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10
Jul

Is China alternative to European integration of Western Balkans?

by Stefan Vladisavljev, BSF Program Assistant

 

Since 2013 and the launch of Chinese President Xi Jinping’s strategic Belt and Road Initiative (previously known as One Belt one Road) we are witnessing the rise of the Chinese influence in the countries that are seeking for additional investment sources, new infrastructural projects, or just political support in the field of international relations. And while that influence has been spreading through Asia, Africa, even Latin America, Europe still looks at it as a challenge and the potential threat to not just European values that are not in line with the Chinese policies (especially internal ones) the Chinese presence has been welcomed in the Western Balkans.

If we are talking about the Chinese cooperation with the Western Balkans, Serbia is the poster child of the rising Chinese presence. Numerous financial agreements have been signed since 2009. The willingness to cooperate with China transcends the political will, different governments, coalitions and oppositions.

The first, and still probably most symbolical agreement was made between two sides for the construction of the Mihailo Pupun bridge across Danube river. Bridge has become the symbol of Sino-Serbian friendship. But in reality, the bridge is also a symbol of the way that China is doing business. For that project, as for the other infrastructural ones that are implemented or Chinese have been using the specific template of providing financial resources, but not as investments. Most of the joint projects are preferential loans. So, China is providing money that country (in this case Serbia) has to pay back, with certain grace period and without a lot of questions asked. The condition is that Chinese Construction Company has to be the contractor that will work on the construction of the agreed infrastructural project. That was the case for the construction of the bridge, for the thermal-power plant in Kostolac, for the Koridor 11 highway that should connect Belgrade with Montenegro, and for the controversial Belgrade – Budapest railway. Controversial railway not because the Serbian side had anything against it, but because European Commission raised concerns regarding competition rules on the Hungarian side, because the job was given to the Chinese without tender. There weren’t any differences on the Serbian side, Hungary is just part of the EU, and Serbia is not. Since the humble beginnings, things have changed rapidly, Serbian delegation (on the highest level) is visiting Beijing at least once a year, and through cooperation platforms like 17 + 1 (welcome Greece!), but also bilateral relations there are always some new projects that are being announced, both investments and financial agreements. Since 2016, when the first real investment, purchase of Smederevo still mill was announced (one can argue that purchase of the assets is not an investment), several others have come from Middle Kingdom to Serbia. After that, Chinese company have also purchased the Bor mining and smelting combine. The special characteristic of both of those investments is that they have kept more than 10.000 people employed in those two companies. That brought great publicity both to the China in Serbia, but also current Serbian government that has proven itself as a reliable and beneficial partner of China. New investments and agreements with Serbia have been announced and it looks like that China will be one of the corner stones of Serbian both foreign and domestic policy in the years to come.

That cooperation with China can backfire has been shown in Asian and African countries with the examples of Djibouti and Sri Lanka were China has confiscated strategically important ports because those state were not able to repay back their loans. One Western Balkans country was on the verge of that debt-trap. Montenegro took Chinese loan for the construction of the highway and it heavily impacted its debt. Now Montenegro has been looking for solutions and ways to get out of that unpleasant situation, and it looks that it will succeed through issuing a Eurobond, selling airport concessions, and granting citizenship to foreigners who are willing to invest in Montenegro.

North Macedonia is also opening the sections of the highway constructed with the help of Chinese. Both North Macedonia and Serbia are important transit countries, because of the Piraeus port in Greece, one of the three largest Chinese seaside entrance points to European Market, so the infrastructural projects that will cut the transportation costs to European market, are win-win situation.

Often there are concerns that the rising Chinese presence will influence those countries and its future of European integration. While there are certain challenges that are coming with the rising influence of any foreign actor, EU has not been estranged from the new agreements with China. In Croatia, the first fully funded EU project implemented by Chinese is currently on going. Italy has signed the Belt and Road Initiative strategic cooperation document, and will probably give Trieste to the Chinese management, and Hungary is now traditionally looking at China as a friend and partner.

So, the level of the cooperation is not that different in the Western Balkans. And the question is, does EU really care? Western Balkans has been called potential ‘’Trojan Horse’’ of the Chinese influence, but that could only happen if those states are not resilient to the potentially damaging foreign influence. And what is the best way to be resilient? Probably to gain resilience through strong and stable state institutions, with the clear separation of power between branches of government, free media, through rising level of the rule of law and respect to the human rights. All of those characteristics are also part of the EU integration process. For the longest period of time that was proclaimed as a solely or at least most important strategic objective of the Western Balkan countries and without clear European perspective there will be more and more chances for the potential damaging or challenging influences coming from other sides of the world.

At the moment, the consequences coming from the cooperation with China are mostly positive, and potential challenges are something that could come in the long term. In order to prevent them, Western Balkan countries should continue to go down the path of European integration, but if end of that path is not clear, maybe they will justifiably turn around and go down the ‘’red and yellow brick road’’.