A New Dawn for EU Development Cooperation: Can EU Values Survive Geoeconomic Reorientation?
How does the EU’s value-driven outlook in development cooperation survive in a conflict-ridden and fragmented geoeconomic setting? Currently, countries are not just cutting their aid budgets, but thematic pillars of supporting developing countries are shifting. A more transactional strategy becomes more salient, as private-sector interests and public/private partnerships emerge as significant mode of cooperation. For example, the dismantling of the USAID’s operations led to the withdrawal of grant and project-based resources from recipient countries; however, the untold story is that the United States’ Development Finance Corporation (DFC) is still intact and operational. These financial instruments often bolster private-sector actors and aim to decrease supply-chain dependency and vulnerability in critical raw materials. Other donors display similar tendencies, although the degree of transactional cooperation varies. One example is China’s concessional lending to African and other countries. These geoeconomic considerations about economic security also explain the EU’s current policy direction as an important actor in global development cooperation.
The salience of economic security
The EU has long been a distinctive donor, not just due to its budget size and complex institutional structure, but its development cooperation was principled on value-driven considerations such as democracy and human rights. Indeed, this value-driven attachment became more salient when development policy became a greater part of the EU’s overall foreign policy objectives. The Lisbon Treaty, the creation of the European External Action Service, and the development of the European Neighbourhood Policy brought development, diplomacy, and security closer together. The EU also operated several separate funding instruments with different geographic coverage, rules, and objectives, which in turn reduced coordination and coherence. This foreign policy orientation was also accelerated also by certain external crises, including the Arab Spring, migration crisis, instability in the Sahel, Russia’s war against Ukraine, and the growth of China as a development financier. Particularly, China’s ambitious financial and geoeconomic engagement presented another important challenge, where it offered infrastructure finance, loans, trade opportunities, and political cooperation across multiple regions. The EU’s vulnerability to emerging shocks, such as Covid-19 also accelerated the EU’s economic-security outlook including a focus on critical infrastructure and supply routes. As a result, the EU began to strategise development finance as part of its response to overseas economic competition, and curated its new development cooperation towards economic-security objectives.
What survives, and at what cost
In response to these changes, the EU developed multiple steps which supported the Union to cope with the new geoeconomic realities. First, it crafted a new financial instrument, namely the Neighbourhood, Development and International Cooperation Instrument (NDICI), also known as Global Europe. NDICI provides the main financial framework for the new era. Previously, the EU had multiple financial instruments such as Development Cooperation Instrument (DCI), well-known European Development Fund (EDF) and European Neighborhood Instrument (ENI). NDICI merged all these instruments in the EU budget, which also increased the European Parliament’s oversight. Second, The Global Gateway was announced as a strong policy direction to mobilize hundreds of billions in public and private investment for infrastructure, digital connectivity, energy transition and critical raw materials. European Economic Security Strategy emphaizes Global Gateway in the context of de-risking and partnering with other countries in investments. These developments indicate an important step toward more effective blended finance. Attracting private capital has always been a challenge, since infrastructure projects in targeted geographies have been risky for private capital. The EU couldn’t attract private capital as expected via the European Fund for Sustainable Development (EFSD), which was a part of the External Investment Plan. EFSD funds previously had limited geographical outreach and financial scale. After 2021, NDICI incorporated EFSD+ operations, which also provided a more effective de-risking strategy by appealing to extensive guarantee capacity. We can think that private capital should be attracted through guarantees and de-risking mechanisms, an approach that has materialized through the European Fund for Sustainable Development Plus operations (EFSD+).
Energy, urban development and transportation have a big place in the EFSD+ agenda by volume, which also substantiates the EU’s priorities related to considerations on economic-security. Projects range from rural electricity and renewable-energy transitions to ports and railways. Many of these investments are in the least developed or fragile contexts, the places where commercial risk is the highest. Regarding EFSD+ operations in these fragile settings, guarantee agreements with development finance institutions operationalize screening activities, and the regulation itself suggests suspending funding if fundamental principles are violated. Therefore, these provisions indicate that EU values are still incorporated in the formal/legal framework. Whether these values influence investment decisions in practice, however, depends on how these provisions are implemented. Climate protection, the green transition and high environmental standards have moved from the periphery to the centre of the EU’s narrative on development cooperation. The Union still differentiates itself from competitors by emphasizing particular values. But the hierarchy of values is no longer fixed to certain geographies and themes. As external threats and security considerations geographically and thematically diversified, certain values are more pronounced in legal texts and political discourse. Democracy and human right still protect their place, while climate, green transition and environment related value discourse start to take more place.
The primary question is therefore not whether EU values still exist in official documents. Instead, we need to ask how values are incorporated in project selection, financing, and aid suspension. The private sector is currently, to some extent, a significant actor in this monitoring. In this sense, the role of multilateral development banks and European bilateral development finance need to take bigger responsibility to track how investment actors comply with or promote EU Values. Since EFSD+ investment operations are attached to guarantees and blended finance, the application of EU values partly depends on the institutional procedures of financial partners including the EIB, EBRD, KfW and others.
Previously, the EU was criticized for imposing double standards against recipient countries, in case these recipient governments violate democratic principles and human rights. The issue stemmed mostly from disproportionately applying political and economic conditionalities to particularly countries and suspending aid flows. Currently, pre-deployment factors or selectivity, rather than ex-post conditionality, can be more salient and effective under geoeconomic competition and economic-security. During the implementation period, a curated auditing is necessary depending on the types of EFSD+ investment operations. Therefore, private actors and development banks` own compliance and auditing to apply standards become more important. Backed by development banks and private capital, blending EFSD+ operations are not episodic or volatile, as they require more dedicated implementation which aims to realize long-term goals. Therefore, the future resilience of EU values` needs enduring and closer auditing capabilities, and division-of-labour among public and private actors entails a level of synchronisation. This can be the point where Team Europe Initiatives should come into play as a coordination framework.
Meltem Müftüler-Baç is Professor of International Relations and Jean Monnet Chair at Sabancı University, Istanbul, where she was also Dean of Arts and Social Sciences (2020–2026). Educated at Robert College, Boğaziçi University, and Temple University (PhD, 1992), she has held positions at Bilkent University and visiting roles at Chicago, Stockholm, and Penn's Perry World House. She has authored and edited several books on Turkey-EU relations, published widely in international journals, and led EU-funded research projects. Her honors include two Turkish Academy of Sciences awards and the European Commission's Jean Monnet Professor ad personam title (2004). She's active on ResearchGate and Google Scholar.
Nihat Muğurtay is a postdoctoral researcher at the Faculty of Arts and Social Sciences, Sabancı University, and PI of the TÜBİTAK-funded Global Diplomatic Network project, he combines text-as-data methods with core IR puzzles. At Sabancı's Computational Social Science Lab, he curates large-scale open-source diplomatic and political datasets to track shifts in geoeconomic and geopolitical trends over time. His research examines global development cooperation, focusing on how non-traditional donors compete with OECD-DAC members across the ACPs, Sahel, and MENA. He has taught IPE at Sabancı and consulted for think tanks. He holds a BA/MA in Philosophy from Boğaziçi, and Ph.D. in Political Science from Sabancı University.
The opinions expressed in this blog are solely those of the author and do not reflect the views of EU-VALUES Network.