Ladies and gentlemen, dear friends, we're now going to start with a conference topic. That is for the first panel. The panel on the use approach to Eurasian connectivity. And I am really very happy to be in a position to present you,

three presenters that have been dealing with Asian and European affairs for quite a while. They do not only represent experience and competence but they also do come from different sects.

And I think this is what is also very much needed when we discuss the topics and especially the topic that this conference covers. Rainer Bütikofer is a member of the European Parliament.

Julian Strack is the managing director and coordinator of the Asian Pacific Committee of German Business. And last but not least, François Zinkula is the senior research fellow and director

of the Centre for Asian Studies at IPRIPARI, which is a major think tank when it comes to foreign policy. And French foreign policy grants view certainly is the highest importance for dealing with these issues.

May I invite Mr. Bütikofer to start? Thank you first of all for the invitation. It's in a way a great respite for me to be here for this conference today.

It allows me to focus on something else than my present task and fate of campaigning for the next European election. So this is a pleasure.

I would like to start by stating the obvious. Europe has been very late in picking up the agenda of connectivity. There have been at least three other players that tried to entice us to become part of that before China developed its Belt and Road.

There has been the Russian Federation. President Putin during his first term in office tried to push the Eurasia agenda quite a lot.

It's remarkable that today. Russia is not very relevant in the discussion over connectivity. It's basically turned into a pass-through country.

When I visited Moscow in January, academics were still discussing what term they should use to translate the term connectivity. So that gave you an idea of where they stand. But they were trying to promote the agenda before we understood it.

Then there have been Asian ASEAN initiatives.

We have basically ignored them, not taken them seriously. There have even been U.S. invitations. Hillary Clinton, after she had invented pivot in 2010 at the 2012 Munich Security

Conference, fed up with all the nagging Europeans, basically said, do your own pivot. And then I think it was also her who invented the idea that Europe should pursue a new Silk Road initiative, even before Xi Jinping came into office. So Europe came very late.

I think the major reason was that most actors were just reluctant to take note of the fact that the world is changing, that there is a continental rift in political and economic terms.

But you can't avoid reality forever, so we've not caught up with it in a way. It took not just China's OBOR initiative, it took some experience with the OBOR initiative to make us understand that we had to conceptualize our own approach.

OBOR was originally welcomed with what I would still call blue-eyed

idealism in Brussels, but the perception has changed to a more realistic assessment. The first step in dealing with connectivity, with the need to develop connectivity was, in my analysis, taken when Europe decided to come up with new regulation to oppose Chinese dumping exports.

So in a way, it paid tribute to the fact that there was a changing economic environment, and also the

screening mechanism that Europe put up for sensitive third country investment in the European market was part of that first step. That was still just doing a little pushback against the new forces. The second step was the connectivity strategy that was published, which, as Professor Jill

said, still keeps us hoping that it will be supported by some funding also.

Obviously, within the MFF, the multi-annual financial framework, there is a provision of putting some 60 billion at this strategy's disposal, but we'll see. And the third step was the recent communication, I would say, which has been dubbed a Copernican revolution.

Well, that's possibly a bit too romantic, but I still think it's a fresh breath of air, and a new wind is blowing,

and quoting Martin Tung, who said the east winds over the west wind, well, at least the west wind is blowing more strongly now. And the fourth step, I think, has been marked by the appearance of the strategy paper that has

already been mentioned, that Mr. Strath was helpful in developing by the BDI, the German Federation of Industry, which showed that the mood in Germany's business community, and more largely, I would add,

in the European business community, has been changing over what had happened a few years ago. And the fifth step would indeed be, as Professor Gill demanded, to underscore the promises with some practical action.

And I would be willing to identify three possible actions that could convince other actors, in particular in Asia, that we need it. One is already underway, which is CAATA, the Comprehensive Air Transport Agreement, that we are conducting with ASEAN countries.

The second could be a regional FTA with ASEAN, which is a policy that was originally pursued by the EU in 2007, given up because ASEAN didn't like it at the time.

Today, we could return to that, possibly. And the third is very specific, and it relates to a sequence of events in Malaysia. When Prime Minister Mathieu came into office, very soon he travelled to Beijing, telling the Chinese that he was not in need of neo-colonialism.

And he cancelled the Kuala Lumpur-Singapore Rail project. My proposal would be, and I know this is overly ambitious, that European industry and

European governments would get together and offer Malaysia a better deal than the Chinese proposed. That could convince people that we need it. Is China a threat? Well, I don't think we are in a similar situation as the US are.

The US have changed their policy towards China 180 degrees. Since Nixon first went to China, it was basically a policy of cooperating wherever possible. Today, the US policy is we will cooperate only where it is absolutely necessary, and everywhere else we will push back.

That is not a policy I believe that Europe can pursue. So, yes, we should continue cooperating with China with a more clear profile and more aware of our own interests.

Are we alone? No, I don't think we are. There are a lot of other countries that are in a similar position vis-a -vis the race of elephants between the US and China, the two superpowers of today's world.

All of which are too small to really stand up to these superpowers on their own. But if they can defend the multilateral order together, that could rein in some

of the more destructive effects of this hegemonic competition between the US and China. And I believe that Europe could work on this. And yes, I also agree that we could weather the onslaught of authoritarianism much better if it wasn't for the internal contradictions that our own societies are suffering from.

I believe that it is not enough for Europe to say, yes, we advocate connectivity, whatever the specific definition of connectivity would be. We have to put ourselves in our partners' shoes.

So, for instance, I found that Secretary Carter, Secretary of Defense Carter, when he gave his farewell speech at Shangri-La, had a very good line saying, we're not opposed to China's rise. We just want to pursue a policy that allows all the Asian nations to rise at the same time.

I think that could be a good starting point for Europe's attitude. And we have to convince our partners there that this is indeed our interest. And I believe that to some degree this is already resonating.

