Headline: Catalytic Power Europe: Blended Finance in European External Action

The global influence of the European Union (EU) has been debated in overlapping strands of literature as ‘normative’, ‘regulatory’ and ‘market power’. They identify the diffusion of its rules and standards as a vehicle of European power. We argue that European power extends beyond its regulatory capacities and includes new ‘catalytic’ capacities in the realm of financing and network building. We analyse blended finance as an instrument of ‘catalytic power’, defined as the mobilisation of partners and their resources to pursue external objectives. The analysis reveals that financial leverage, the original motivation behind the tool’s creation, has declined in importance. Instead, blended finance is designed to facilitate and structure cooperation with other European and multilateral financial institutions, positioning the European Commission as a central node in international cooperation and increasing its influence in this sphere. The article closes with a discussion of blended finance as a tool of catalytic power and related trade-offs.