In his end-of-year "review" for 2021, European Union (EU) foreign policy chief Josep Borrell set a positive note on the bloc's relationship with Southeast Asian countries.

"We have put the emphasis on diversifying our partnerships across the Indo-Pacific … My visit to Jakarta in June consolidated our engagement with ASEAN," he said, referring to the Association of Southeast Asian Nations bloc.

Lay Hwee Yeo, director of the European Union Center in Singapore, told DW that Southeast Asia is now a key region as the EU seeks to increase its influence in global affairs.

"2021 was a good year for EU-ASEAN relations," said Yeo.

Continuing momentum

The big news in 2020 was that the EU finally became a "strategic partner" of the ASEAN bloc after years of lobbying.

In 2021, momentum continued with the conclusion of the EU-ASEAN Comprehensive Air Transport Agreement, the world's first bloc-to-bloc air transport agreement. It aims to increase and streamline passenger and cargo services between Europe and Southeast Asia.

Yeo said this is a sign both sides "intend to keep their economies open and strengthen the agenda on connectivity."

The EU was also a major donator of COVID-19 vaccines to Southeast Asia last year, mostly provided through the international COVAX scheme.

Next up, Yeo said, the EU and ASEAN could embark this year on negotiations for a comprehensive digital agreement.

Last January, ASEAN released its ambitious "Digital Masterplan 2025," and the EU has also signaled connectivity and digital governance and partnership as one of its key priorities in its Indo-Pacific strategy, she added.

More progress is expected on the ASEAN Smart Green Cities initiative and the ASEAN Customs Transit System, both of which the EU backs financially.

Brussels is also a leading benefactor of climate change action in Southeast Asia. Last November, Green Team Europe, a forum of member states and the European Investment Bank, provided an initial €30 million EU grant to help promote EU-ASEAN cooperation on climate action.

"As the EU continues to implement our Recovery Plan for Europe and ASEAN its Comprehensive Recovery Framework, we aim not only to build back better and strengthen the resilience of our public health systems, but also to build back greener, with sustainable development at the center of our recovery efforts," said Lukas Gajdos, deputy head for the EU delegation to ASEAN.

Investment and trade on the horizon

Of particular interest in 2022 will be how the EU's Global Gateway Initiative, a €300 billion investment scheme launched last December, will be implemented, said Alfred Gerstl, an expert on Indo-Pacific international relations at the University of Vienna.

Southeast Asia was identified as a key region for this investment plan, which was unveiled late last year and has been seen as a potential counter to China's vast Belt and Road Initiative (BRI) investment scheme.

"Most Southeast Asian governments are increasingly critical of the BRI," Gerstl told DW.

"Vietnam, but also Indonesia and the Philippines would certainly welcome quality infrastructure projects sponsored by the EU," he added. "However, the higher European project standards and norms may deter some governments."

On the trade front, plans have stalled on an EU-ASEAN free trade agreement. But Singapore and Vietnam have now signed bilateral trade pacts with the EU and negotiations are ongoing with other ASEAN states, chiefly Indonesia.

Thailand, Indonesia and the Philippines last year signaled their desire to renew trade talks. Resumption of negotiations is likely to begin in 2022. 

On January 1, the Regional Comprehensive Economic Partnership (RCEP), an ASEAN-led trade scheme involving most Asian countries, came into force creating the world's largest trade deal. 

"Given the entry into force of RCEP, all bets are now on how quickly the EU and ASEAN will reopen negotiations on their own bilateral free trade agreement," said Shada Islam, an independent EU analyst and commentator.

Myanmar — a geopolitical sore spot

However, difficulties lie ahead. David Camroux, a Southeast Asia specialist at Sciences Po, noted that the Myanmar crisis will continue to be a source of strain in 2022, especially if the military junta that seized power in last year's coup continues with violence against civilians.

So far, the EU has publicly backed ASEAN to take the lead in trying to mediate the crisis.

But Brussels is stuck in a bind. If it continues to support ASEAN’s mostly failing efforts, the crisis could become even more protracted. If the EU imposes further sanctions, which it promises to do, or takes even stiffer action, it could jeopardize relations with ASEAN.

“There are efforts underway to get European countries to recognize the NUG in Myanmar,” Camroux said, referring to the National Unity Government, the anti-junta government-in-exile.

"The challenge in EU-ASEAN relations will be to reconcile this with the wimpish non-interference ASEAN approach."

Other ongoing problems are likely to continue in 2022, including the EU's move to ban imports of Indonesian and Malaysian palm oil.

Last year, Kuala Lumpur brought the dispute to the World Trade Organization. Another bone of contention will be the state of democracy and human rights in Southeast Asia, where political freedoms have declined in recent years, according to Freedom House’s annual reports. 

The chair of the ASEAN bloc this year is Cambodia, which has seen major democratic backsliding since 2017. The EU even partially removed Cambodia's trade privileges in 2020 in protest over the deterioration of Cambodia's freedoms.

Southeast Asia welcomes the EU

But this is unlikely to affect bloc-to-bloc relations too much, according to analyst Islam.

"Policymakers will try to sidestep areas of discord and focus on finding common ground. But it will be complicated," she said.

The upcoming release of the 2022 State of Southeast Asia survey, an annual report of regional sentiment, is expected to reveal the EU is a trusted partner in the region and is seen as an important bulwark against the increasingly tense US-China rivalry.

One of the EU’s tests for 2022 will be convincing its Southeast Asian partners that it can be a more rounded partner and not just a financier of ASEAN projects.

"The EU is seen as a trusted strategic partner, but not as a serious security actor in Asia," Bart Gaens, a senior research fellow at the Finnish Institute of International Affairs, told DW.

Pundits are divided on whether that's achievable. However, the EU looks more and more at Southeast Asia as a region where it can assert influence on the world — and where its influence is welcomed. This is likely to continue in 2022.

Edited by: Wesley Rahn