So, for instance, Singapore has for a long time been very adversarial against any ambitions on the part of the EU to move beyond a role as a mercantilist power. But Singapore most recently has taken the attitude that, yes, we need the EU as a partner.

And I think that shows some of the transformations that we have been not fast enough in adapting to. So, for instance, when we struck a so-called strategic partnership with ASEAN, unfortunately the

European Council insisted on creating a precondition, which was that we should be invited to the East Asia Summit first before we would demonstrate that we met the strategic relationship. That was very foolish, I believe, and now we're caught in the consequences of that mistake.

The role of the member states is certainly central, but I would warn against just identifying a few member states as the culprits, like, say, Italy signed this MOU.

I think a couple of other member states have signed worse MOUs than this one. And when I look at the practice of my own country, I think it's also been extremely selfish in its economic and political relationship with China. And it's not been opening up to partnering with other European neighbors so that it

basically exposes smaller European countries to the divide-and-conquer strategies that are pursued from China. So it's also on us, and I believe that the question of whether this connectivity strategy will ever work rests very much

not just on the willingness of Brussels to make it work, but in particular on the willingness of Berlin to make it work. And my last point is we need to pursue this strategy, this connectivity strategy, for Europe to stay relevant and for Europe to stay united.

If we don't become an actor, we will not be able to influence the course of events. It's a basic either or. Either you're at the table or you're on the menu. And for Europe, I think the preferable option is quite obvious.

I don't think that we should pursue this under the guidance of the principle of strategic autonomy. I think that's about three bridges too far.

We have much more immediate concerns that we should pursue. And I believe that the most immediate concern is, and that's my final argument, to make everybody understand that we are at a point in our history

where the question arises whether we will return to the age-old game of big-power politics, where according to the median dialogue, the strong act as they will and the weak act as they must.

And I think it's the most important task for the EU to resist that tendency. Thank you very much. And I suggest that we continue with the next presentation.

And afterwards, after the three presentations, we plan to have a good time. Mr. Schleicke, the floor is yours. Thank you very much Sebastian. Great pleasure to be here and great pleasure after a couple of years working together again.

I really enjoyed that. And thanks for posing this topic here. When I already told you in the coffee break, when you applied for the programme and introduced the topic in 2015, it was quite far-sighted to set this topic in 2015 as a hot-spotting discussion.

It was not self-speaking that it would be such a hot-spot as it is today. I will quickly run through seven points and theses. The first point leads me

straight to the two introductions of this morning, of you, Sebastian Berzig and Rachael. The global context has completely changed when we look at connectivity from the EU, Central Asia, East Asia.

And I'm tempted to say we have a historic opportunity to play a new role as the EU in this global context. Why is that? First of all, we could lay back for the past 40 years in terms of security policy because there was always Washington to bail us out, be it the East-West conflict or any other conflict.

All of a sudden my feeling was that the pulling out of TPP was a remarkable step where nobody really felt that the reliability of Washington is given forever.

So this stepping out of TPP for me was a signal to everybody in the world, not only to the TPP countries, that you cannot really count on historic commitments that you thought were given forever.

The second is, why we Europeans could lean back in the past years was, in all of the rest of the fields and mostly in economic cooperation, we were strong proponents of the multilateralism.

And again, if I look at the multilateralism, the WTO is in a very, very deep and fundamental crisis and we are not convinced that the multilateral order, as we have known it for the past 40 years, will continue to exist and continue to be

a solid basis as it was, for example, for German industry being globally so successful as we have been in the past years. So I fully agree with Reinhard Bütikofer's conclusion and put it in the words of Karl Bildfeld, who spoke in our BDI international committee 10 days ago at the opening of Hanover Messe.

He said, either the EU manages to become a global actor or we will be the playground in Europe of global actors, but not a global actor. And it's only these two choices we have. From the German perspective, we never felt it easy to

say we want to take a stronger role in international politics, international matters, whatever it is, politics, security, economics.

And it is easier for us to put this card on the Brussels table, but we never feel confident with making Europe and the EU great again, but this is our way and this is the only way we see.

The second point leads me more to connectivity. Clearly I see, as Reinhard Bütikofer says, the connectivity strategy of the EU is a reaction to Belt and Road. Even though, when I prepared myself, I took a look at a couple of documents, and one of the documents I found quite interesting was

that the EU in 1993 issued the Transport Corridor Europe Cow Castles Asia Programme, which I never heard of before, but it has two remarkable things.

The programme offered technical assistance for infrastructure development in Central Asia and the programme opened the Erasmus programme for Central Asia, which is a remarkable step because people-to-people connectivity, I think, is really core to connectivity.

And we should not forget that we have a foundation and that we build on something, even though it is not seen and we Europeans are extremely poor in marketing our initiatives. So our connectivity strategy from October 2018 is clearly a reaction to Xi Jinping's Belt and Road initiative.

And it took us five years where you might imagine that German business, we were quite complaining vis-a-vis the European Union, but also policymakers in our member states.

When everybody talked in the business community, for example, everybody talked about Belt and Road, our prime message to policymakers was, okay, let's talk about Belt and Road, but let's define a European answer. We have it now. It's a very good first step. It maybe took a little too long, but that leads me to my third point.

We are not the fastest in Europe, but we are good. We are good in doing policy and we do successful policy. I'm not critical, but you were criticized for Russell's bureaucracy and you often hear the blame.

Today I try to point out our extremely strong spots and we do have these strong spots. If we look at decision-making of the EU vis-a-vis China, let me pick three issues where I think the EU has been extremely successful.

The first is the reform of our trade defense instruments two years ago in the necessity to redefine the market economy status of China.

