Prioritise collaboration with Europe on regional infrastructure investments: new report

With governments looking to step up their infrastructure financing efforts in response to geostrategic concerns about China’s rise as an infrastructure financier, Australia should prioritise its relationship with the European Union as it expands development financing for much-needed infrastructure in the Indo-Pacific region, a new Lowy Institute research paper argues.

Written by Lead Economist Roland Rajah, the report Indo-Pacific infrastructure development financing: an agenda for Australia and Europe argues that better collaboration between Australia and the EU can expand the available pool of bankable infrastructure projects and improve the quality of investment and infrastructure in the region.

“The financial firepower of European governments as major infrastructure development financiers is on a scale that far outstrips Australia, the US and the UK combined,” Rajah said. “Priority should be given to making sure the EU and its largest members are closely involved in the regional mechanisms aimed at financing joint infrastructure projects.”

Among the report’s key findings are:

• Financing infrastructure development remains a strategic priority in the Indo-Pacific given rising geostrategic competition and the longstanding financing gap only made larger by the overlapping crises of pandemic, war and climate.
• European governments are major infrastructure financiers in the region and should be closely integrated into donor coordination efforts by Australia and other like-minded governments.
• Australia and Europe should cooperate by investing more in project preparation, streamlining project standards, and pursuing reforms to unlock greater official development finance.

The report Indo-Pacific infrastructure development financing: an agenda for Australia and Europe is available to read and download at the Lowy Institute website.

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