Europe risks losing battle over digital infrastructure to US and China

(lifePR) ( Berlin, )
Key take-aways: 

Undersea internet cables are as important as gas and oil pipelines – like the Nord Stream 2 project – and are a focus of growing geopolitical rivalry between the US and China throughout the EU’s wider neighbourhood. 
China and the US have different approaches but are racing ahead of the EU in terms of their influence over internet infrastructure and the states that depend on it. 
The EU has the ambition and potential to become digitally sovereign, but it lacks an all-encompassing strategy for the sector, in which individual governments are still the key players.  
The EU should set industry standards, help European telecommunications companies win business abroad, and protect internet infrastructure against hostile powers. 

The development of the internet is underpinned by infrastructure in the form of physical cables that criss-cross the world, over land and under oceans. Those cables that lie at the bottom of the sea are a cornerstone of this network. 97 per cent of internet traffic and $10 trillion in daily financial transactions pass through submarine cables, totalling 1.2 million kilometres in length – more than three times the distance from the earth to the moon. 

In a new report “Network effects: Europe’s digital sovereignty in the Mediterranean” by the European Council on Foreign Relations, Arturo Varvelli, Matteo Colombo and Federico Solfrini explain why internet cables are a focus of growing geopolitical competition between the US and China, and what the EU must do to build and protect internet infrastructure in the wider Mediterranean region. Based on interviews with leading business executives and expert analysts, the authors conclude that the EU is not doing enough to protect EU interests in digital infrastructure. 

While the US works to create the best conditions around the world for American companies (i.e. Google/Facebook) to operate in the sector, the Chinese government actively engages with its companies (i.e. fiber optic cable manufacturer Hengtong Group) to advance its interests. EU companies (i.e. Orange Marine, Telecom Italia Sparkle) are also active in the region but the power to allocate licences to build digital infrastructure lies solely with member states. As a result, the lack of coordination overall jeopardises the emergence of digital European strategic sovereignty. 

Chinese digital infrastructure activity in the Mediterranean should be particularly concerning for Europe, both politically and geopolitically speaking. 

The EU’s regulatory power in the realm of digital infrastructure has not fulfilled its potential: Beijing does not play according to the same rules as the EU. And as Chinese companies increasingly establish their own relationships with state governments and local consortia, the Chinese approach is likely to prevail. 
Another point of tension between Brussels and Beijing relates to the accusation of dumping. The issue is particularly important for China’s strategy, as it distorts the market. If left to cost alone, European and other companies will opt for the cheaper option, giving Chinese companies – and by extension Beijing – a competitive advantage. The issue is clearly political, as cheaper prices would allow China to extend its presence in the region. 
The geopolitical implications of China’s investment in undersea cables are to be found not only in ambitious infrastructure projects such as the PEACE cable – which starts in Gwadar and Karachi in Pakistan and is planned to land in Marseille in France – but also in the ties that the Chinese power and fiber optic cable manufacturer Hengtong Group has with the Chinese political and military ecosystem. 

The EU is actively working to define a stronger and broader policy on the development of internet infrastructure and its geopolitical implications (including the declaration on “European Data Gateways as a key element of the EU’s Digital Decade”). But further steps are required for the EU if it wishes to maximise its influence and defend and promote its interests in this sector. It must establish a new approach to building and protecting internet infrastructure in the Middle East, North Africa, and the Sahel – and thus looking after its own interests and strengthening the European economy in the process. 

Devise new EU goals and guidelines on consortia, licences, and new digital infrastructure: The EU has the power to establish benchmarks on issues such as broadband capacity and the diversification of connection routes. To do this, the EU Commission can make recommendations to states about the allocation of licences and consortia formation with non-European companies. The Commission could also warn member states against projects that include companies that may pose a threat to EU interests, such as by creating channels for foreign governments to exert pressure on member states.  
Support pan-European consortia in EU-driven projects: The EU Commission should identify a number of key projects whose goal would be to diversify cables’ routes and increase European broadband capacity. The EU could link financial support for such new projects to particular aims such as supporting the digitalisation of research and development, e-government, and e-health sectors. This financial support would allow the European Commission to set up a pan-European consortium with EU companies to operate the new infrastructure.  
Encourage a diplomatic resolution to eastern Mediterranean EEZ disputes to diversify undersea cable routes: The EU should seek to mediate in the ongoing crisis about the Exclusive Economic Zone (EEZ) demarcation in the eastern Mediterranean given the region’s importance to maintaining strategic undersea cable routes between Europe and Asia. As part of this, the EU could provide policy recommendations to member states for not obstructing the construction and maintenance of undersea cables in their EEZs. 
Protect the security of internet infrastructure and users’ data: The EU should make the protection of digital infrastructure a (geo)political priority and encourage EU member states that also belong to NATO to deploy a military presence in places where attacks on internet infrastructure may be likely to occur. In terms of data security, a NATO military presence could also help prevent data tapping by hostile forces, with obvious benefits also for the states hosting the tapped infrastructure. 
Improve internet infrastructure in Africa: The EU could look to advance a partnership with the AU to improve economic relationships between states in Africa by ensuring internet infrastructure is part of wider EU-Africa cooperation. The creation of a regional network properly connecting up all states would help boost e-commerce and other internet-related economic activities, supporting wider inter-African economic integration. 

“Europe has ability to increase its connectivity within neighbourhood and exercise its role as a strategically sovereign player in a sector of increasing international importance. Its potential as a regulatory power in particular is significant but currently woefully underdeveloped. If the EU fails to project itself in the region, other global players will fill this space. They will do so by creating technological dependencies, such as standards determined by China, which are likely to prove detrimental to EU interests”, Arturo Varvelli emphasises. 
Für die oben stehenden Pressemitteilungen, das angezeigte Event bzw. das Stellenangebot sowie für das angezeigte Bild- und Tonmaterial ist allein der jeweils angegebene Herausgeber (siehe Firmeninfo bei Klick auf Bild/Meldungstitel oder Firmeninfo rechte Spalte) verantwortlich. Dieser ist in der Regel auch Urheber der Pressetexte sowie der angehängten Bild-, Ton- und Informationsmaterialien.
Die Nutzung von hier veröffentlichten Informationen zur Eigeninformation und redaktionellen Weiterverarbeitung ist in der Regel kostenfrei. Bitte klären Sie vor einer Weiterverwendung urheberrechtliche Fragen mit dem angegebenen Herausgeber. Bei Veröffentlichung senden Sie bitte ein Belegexemplar an