There was a clear need to address this because we had the WTO protocol and the way forward for the Commission to work this out was extremely good. It was highly conflictual between different sides of industries, between Italy on the one side, Germany

and Nordic countries being more liberal and open on the Benelux countries on the other side. We had fractions within German industry battling for a good solution and the solution the Commission came up with is extremely well. It allows us to deal well with dumping of Chinese companies in the European market in a manner where I

think this is a role model how to deal with China for other areas where we have problems with China. The second is – and again kind of congratulations for the good work and the work beyond party interest and

party politics – for three months now we have a European investment screening process in place, which is extremely good. If you would have asked me two years ago on the possibility of having a European investment screening

process, I would have said the possibility to have that in the next ten years is probably 5-7%. We have it now. It's extremely good. It's not a policy instrument, it's a framework for

the member states, but it's a really good framework and it's a really good step forward. The third, it has been mentioned a couple of times, the China Communication of the Commission is one of the best papers I have ever read. It's only ten pages of text, so it's easy to read. Page 11 is the summary of the recommendations and action points, which are in the ten pages already, so it's

extremely dense and it hits to the spots where policy action is needed. I have rarely seen a better policy paper.

The fourth remark is on the connectivity strategy. While the EU has labelled it a sustainable comprehensive rule base, I would label it positive in the sense that we work with a high degree of transparency.

In the rule making process, in the legal process, that is the strength of our liberal economies, of our liberal market orders. We work in transparent orders and we do so also in connectivity. We have transparent bidding processes, transparent guidelines. We orient ourselves in international bidding

processes when we issue projects, so that's really a fundamental point for us. Second, in terms of sustainability, we are really good and we have something to offer. If I look at

German industry, it's an asset for the Chinese to get German and other European companies on board with BRI. It's as well or even more an asset if we talk about our own connectivity strategy. We try

to be environmentally sound in what we do abroad, our companies. We try to be socially more inclusive. Our companies are used to have a really high degree of local content in

their local projects, completely different compared to Chinese companies. They have very low local content. When we do projects, be it in Pakistan or wherever, our companies for decades are used

to train and educate the local people to get involved in the projects we do abroad. Also, we have experience in the sustainability of debt structuring, where the Chinese have an extremely weak spot that we should make use of.

Third, we are rule-based. As I mentioned in the transparency, we follow internationally accepted procurement rules, we follow the OECD guidelines in developing assistance and we follow internationally accepted dispute settlement schemes, which also is something that differs us from China.

All in all, the connectivity strategy came late, but if I have to say from a business perspective, it's a very good move. That brings me to my fifth point. What do we address the infrastructure need, especially in Central Asia, but also in the rest of Asia? It's huge.

We in BDI and Asia Pacific Committee are convinced that infrastructure development is core to economic development.

I remember a couple of years, 15 years ago, you couldn't go to the German Development and Cooperation Ministry and teach them about the importance of infrastructure because they had, sorry to say that so bluntly, gender promotion and stuff like that, where they felt it's much more important.

I'm not against gender promotion, contrary, but the basic need for infrastructure as the foundation for economic development, it had been underestimated and the Chinese said, well, it had been underestimated by the West for some good reasons.

This is where we dive into and our answer now is we are back in infrastructure financing. The Asian Development Bank has always been. That's also part of why we are not so active because we are in the Asian Development Bank. If we take together the European capital we have from the Asian Development Bank, I estimate we are around

one quarter or even more, one third of the capital of the Asian Investment Bank, but we are split up. The Germans have 5%, the French have 5%. We have different executive directors, one for Germany, Great Britain and Austria, one for

France and Turkey and I don't know why, so it's really a very diverse pattern. We need to be better in that. The ADB estimates the need for infrastructure development in the next 10 to 15 years

with 1,700 billion US dollars annually in the Asian developing countries with a strong need in Southeast Asia, especially the three poorer countries in Southeast Asia, but especially in Central Asia.

And that clearly leads us to the conclusion that we definitely need to increase our capability to be an alternative for these countries.

The 60 billion you mentioned, I think it's good. They are not approved yet or not in the budget yet, but it's the planning. We definitely need that because, as you mentioned, it doesn't help us talking nicely about connectivity. We need cash on the table and that's all that helps in the end.

Point 6 on Belt and Road. We always said, or I said, we need three kinds of strategies. The first strategy, and that was always important, we need a European answer. We have it, it's a good one.

The second, we need to influence China to make BRI part of an improvement. And it does not work if China brings in the money, sets the rule and establishes its own order, including dispute settlement.

We need to push China harder to follow international rules while they do this initiative. I know it's difficult, but we should not leave the Chinese alone with doing their stuff.

We are a lot of countries. The US is pushing, the Europeans, Japan is not part of BRI, but they are cooperating in third country cooperation since the Abe visit in Beijing.

So there is a lot underway and Australia clearly is a good partner in that. The third track, of course, we encourage our businesses to participate in the BRI projects because it's a lot of money on the table from the Chinese side and we could not tell our Siemens and others to stay away from this sort of business.

They take all the business they can and in our normal business world there are little distinctions between the good business and the bad business. Usually our business is grey and we do grey business, we don't do black business, black business is embargo stuff and all that.

But the grey business is partners who might want better partners, but you choose the one that the partner is able to pay.

Point 7 brings me back to the BRI paper on China. Why did we have this shift in perception? To be honest, we didn't have such a clear picture when we started working. We clearly had an analysis on the table.

The analysis was that the China we see today is a different China than we thought we see a couple of years before. I think China is the same, but five years ago I thought I see a different China and

today my perception of how China really is has fundamentally changed and so have many players in business. Why is that? Because very simple Xi Jinping in his party speech in October 2017 openly stated we want to be the world leader,

we have no intention to change our hybrid system with a very strong state driven influence on economic players and no doubt about the Communist Party of China. Whatever we do, it must secure the power of the Communist Party of China.

