Cover Section

Sep 30, 2021

In Search of an Indo-Pacific Role

The European relationship with much of Asia is rapidly evolving, largely as a result of changing relations with Beijing. The EU faces the danger of getting caught between the United States and China.

British frigate HMS Argyll, Japanese helicopter carrier Kaga and Japanese destroyer Inazuma are silhouetted against the sky during a joint naval drill in the Indian Ocean, September 26, 2018. Picture taken September 26, 2018.
All rights reserved

The European Union has been very active in recent years in its engagement with Asia and the Indo-Pacific region. In line with where the bloc’s competencies lie, the form this engagement takes is mostly that of building or extending economic relations. Over the past decade the EU has concluded bilateral trade agreements with several countries, including Japan and Vietnam, and it is currently negotiating further ones with, among others, Indonesia and Australia. Beyond these there is a web of economic partnership agreements with Asian countries and other forms of formal cooperation.

Although mainly driven by economic considerations, these efforts to deepen relations with the region also need to be understood in the context of the EU’s ambitions to be a geopolitical player. Very early on in her term as European Commission president, Ursula von der Leyen made it clear that she wanted to lead a “geopolitical Commission.” The rise of China moving the focus of geopolitical competition to Asia has also pulled the EU’s attention to the Far East.

Part of this effort is the bloc’s pursuit of what it calls “strategic autonomy.” It defines this as the capacity of the bloc to act independently on the world stage when and where necessary and with partners wherever possible. In other words, to reduce dependencies on others, mainly the United States, in the area of security and on both the US and Asia in the economic sphere. Reaching this long-held and lofty ambition is still far off for the EU, though, and deep interdependencies remain, often constraining choices.

European countries are not just dependent on the US for their security, they also depend on Asian supply chains in many areas. A shortage of semiconductors, which are no longer produced in Europe with very few exceptions, but in places such as China and Taiwan instead, has highlighted this over the past year. In response, the EU has announced its intentions to work toward reducing this reliance on Asian producers, in part by pushing for a European industrial policy.

From Connectivity to “Global Gateway”

The EU’s search for geopolitical relevance also finds expression in concrete policies, often with a direct bearing on its relationships with Asian countries. A good example of this is the recent effort to rebrand its connectivity efforts. Connectivity is the Brussels way of discussing the financing and building of infrastructure in partner countries outside of the EU. In order to extract more value from the significant work the EU and its member states do in this area, it will rebrand its effort under the banner of “Global Gateway.” Inspired by the influence that China’s Belt and Road Initiative (BRI) seems to have brought Beijing, Brussels hopes that this rebranding will achieve something similar and thereby enter into direct competition with the BRI in Africa, Eastern Europe, and Central Asia.

However, the focus is on South and Southeast Asia, a fact highlighted by the EU publishing its first-ever “Indo-Pacific strategy” in September 2021. It is aimed at boosting cooperation on issues including connectivity, the green transition, security, and digital governance in the region, based on its interests and core values, such as the rule of law, democracy, and human rights. In line with other European Indo-Pacific strategies or “guidelines” (like the German one) the EU does not overtly reference China as the main challenge. But due to it being the dominant and growing force in the region, it is what is effectively driving this strategic conversation. It is therefore particularly important to explore European views and policy toward China when attempting to understand its wider regional engagement.

China on their Minds

For a long time, Europe viewed China mainly as an economic opportunity, effectively as a low-cost production base and a large potential consumer market. However, these views have shifted in recent years and as the Chinese economy has moved further up the value chain, Chinese business practices introduced more distortions in the EU’s single market. Also, as the Chinese government has become more assertive, European capitals increasingly see it as a threat.

The EU’s High Representative for Foreign Affairs, Josep Borrell, set out the EU’s vision of its relationship with China in 2019, describing the country as “an economic competitor, systemic rival, and partner.” Initially most EU member states, notably Chancellor Angela Merkel’s Germany, were hesitant to start describing China as a “systemic rival” as they continued to push for more engagement. This was often driven by economic interests. For Germany for example, China is not just a significant export market, but also a country where it has significant investments.

Nevertheless, views on China continue to be contested within the EU. They are evolving, even in Germany, albeit in contradictory directions. Whereas Lithuania has become mired in a diplomatic scrap with China in 2021 over the exchanging of diplomatic offices with Taiwan, receiving open support from only a small number of fellow EU member states, Hungary has been keen to court investment from China and even represent Chinese views within the EU. In all, the EU is still working out its approach to China, and by extension to the Indo-Pacific, as it seeks to not get caught up in the US-China rivalry.

Geopolitical Investments

However, playing a more active role on the geopolitical stage requires putting your money where your mouth is. And the EU is often unable (or unwilling) to put the resources behind its often lofty intentions, both at home and abroad. The EU’s Indo-Pacific strategy is telling in this regard, as it does not see a significant defense role for the EU in the region. Individual member states, France in particular, play security roles in the region, but the EU is not set up for that and even the member states that are active there only have limited resources. At the same time, becoming self-sufficient in semiconductor production would require large investments, as would making a significant offer to its partners there to contribute to Asian security.

In other words, while it is more intensely eyeing the Indo-Pacific, strategic autonomy for the EU is far off, there and everywhere else. What’s more, a continued focus carries risks of its own. The EU could be tempted to explore “soft triangulation” between the US and China, albeit remaining closer in outlook to the former as evidenced by recent initiatives such as the EU-US Trade and Technology Council. Such an approach, driven in part by trying to continue benefitting economically from engagement with both the US and China, would leave the EU open to political and economic pressure from both sides in the defining geopolitical rivalry of the age.

This was clearly demonstrated in early 2021 when China imposed sanctions on European bodies, MEPs, individual scholars, and research institutions, leading to the likely demise of the EU-China Comprehensive Agreement on Investment (CAI) that Germany and France pushed through in late 2020, overruling worries cautiously voiced by some other member states. At the same time, the US, still governed by Trump administration, was threatening to impose sanctions and introduce further tariffs.

Countries in the Indo-Pacific are faced with a similar balancing act and these developments are also affecting the EU’s relations with South and Southeast Asia. EU efforts to promote a more open and democratic economic model in the region through its partnerships and trade agreements is part of the systemic rivalry with China. Furthermore, the US is building out security partnerships with countries in the region, with an eye on its competition with China. A small number of EU member states are doing the same. A former EU member state, the United Kingdom, is also strongly in the mix, as the recently announced AUKUS security pact between the US, the UK, and Australia has shown.

As China’s influence increases, it will become even harder for the EU to just focus on economic relations as they will increasingly be mixed in with security issues. Given its limited toolkit and resources, the EU will struggle to find its role.

Pepijn Bergsen is Research Fellow with the Europe Program at Chatham House in London.