the “reduction and, in the long term, the eradication of poverty”. Yet only 16 percent of all Global Gateway projects invest in key development sectors like health, education and research. This points to the risk that the EU’s aid budget is focusing more on boosting their own geopolitical and economic interests, rather than on tackling poverty and encouraging development.

Alexandra Gerasimcikova, Counter Balance’s Head of Policy and Advocacy and Report Author, said: “We have reviewed dozens of projects and found that Global Gateway projects are being rolled out to boost EU business in the Global South, despite serious social, economic and environmental risks. The high standards that the Commission claims to offer to the rest of the world often fall far short."

The research also highlights the opacity of the Global Gateway’s strategy. There is a lack of publicly available information on projects, financing, contracts or assessments for human rights and the environment. This makes it difficult to determine to what extent the Global Gateway contributes to sustainable development. 

Farwa Sial, Senior Policy and Advocacy Officer at the European Network on Debt and Development (Eurodad) and Report Author, said: “The Global Gateway is largely funded by the EU’s aid budget - the public has a right to know what it is being spent on. Yet, 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 analyse is only the tip of the iceberg."     

The report shows how the Global Gateway risks exacerbating inequalities.  For example, in Peru, one project identified encourages poorer families to take out mortgages for green properties by making a substantial down payment, encouraging individual debt and pushing them potentially further into poverty. 

The Global Gateway also threatens to exacerbate the debt crises in several countries and perpetuate colonial practices. The EU will roll out Global Gateway projects in 29 of the world’s 37 most indebted poor countries. These projects prioritise loans over grants and reduce governments’ capacity to meet the needs of their people as they must pay back the debt and interests to European financial institutions. 

Martha Sanchez Gutierrez, Programs Director at Oxfam Central America, said: "The Global Gateway’s approach towards Latin America risks syphoning resources from the Global South to pay for the EU’s so-called green transition. This comes at the expense of our communities. Latin America is the most unequal region in the world. The EU must also listen to the voices fighting for a truly fair green transition.”

The research also underscores the potential negative impacts of the Global Gateway on human rights and the planet. Three of the 13 water-intensive hydrogen projects analysed are planned in countries where water is scarce, like Namibia, Chile and South Africa. At the same time, fossil fuel companies such as Total Energies and Enel are members of the Business Advisory Group. 

The report points to projects that threaten to worsen existing crises and conflicts. In Rwanda, the EU signed a hydropower project that risks forcing at least 4,500 people to leave their homes and impact their lands, crops and fruit trees. The EU also signed an agreement with Rwanda under the Global Gateway to extract raw materials despite accusations of fuelling the deadly conflict in the region.

Antonio Gambini, Oxfam EU aid expert, said: "The Global Gateway is a flashy branding exercise that risks fuelling corporate profits with European taxpayers’ money. The EU's aid budget is not to boost business’ bottom line, it is to fight poverty. The EU must make sure it remains this way. Anything else betrays the EU’s constitutional duties, sidelining development goals to favour private interests”. 

The report also exposes the lack of democratic checks and representation from partner countries and civil society. While the interests of European companies are at the core of decision-making through the EU’s Business Advisory Group, the role of partner countries, the European Parliament and civil society have been relegated to a testimonial one.