So with this change we thought maybe our dream that the world market is the strongest force of convergence that is possible, maybe this dream did not come true in the case of China and we need some new analysis.

So we did this analysis and the longer we worked on this paper, and we started working on this paper in early 2018, we had the core set in summer, the rest from summer onwards was getting our constituency on board,

but the process from March to summer was a process where with each week working on the paper the more from national answers the more we came to European answers. And that is my baseline and where I finish. The China challenge for us in BDI is a challenge for Europe.

We feel in Germany that we are good in formulating German interests, but in the world of tomorrow nobody cares about German interests

and the strongest German interest we have today is that we have a strong Europe because that's the only actor that is seen. I think we are on a good way. When I looked back in November 2016 we had the Asia Pacific conference in Hong Kong

and Kevin Rudd told us in the security policy panel, actually you Europeans, you are not present in Asia, but that's no problem, we don't need you here, we get along fine, there are other players more important. The Asia Pacific conference in November 2018, we had the same panel on security policy with John Blaxland from the National University of Australia

and John Garneau moderating it, John Garneau one of the brains behind the China policy change in the Malcolm Turnbull cabinet

and the message was completely different. The world has turned and what we need today is a strong Europe being an actor in Asia and this is where we want to be seen in the next years. Thank you very much for your analysis and for your very clear statements. I think this presents us with important context

indeed to better understand why a re-dedulation not only in factual but also in perceptual terms is taking place, is underway

and it also reminds us that we are not dealing with events but with processes. So for us it is very important not to wait until the big bang happens but to actually trace developments while they take place.

And China's rise has taken place now for so long that it actually has arrived I suppose

and this is the world, this is the fact that the world is waking up to now. And Francois Nepula has witnessed this rise and observed it for a long time. The floor is yours.

Thank you. First of all thank you Sebastian for having me here to share my thoughts on this very important topic. I'll start with a small remark. I couldn't agree more with you that changes in mindset do not happen

overnight, they may take time and I think we have to thank China for pushing us to wake up. You can look at that from a positive perspective and I think it's a good thing and in particular I

think that this pressure that China is exerting on the EU has pushed the EU to get its acts together. I think it's very positive. But if we focus on the case of Germany, let me be a bit nasty with Germany as a French person, that's standard. I think that one of the reasons why there was a change of mindset in Germany regarding China has a lot to do with the Ku Klux case.

Until recently I guess that the position in Germany was much more benign towards China. I guess we

had more concerns in France because we were under stronger pressure due to our lack of competitiveness etc. Germany was much more relaxed until there was this acquisition of its robotics and that was a shock. I think that really was a wake up call. I may be exaggerating slightly but I think that was a real shock.

And so it pushed Germany perhaps to rethink or to look at China in a different way and at the end of the day it is a very positive change because then it pushed Germany to team up with the authors and I guess

I would argue that it is one of the reasons why we now have this screening mechanism, this joint screening mechanism, investment screening mechanism. Without the Ku Klux I'm not too sure that we would have it. But that was my French attack on Germany.

I'm sure you can't do better than that. Let's turn to the topic, to the connectivity thing. I agree with a number of things that have been

said before and that the change in the environment has led to this change in the EU's approach to Asia. And what I would point as important changes is also the rising tensions between China and the US. This has

obviously a direct impact on the EU. We are not part of the friction but we are victims of this friction. And this rivalry or this trade complication between these two big powers are likely to become

a never-ending story. I guess we are stuck with this problem for a long time. And so this is a major change in the landscape plus we also have a change in Asian geopolitics. So as a result of these various changes the EU has again to rethink its position vis-a-vis the approach vis-a-vis Asia.

And so this is why it is trying to define an optimal approach to its Asian economic partners. And the connectivity strategy, I guess, is part of this response.

So before I address this, let me perhaps start with a couple of definitions. I have huge difficulties with this connectivity strategy because I think that it's very unclear what connectivity means. So I guess that what we need to do right from the start is to try to define connectivity.

And in what has been explained, what has been said in the previous presentations, it's quite clear that we have very different things in mind. We have a number of things in mind but perhaps all of us do not have exactly the same things in mind. So connectivity is, first of all, physical connectivity, infrastructure.

And this is usually what people have in mind first. And indeed, connectivity enhancement is about reducing infrastructure bottlenecks and barriers to cross-border trading investment flows. But these barriers may be in the form of physical constraints but not only.

There may be missing links, there may be low quality infrastructure, okay, but there are also other forms of barriers. And these other forms of barriers are institutional barriers, missing provisions, non -tariff barriers, incompatible regulations, a number of things that we can think of.

And so the traditional way of thinking about connectivity has tended, it seems to me, to target almost exclusively physical infrastructure development. But I think that a more comprehensive approach is really badly needed.

And in particular, absent the rest, physical infrastructure is totally useless. So you need the two things at the same time. So you need physical connectivity, yes, which is about building hard infrastructure, maybe transport infrastructure but not only, energy as well.

But what is also required next to that is institutional connectivity. And this is about streamlining regulatory processes, harmonizing procedures, harmonizing requirements, standards, etc.

So as to achieve seamless trade in goods and services as well as any kind of approach that can be involved. So these two dimensions of connectivity are absolutely key and they go hand in hand. And absent one, the other is useless. Then you have a third dimension of connectivity which was highlighted by, I

don't remember who, which is people to people connectivity, which is also extremely important. And the mention of the Erasmus program extended to Central Asia is a very good example. So people to people connectivity is the third dimension of connectivity and it is also a very important dimension and it should not be neglected.

So the three should be in mind at the same time. On this very last point, people to people connectivity, again, there may be also slight differences in definition. And some people, when they talk about people to people connectivity, what they have in mind is exclusively labour mobility.

But there is more than that in the people to people connectivity. So the next point beyond this definition is why do we need to enhance, why do we want to enhance connectivity? Again, on this point, I think that it's important to stress that connectivity should not be seen as just an end.

