Beijing’s influence in the Balkans continues to grow, but it should not be compared to that of Russia. Chinese influence differs both in the motivations and the tools used for its diffusion, writes Matej Šimalčík.
Matej Šimalčík is the executive director of Institute of Asian Studiesa think tank based in Bratislava, Slovakia.
Last year, High Representative Federica Mogherini observed that the Balkans are becoming a chessboard on which the game of the great powers is played. It appears that China is becoming one of the major players in the region.
Chinese influence in the Balkans has increased since 2012, the year the 16+1 platform was born. Since then, China has invested heavily in the Balkans in infrastructure, steel and other sectors.
The acquisition of the Smederevo steelworks, the construction of the Budapest-Belgrade railway, the Belgrade-Bar highway and the Pelješac bridge are some examples of Chinese investments in the Balkans.
Financial aid or debt trap?
Recently, many Chinese investments have been accused of being debt traps for their beneficiaries. The case of the port of Hambantota in Sri Lanka is well known. Similar effects also reached Europe.
Despite two feasibility studies indicating that the project is not bankable, the governments of Serbia and Montenegro have decided to move forward. build a highway connecting the Montenegrin coast to Belgrade, and financing it with Chinese credit. The loan caused Montenegro’s public debt to skyrocket.
To manage the country’s finances, the government was forced to increase taxes, freeze public sector salaries and end the payment of maternity benefits.
If CRBC successfully concludes the project, it will gain a valuable benchmark for future infrastructure purchases across Europe. The same goes for the construction of Peljesac Bridgewhich is of strategic importance to the Croatian government as it will connect the Dubrovnik enclave to the rest of the country’s mainland.
As it has so far failed to build a road within the EU, China has a lot to gain from the construction of this highway. Many still remember the failure of the motorway construction project in Poland, where COVEC won the contract through a competitive tender undervalued by 50% and subsequently failed to pay its subcontractors.
A bridge to Western Europe?
When talking about Chinese influence in Europe, many believe that Chinese influence is basically the same as Russian influence. This is a flawed assumption as China, unlike Russia, has much to gain from further EU integration and stability, with the EU being its largest trading partner .
In 2010, Chinese State Councilor Dai Bingguo came with a notion of “core interests” that motivate Chinese foreign policy. The three fundamental interests are regime security, sovereignty and economic development. The three fundamental interests are mutually linked in a single objective: ensuring the survival of the Chinese political system, with the Communist Party at its head.
The Balkan market is not of great interest to Chinese companies in terms of trade and investment. When it comes to doing business, Western Europe is much more attractive to Chinese companies. But this is where the paradoxical importance of the Balkans lies in developing economic ties with the (Western) EU and thus ensuring China’s economic development.
The Balkans are an important trade route linking the Greek port of Piraeus to the rest of the EU. This is also an area where Chinese companies can test their capabilities in the European market and gain the necessary goodwill to enable them to expand into the EU.
Second, the Balkans’ growing dependence on Chinese money allows China to extract political concessions on core sovereignty interests. Taiwan, Hong Kong, Tibet, official statement of one China.
In the Balkans, the one-China policy has received the greatest support from Serbia, which supports China on the issues of Tibet and Xinjiang. Although Serbia’s behavior is partly motivated by China’s failure to recognize Kosovo, Serbia’s unwavering support should not be divorced from the economic support it receives from Beijing.
If they become members of the EU in the future, the Balkan countries could serve as Chinese proxies to deal with the mentioned issues.
All of this can be used by China for domestic propaganda purposes with the aim of creating a national image of Chinese greatness and respect abroad, thus serving to legitimize the Communist Party.
The EU must reconsider its investment policy in the neighborhood
To counter China’s growing influence in the Balkans, the EU can take several steps.
First, non-EU Balkan states must have a clear path to EU membership in mind. Much of the appeal of Chinese money comes from the fact that these countries do not have many opportunities to access cheap (or even free) European financing for infrastructure projects.
Second, part of the pre-accession funds should be dedicated to infrastructure investments. Third, investments by European companies in the Balkans should be promoted. By contributing to employment in the Balkans, the public image of the EU can be improved.
Finally, EU public procurement rules appear to be an effective tool to block investment proposals that are not so beneficial for recipient countries. The Budapest-Belgrade railway is a good example.
The Hungarian part of the railways was delayed thanks to the Commission’s investigation into whether the project complied with EU public procurement rules. In neighboring Serbia, which is not bound by European public procurement rules, construction work using Chinese companies and workers has already started.
NGOs and journalists can and must play a role in monitoring growing Chinese influence. The subject of Chinese influence in Europe is complex and multifaceted. There is therefore a need for greater cooperation between Chinese experts, think tanks and journalists.
This cooperation should cover the entire EU and the European neighborhood. Such partnerships will lead to a better understanding on our part of China, its interests and the tools used to achieve them.
While think tanks can comment on the context of relations with China and the risks and opportunities that arise, it is journalists who have the skills and tools to investigate specific transactions. This will ultimately result in better media coverage of topics related to China, but also in better informed political analyses.