After a difficult transition from communism to democracy, the Western Balkans are becoming China’s playground.
The photo session was more than symbolic.
A number of senior Bosnian government officials recently posed with Chinese engineers following the successful drilling of a tunnel south of the picturesque town of Mostar. The 11.75 km Počitelj-Zvirovići The motorway section is estimated at 100 million euros.
The logo of the main contractor, China State Construction Engineering Corporation, was clearly visible in the background.
A few months earlier, the first group of Chinese engineers had arrived in Tuzla, a gloomy Bosnian town known for its communist-era architecture and smoking power plants. Engineers will participate in the construction of the Blok 7 project, a thermal power plant worth 700 million euros and financed by a loan from the Chinese bank Exim. This is the largest investment made in the country since the end of the 1992-1995 war.
But why would China invest in a poor region in the southeastern tip of Europe, known for its endemic corruption and underperforming economies?
The answer may lie in the region’s strategic location.
Here is an information document. In 2013, China unveiled its Belt and Road Initiative, a grand plan to secure land and sea trade routes from Asia to Europe and Africa. The Western Balkans, strategically located on Europe’s southern flank, are seen as a key access point for China to reach central Europe and beyond. Concretely, it is much easier and cheaper for a Chinese cargo ship to dock in the Greek port of Piraeus and then transport its goods by road and rail to the countries of Central, Eastern and Western Europe, instead of go north (and the most distant countries). more expensive) in the ports of Rotterdam or Hamburg. In Beijing’s strategic calculus, the Balkans are merely a transit corridor to the more lucrative markets of Western Europe, where China’s real interests lie and where per capita household consumption is one of the highest in the world. world. The highest.
To smooth the political playing field, Beijing has begun holding annual “17+1” summits with Eastern and Southern European states to discuss investment opportunities. At these summits, Beijing began attracting cash-strapped Western Balkan countries, such as Bosnia, Montenegro, Serbia, North Macedonia and even Greece, with its soft loans and generous repayment programs. . It was an offer few could refuse.
Beijing then turned to hard currencies. The starting point was the Greek port of Piraeus, at the southern tip of the region and the fastest growing port in Europe. It is now effectively in Chinese handswhile the China Ocean Shipping Company invested 600 million euros in port facilities and acquired a majority stake in the port authority. To the north of Greece, China has invested massively in Serbia and Montenegro. The volume of trade between Serbia and China continues to grow, exceeding 2.1 billion euros in 2018. With Chinese investments worth 10 billion dollarsSerbia tops the list of Central and Eastern European states involved in the “17+1” framework designed for cooperation between China and Central and Eastern European countries.
However, China’s flagship investment project in the region, although much delayed, is a railway line linking Belgrade to Budapest. With mainly Chinese loans, Hungary and Serbia have agreed to upgrade their respective sections of the 350 km Budapest-Belgrade line at a total cost of a few dollars. 4 billion euros, distributed between the two countries. Another major project, which has raised eyebrows among human rights activists, is Huawei’s Safe City surveillance system project, consisting of 1,000 high definition cameras spread across 800 sites throughout the Serbian capital. Using artificial intelligence, the system will use facial and license plate recognition software and transmit all collected information to the Serbian Interior Ministry. In NATO member state Montenegro, the China Road and Bridge Corporation (CRBC) is constructing the first section of the Montenegrin section of the Bar-Boljare highway, covered by a 796 million euros loan from the Chinese bank Exim. China has also become the largest investor in Montenegro with 70 million euros of direct investment in the first half of this year. according to at the Central Bank of Montenegro. In Croatia, CRBC is building the Pelješac Bridge, funded by the EU (the European Commission provided 357 million euros for this, or approximately 85% of the estimated cost of the project).
Chinese penetration into the Western Balkans should come as no surprise.
A poor investment climate, the mediocre performance of its economy and the failure of communist-era state-owned enterprise privatization efforts have meant that the region as a whole has attracted little foreign direct investment. China saw this as an opportunity and simply filled a void created by Washington’s gradual withdrawal and EU inaction.
The political elites of the Balkans do not complain about the Chinese. In a climate of growing kleptocratic authoritarianism, the region’s strongmen have realized that they prefer to do business with Beijing rather than Brussels. After all, Beijing will not lecture them on media and personal freedoms, nor will it stand up to shady business deals, bribery, or other similar corrupt practices. Furthermore, among the political elites of the Balkans, but also increasingly among the population, China is seen as a credible source of economic growth that preserves local jobs. For example, while the IMF or the EU might demand the privatization of communist-era companies, which would inevitably lead to the loss of jobs for unskilled workers, the Chinese acquisitions Heavy industry assets are seen as helping to protect local jobs – as was the case with the takeover of Serbia’s Smederevo steelworks.
Beijing is doing much more than simply repurposing the rugged Balkan terrain for its Belt and Road corridor. By deliberately targeting the construction of critical infrastructure, China is in effect creating new economic dependencies abroad. Thus, if a borrowing country from the Balkans default values Because of its debts, there is a serious risk that a Chinese state-owned company will take over the infrastructure it built and operate it for decades until the debt is repaid. The small state of Montenegro is in danger because it must 40% of its total external debt to China.
China – like any other major power – will also use its overseas investments as political leverage to extract concessions on Chinese human rights issues of international concern, such as the mass incarceration of Muslim Uyghurs in the Xinjiang or repression in Tibet. A good example is Serbia, Beijing’s closest ally in the Balkans, which has resolutely defended Chinese policies in Xinjiang.
Third, Chinese overseas investments serve a national purpose, legitimize the ruling Communist Party and portray it as a benevolent Big Brother who takes care of a region neglected by the West.
While Moscow develops its own political imprint through pan-Slavic, cultural, energy and media campaigns, China is focusing on infrastructure development where Western states are reluctant to invest. However, unlike Russia, whose main objective in the Western Balkans is to thwart NATO and EU expansion, China’s approach appears to be “business first, politics later.” “. This appeals to myopic political elites in the Balkans who consider the prospect of EU or NATO membership to be very distant. Increased engagement with China therefore constitutes a tempting auxiliary option and a means of easing Brussels’ conditionality. Low-interest loans and generous repayment plans may be alluring for now, but they could well become honey traps in the long run.
Although Chinese investments are seen by local elites as an opportunity for faster development, they have not (yet?) translated into an institutionalized preference for Beijing as a political model. Western Balkan states that have not yet done so still aspire to join the EU and NATO. However, without a credible and visible path to Euro-Atlantic integration, this too could change and the region could easily succumb to the lure of China’s generous offers. Serbia is an example of a country that is growing ever closer to Beijing, so close that Serbian President Aleksandar Vučić calls Chinese President Xi Jinping a “friend and brother‘. In March 2020, as the coronavirus pandemic raged and European states bickered among themselves over Germany’s decision to to forbid exporting face masks, China sent tons of medical aid to Serbia. President Vučić publicly declared that China was “the only country that can help us‘.
So while the West was preoccupied with Russia as its main rival in this turbulent part of Europe, China slowly but surely invested in the region and set the stage for a coming geopolitical battle on the EU’s doorstep. .
Harun Karčić is a Sarajevo-based journalist and political analyst who covers foreign influences in the Balkans.
The opinions expressed in this commentary are those of the author and do not represent those of RUSI or any other institution.