It is, it should be seen as a means to an end. And connectivity is really about enhancing economic development. That's really the point. Otherwise, it's not just connectivity for the sake of connectivity.

The point is to enhance economic development and at the end of the day, to reduce development gaps. So this is why, I guess, as far as the EU is concerned, but I'll get back to that later, the connectivity strategy could be seen also as one aspect of the development assistance strategy to fall under this item.

So anyway, the point of enhancing connectivity is really about unlocking growth potential. That's really the point.

And if we look at the details of that, if you reduce transportation costs, then you will allow firms to better exploit cross-country differences. You will allow them to engage in vertical or complex foreign direct investment strategies.

And in this way, multinational corporations will be able to separate their production stages across countries and connect all these countries together. That's the whole point. And this is why, at the end of the day, you will be able to help or assist economic development.

So connectivity is really about helping to make the best of complementarities and then connecting countries with different levels of development and pushing all of them forward. Okay, so now let's turn to Asia and the EU.

If we look at the economic relation between these two vast regions, what we see is that the ties between the two regions are already quite tight. And these ties have reached a unprecedented level. And interestingly, the EU-Asia economic relationship is the largest bilateral economic relationship ahead of the EU-US.

We tend to think that the EU-US relationship is the largest one in the world. That's not true. EU-Asia is larger. Asian markets account for over one third of exports from the EU as a whole. And almost half of the goods and services imported by the EU come from Asian countries.

So this is really the largest. If I had prepared a top representation, I could show the graph to you. Of course, I didn't do that. And there was no electricity last night. That's why I couldn't do it. Now you know.

Okay, so the economic relationship is already quite tight. But I guess it can be an objective to tighten it even further. And the reason why the EU may want to tighten the relation is, as I explained earlier, the tensions with the US.

The problems with the US push us to pivot towards Asia. And what we observe also is that Asia is still the fastest growing region in the world. So after all, it's a good strategy to turn towards this part of the world.

So economic growth in emerging and developing Asia is certainly expected to dip slightly, but very slightly. And the region will still remain the most dynamic over the coming years. So it makes sense to try to develop the relation with this part of the world. Of course, another objective is to respond to the Belt and Road Initiative.

That's also a hidden, perhaps, objective. It's not an explicitly expressed objective, but it's also an objective. And here, I have some doubts. So let me now turn precisely to the EU Asia connectivity platform and provide some kind of assessment.

So the communication that has been described by the previous presenters is... Well, the joint communication that was published is a nice document, because it's not too long a document either. It's like 12 pages or so, or 13.

That's pretty clear, with key actions for various sections. So that's a good strategy document from this perspective. I see a number of problems with this document, though. One first thing is that, again, connectivity is not defined very precisely in the document.

So we don't know exactly what the point is. What we see is that there is the willingness to expand or extend what is already in existence. And in particular, there is the...

Officially, what is being targeted is the expansion of the transport network, the trans-European network. That's one aspect of it. So behind this, we see immediately that hard infrastructure is very much at the centre of the connectivity strategy.

But what is not very precise is where does this transportation network go. Nobody knows. Asia is not very clearly defined either. So connectivity is not very precisely defined, and Asia is not precisely defined. And Asia is a very vast region.

So what are we talking about? Are we talking about Asia, are we talking about China, are we talking about Japan, are we talking about Korea? All of them together, Central Asia as well. But we cannot have exactly the same approach to these various parts of Asia. Well, in the document, it is explicitly said that there will be different approaches.

But then, there are no details about these different approaches. So to my taste, the whole thing is a bit fuzzy, both from the connectivity perspective as well as from the regional perspective. So that's one first big block of issues that I have.

Of course, another issue also has to do with the means, the funds. And this is a very often heard comment about the EU platform, which is about the means. And the means are ridiculous compared to the Chinese means. The means are, and it's been mentioned before, the EU has promised to

put aside some 60 billion euros in the 2021-2027 multi-annual financial framework. And these 60 billions will support the implementation of the connectivity strategy.

But if you compare that to what Beijing is willing to put on the table, this is ridiculous. Beijing is talking trillions of dollars, so we cannot compete. Well, there are many things that come with this big money.

One first point is that perhaps we should not emphasize this aspect too much. One first thing is that, of course, funds are badly needed, yes. But there may also be problems if there are too much funding. Too much funding may be a problem for the recipient country.

The country may not be able to actually absorb all these funds. So there is a problem with if there is too modest a capacity to absorb funds this person. And this may be the case in a number of countries. So there is a risk of bottlenecks resulting from insufficient absorption capacity.

So emphasizing the fund aspect may be a problem. Moreover, I think that this funding issue is not necessarily a problem. We should not see the fact that the EU doesn't have as much financial capacity as China has a problem.

And this is particularly true if we do not exclusively have in mind the physical infrastructure dimension. If we also think of the institutional connectivity dimension. So in this case, this requires far less funding, far fewer means.

And if we want to push for regulations or procedures, rules-based, whatever it is, or what was pushed by the EU, in this case you do not require as many funds. So this issue with the funding may not be that much of a problem at the end of the day for these two reasons.

Our next point is the connectivity strategy on the part of the EU is supposed to be a response to the Belt and Road. Well, I have some doubts about that. If you look at the Belt and Road, the objectives of the Belt and Road are extremely clear, even though they are not official.

They are extremely clear and it is really pushing China's national interests. It is pushing China's development. It is pushing China companies' internationalization. It is pushing Chinese western regions' development.

It is largely part and parcel of the restructuring strategy in China. So the objectives of the Belt and Road are extremely clear. The objectives of the EU connectivity strategy are not as clear. So as a result, you cannot really see that as a clear response to the Belt and Road.

So I have a little bit of a problem with this again. So what are the real objectives? If my two co-speakers can explain that to me in a very clear way, I'd be happy. Okay, very good. Two more points, which I see as slightly problematic in the strategy,

is the at least sufficiently clearly expressed connection with the business sector. So if you look at the way the connectivity strategy will be put in place, at the end of the day, it should be done through the business sector, through business involvement.

And I don't see much mention of the business sector in the strategy. I understand that the business sector is very much willing to contribute and to participate, but in the strategy, it's not all that clear how it can be associated. And a last problem also I have, which has, I guess, a lot to do with the definition issue that I highlighted earlier, are priorities.

There is no priority list associated with the strategy. And I guess we would need to have very clear priorities set in order to know exactly how the strategy will be rolled out.

Okay, and now for perhaps a final point, I think, again, in the document, there are existing things. There are a number of connectivity-related initiatives that are already in place between the EU and Asia.

existing FTAs. We have a very good, deep, strong, serious FTA with Korea. We have another very deep, strong, serious FTA with Japan. We have an FTA with Singapore. We are negotiating a couple of FTAs with other ASEAN countries. So there are things already in place. And

these are also about connectivity. And these are precisely, tightly connected to the institutional connectivity that I was stressing earlier. And so I guess we can also start from this basis to try to develop further the connectivity with Asia.

Okay, well I see that Sebastian is getting impatient, so I guess I'll leave it here. But I'll just try to be a little bit provocative and critical so that there could be discussion. Thank you. Thank you very much, Francois, for being provocative and for also raising some issues with the

strategy. So there are different ways of looking at the strategy. What has been pointed

out by all three speakers is that institutional relations do exist between the European Union and East Asia, especially when it comes to free trade agreements that have been

signed and ratified. And here, certainly, Japan is an important landmark event. I'm a CFP or ASEAN FTA that has been well talked about for a long time. We will do discuss

Southeast Asia today as well, so we tend to come back here. But for the time being, this is when the real discussion starts and new comments from what used to be Ashtana

until very recently. Can I speak? As a question, please. I've been interested in your point about the three types of connectivity and some of its people-to-people. I think Europe doesn't realise what advantage it has in the people-to-people

part. I think we don't take seriously enough the scientific and cultural diplomacy that we have in other countries, particularly in Central Asia. Because if you've got

two great big neighbours like Russia and China, actually, Europe is very important to you, because it's an important third party. In the previous session we had about liberalism, et cetera, actually, aspiring to be like Europe is quite common in Central

Asia. And I think if the EU got its act together and didn't let member states just mess around on this cultural and scientific diplomacy area, there are lots of benefits we could have relatively cheaply without, as you say, we don't need spending the big money

to get a lot of money. It would be my idea. Yeah, Kazakh special, please. Okay, right, yeah. Yeah, there is a further question, yeah. First off, thank you for your food for thought, and especially to you, first off, because

it really reflected what was on my mind. Because I think that all of you mentioned China as one of the major challenges to the EU, but for me it's a bit like, well, we talk about Eurasian connectivity, and there are other countries, too, that we actually

talk about, and it's like you look at the fire that really burns high, and then you don't react or just don't see that the grass around is dry, so that's facilitating the fire burning. And I think it was you who instructed, emphasizes on the regulation

or law-based system that we live in in Europe, and if I take on maybe a more Asian perspective,

I was wondering, well, how does regulation actually keep privileges that European countries for example, and also firms and companies, how does that actually help Europe? Because it's rather a burden. And also with the approaches that you mentioned that the EU

is now taking on, it's really regulation-based. And what about people-to-people dialogues or other aspects, so don't you maybe think that it's also just, Europe is just reacting to China and leaving out the rest of Asia?

Yeah, let's collect some questions and then we'll have time to respond. Thank you. On a similar note, there's been also a lot of discussion, not only in terms

of Europe-China, but also Europe-Asia, about the role of sub-regional diplomacy in Europe. In some cases it's become very manifest, such as the 16 plus one, possibly 17 plus one talks that China is having with Central and Eastern Europe, but we're seeing

it in another direction. For example, the Nordic region has been discussing at length the potential value of the Nordic approach to Asian diplomacy and Asian connectivity. So I was wondering if you could comment about whether you see this kind of new layer that's starting to appear, sub-regional diplomacy, as a problem, an opportunity, or some

combination thereof? Yes, thank you. Thank you very much altogether for the presentations and I would just kind of maybe add on the comment by a Chinese colleague about – sorry, are you Chinese? No. Sorry. Sorry about other countries in Asia. As a Russian, really I do wonder, it's

no wonder for me that Russia is mentioned only once in EU connectivity platform and never in these presentations, but nevertheless I can maybe provoke you to express some

Europeans about how Russia is doing all that, because that's actually the only country which borders both European Union countries and China. Thank you. I will be – I was talking about the Russian perspective tomorrow, but I will be grateful for your view. Yes.

Good. So, well, let's start in reverse order. Perhaps on the Russian point, personal view, the first thing my co-speaker here mentioned – I noticed that. But I think one issue is perhaps the fact that Russia was mentioned

too often, precisely reflects the problem of the transit country. Russia is indeed between the EU and Asia. It's on the way. So what do you do with the on the

way country? So is the on the way country part of the programme, part of the strategy, or is it just the connecting link, so to speak, and in which case what do you do with the link in the middle? Is it part of the strategy? Is it supposed to also

benefit or is it just connecting and that's it? So I don't know and I don't want to make any comments about that, so I don't know exactly what the EU had in mind. But that's really a problem. On the point of is the EU just reacting to China?

I hope not. I guess that China and China's pressure was the trigger for this strategy to be developed. But I guess – I'm sure – that the objective is much broader than

that. So I see China as – and it's a little bit the same thing as for the investment screening mechanism I was alluding to before – China is really the trigger. It acts as a wake-up call. But then the EU has a broader approach. So it's not just trying

to respond to China. But I think it is the realisation that something should be done, but not exclusively or not only about China. Something should be done vis-a-vis Asia. And that's why I said in the very beginning of my presentation, I think that another

factor that also pushed the EU to develop the strategy is also the tension between China and the US. So the US is also part of the story. So it's not only about reacting to China. That's not the way I see it. And on sub-regional diplomacy, I don't want to make any comment on that, but I would like to add another layer, perhaps, that isn't more problematic. It is the

sub-regional diplomacy. What I have in mind here are cities, for instance. And in the case of France, what we observed was that one city was targeted by the Belt

and Road Initiative, that is, Lyon. And what you see is sometimes a huge gap between the central government's position and the local government's stance. And in the case of Belt and Road, that was pretty clear. Even though we should perhaps not make too much out of it. In the case of Lyon, the train coming from

Wuhan reached Lyon without people in Lyon even knowing it two days before. And all of a sudden, they were informed that there was this train. And so all of a sudden, this was turned into a Belt and Road event. But that was really organized at the very last minute. But of course, I mean, in Lyon, they were more than happy to have that.

And they are now connecting much more tightly with China. And the same thing is true for Marseille, for instance. And this reflects exactly the same position as the central government's position. So that's another layer to be added. That's something that can be addressed in the World Initiative panel tomorrow.

Yes, it's difficult as a guy from the business sector to speak on the question,

are we in the EU too much regulation-based? Normally in the business sector, I would say, yes, we have too much regulation in Europe and Germany. But in this context, I would state it differently because, yes, we are regulation-based.

But if we look at certain types of regulation, they address specific objectives. I give you one example. One example that I mentioned in the context of connectivity and in the context of international procurement is guidelines and rules

that we have agreed among the industrialized countries in the context of the OECD to ensure fair competition between companies. And we think this is a good principle and business speaks to it

and it gives us the certainty that in fair, transparent, open bidding processes there is an absence of corruption, you get better projects, you get more sustainable financing. So we are convinced that in some areas where you have stronger regulation

and including a bureaucracy, applying for these projects for companies is extremely difficult and they hate it. But it's part of the international agreement and everybody sees the necessity of it. So in this sense, I would argue our strong regulation-based system

when it is connected to clear objectives, yes, tag it and we take it as a necessity of organizing our world. On subregional diplomacy, I would argue

in the absence of strong and clear European positions on China, subregional diplomacy such as 16 plus 1 endangers us. In the presence of a clear, strong EU policy vis-à-vis China,

we have a continuation of all member states cooperating with China, the EU dealing with core issues, with the acceptance of all member states and in that context, I would say 16 plus 1 would not really harm us but I must also say that I'm quite happy, especially Finland blocked the cooperation of China

with the Nordic countries because it would have sent the wrong signal at the moment and I'm quite happy that we have more cautiousness towards these subregional dialogues. On Russia, yes, I must say we have a dissimilarity from the business side,

we live with an embargo vis-à-vis Russia that is not part of the long-term world we would like to see, we would be happy if we could come back to a much better cooperation,

if business would work well, but to be honest, the embargo with Russia has hit our business, especially in Europe-German business because we have been the strongest in Russia and we still are, but it's no comparison if we would have a situation that brought us into an embargo vis-à-vis China.

We have invested much more in China, our trade flows are much bigger, China for Germany is the trading partner number one before the United States and Netherlands, so I wish I could say that not being connected so deeply with Russia would affect us more,

it does not affect us so much and we should work towards a situation where not being connected deeply affects us.

Let me start with the Russian issue, I did mention Russia, but what I would still say is that I believe Russia has not made up its mind. I understand the OBOR initiative as an alternative to the trade multilateralism

that has dominated our international trade relations for the last couple of decades. What the Chinese advocate through BRI, I would call a serial bilateralism or maybe I should rather say a hub and spokes approach,

and the hub is in Beijing and Russia is just considered to be a spoke just like any other country in this initiative, and Russia has to make up its mind whether it wants to be a junior partner

to Chinese hegemony or whether it wants to side with us and others to defend multilateralism. In the Munich Security Conference there was a nice quip where people said the Russian foreign minister advocated unilateralism but in reality he depends on multilateralism

and the Chinese representative advocated multilateralism but in reality he believes in unilateralism and I think Russia must make up its mind and once it does it might feel it has much more in common with us than the Russian leaders are presently conceding.

The second point, European, well I did not talk in my presentation a lot about why this change happened and suffice it to say that I think since Xi Jinping took over we've seen what I believe amounts to regime change in China.

A kind of aristocratic communist regime has turned into a party led empire and the emperor is controlling everything and teaches everybody in his country

that the party rules east, west, south, north and everything. I think that has changed a lot and it took a while for us to realize that there was this very fundamental change

even though it's still the communist party that is in control but it's a different kind of communist party than the one that Deng Xiaoping advocated during the time where he was prevalent. Regarding the European BRI initiative you have called it fuzzy and I'm sure you're right

but in politics sometimes that's the way to make progress. If you want to wait until you have clarity on every detail you will never get started.

So you have to be willing to be a bit fuzzy and then work on the details later. I believe that we have been clear on the fact that this is not just about physical connectivity.

That's why I mentioned Qatar. That's why I mentioned the trade dimension. And also with regard to people to people there have been initiatives. Certainly not enough. I would agree with that. But for instance there have been efforts to strengthen the involvement of Asian countries in the Erasmus Mundus program and

there has been an initiative by the European parliament to start a young leaders conference between ASEAN and the EU. So there are such initiatives and certainly they should be expanded to the city level or the municipal level which you just alluded to.

I hear similar stories from Duisburg or from other municipalities in Thuringia where there is a need to really include these actors from the municipal level and also give them an opportunity to learn about what they're up against.

Regarding the BRI and the relationship between the BRI and the European connectivity strategy, I would insist that our connectivity strategy is not just a reaction to BRI.

I would say there are two dimensions. One is indeed a pushback against the hegemonic impulse that BRI carries. But the other is a positive effort to shape another relationship.

And Europe has been doing that in two ways. First by trying to agree with China on certain criteria for acceptable connectivity. So for instance if you look at the summit conclusions from the 2018 EU-China summit on

BRI, there are very clear adjectives that the European side achieved or succeeded in including which says, according to international standards and transparency and sustainability, a lot of things that BRI

doesn't live up to but at least Europe sort of tries to define standards. And on the other side by shaping our own connectivity policy we try to show that you can do better than China is doing.

I think there are a couple of criteria that we should work on. For instance, sustainability. Clearly BRI is anything but sustainable. According to the Chinese plans several hundred new coal-fired power plants should be built as part of BRI.

If even half of them would be built, Paris would go out of the window. The Paris climate agreement would go out of the window. And in order to prepare the second BRI summit, China mandated a study on the compatibility of BRI and sustainable development goals with the European academics.

And when the academics presented their first findings, they were kicked out of the contract because China didn't like the results but didn't want to give them any facts either. So they rather wouldn't have the study than face reality. That's why we should insist also China is putting up BRI courts.

I think this is something that Europe should look into. China is trying to insist on applying exclusively national industrial standards in the context of BRI deals.

Not multilateralizing through the international standardization organization but in parallel pushing explicitly Chinese standards, which is a form of neo-colonialism I think you could say.

Also the issue of competitiveness. According to a study from CSIS in Washington, about 90% of all the contracts that have been agreed so far in tenders under BRI have gone to Chinese companies.

So there is not even a little local content. And Friedrich Strack mentioned the Asia Pacific conference in Jakarta in November. There was a poll being done by the organizers among the participants, about a thousand German entrepreneurs.

And the one question was how many of you are hoping that they will get a contract or that they will do have some business under BRI and the number was more than 50%.

And the second question was how many of you have been successful in landing a contract and the number was below 10%. So that's also the reality of that. And I think we should also look at the financing institutions, the IFIs. Because when you look at AIIB for instance, slowly but with full clarity, the Chinese president of

AIIB is transforming AIIB from an original multilateral financing institution into a tool of China's foreign policy.

And there's been a study published just recently on how this is being transformed and that is quite an interesting story. I believe that the last question I think was on the 16 plus one and the Nordic. My general bottom line

is that all European institutions and all European countries should insist vis-a-vis China on them pursuing a one Europe policy. They don't like the term but I think that proves the point that it is relevant.

I believe that on the other hand it's not very helpful if we just blame China for taking advantage of our own internal divisions.

I did mention the role of Germany. There is no country in the EU that has more intense relations to China, economic and political, than Germany. Germany is the only country with which the Chinese leadership has annual governmental meetings, cabinet meetings.

The German government has agreed with China on an innovation partnership that runs across 110 chapters. We could do a better job of allowing some of our smaller neighbors to piggyback or to be part of that undertaking.

But if we let them wait until a few crumbles fall from the Lord's table, well maybe that's expecting too much patience from them.

And if China waits with 10 billion investment, which small country can really resist that temptation? Now China is not deliberate and the Polish who were originally the ones who pushed the 16 plus one the most have already grown very dissatisfied.

And the Polish Prime Minister didn't attend the last 16 plus one meeting, which was a clear signal of dissatisfaction. And now China is trying to push the 16 plus one into more contentious territory by trying to force them to do deals that run counter to EU only regulatory matters, which is not what the countries like very much.

So I think there is a chance of reintegrating the European cooperation, strengthening European cooperation and not just blaming China for some of the internal divisions that we have left festering.

Oh sorry, one thing I forgot about connectivity and Asia in general. There has been an ASEAN connectivity strategy before China invented the BRI.

There have been initiatives in Georgia and the neighboring countries, so there are different connectivity approaches between East Asia and Europe. And I think it should be our goal not just to look at China, but also to look at these partners and find ways of teaming up with them.

And I think that is what the connectivity strategy is very much about. Yes, and this is what this conference is going to be about, I have to say. This week, not only the next 16 plus one summit meeting will take place in Croatia and maybe Greece will join the

plus, but also by the end, in two weeks time, the second Belt and Road initiative summit will take place in Beijing. And the question is indeed who will participate from the European side, which governments will participate and also from the EU institutions side.

One thing has become quite clear here, there is a need for regional, inter-regional, trans-regional governance in Eurasia.

And the question though is, because this is about problem solving, there are many issues. But the question is whether the Belt and Road initiative, which is in the process of institutionalization, whether this is the forum that can perform these functions.

So far there are doubts, and what is needed from a European perspective is something that I like to call BRIM, the Belt and Road initiative for multilateralization.

However, so far, if that should take place, then Europeans need to be present when those issues are discussed. If they don't go, if they don't participate, then they can hardly complain afterwards, but they need to be informed.

And for that, there are other institutions, like for instance the Asia-Europe meeting, which has been there since 1996, to which more or less all of the actors in Eurasia, including Australia, are participants, Russia is a participant as well.

And maybe it's time to rethink whether more institutionalization is needed when it comes to dealing with issues that can be broadly discussed under this buzzword of connectivity.

Thank you very much. I beg your forgiveness, but I forgot one argument that I think needs to

be added, and that's about the ridiculous amount of 60 billion from the next NFF. It's not quite as ridiculous as it looks, because this is meant to be a bag of money that facilitates a leverage 15 times, just like the Junker Fund has been leveraged 15 times.

So if you look at that number, you get close to 800-900 billion that could be initiated through that fund.

So I'm not saying it's enough, I'm just saying it's not quite as stupid as it looks.