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Analysis: China - Not an Alternative but an Opportunity for the Balkans
|In Analyses, One Belt, One Road
By launching its "One Belt, One Road" initiative, China has become an actor in the Balkans to an unprecedented degree and in a way that sets it apart significantly from the other forces in the region. Following the money illustrates amply China's most active presence in the Balkans. In 2014, China pledged to all countries of Eastern and Central Europe, including those in the Balkans, an equity investment fund of 3 billion dollars, to supplement the 10 billion dollars in loans promised a year earlier in support of Chinese investments.[i] Such a level of investment would have been unthinkable in the past, but in the light of the European Union's reluctance to expand into the Balkans, China has become more active in the region than ever before.
With China poised to create a network of infrastructural connections across Eurasia through the One Belt, One Road Initiative, the Balkan nations have a newly valuable asset to offer China: their geography. China views the Balkans as a lynchpin between the Mediterranean and Central Europe and as a geopolitical bridge between the Western world and wider Eurasia. As such, while Westerners have generally viewed the Balkan region as a nuisance – an ethnically fragmented territory on the periphery of the Euro-Atlantic world – China thinks of the Balkans as a conduit to European markets, as well as a way to project its soft power and buy friends among new E.U. members and potential membership candidates.[ii]
Historically, Chinese interactions with Balkan countries were never especially deep. Mao's China and Tito's Yugoslavia had a complicated on-again, off-again relationship buffeted by Mao's frequent accusations of ideological revisionism against Tito, and by the two nations' competition for influence in the Third World. China's close ties with Enver Hoxha's Albania symbolized cooperation between two isolated communist regimes trying to be autonomous from Moscow. During the Yugoslav Wars, China tried to have a neutral posture while abiding by the U.N. Security Council resolutions. However, the Kosovo War of 1999 and the destruction of Chinese Embassy in Belgrade by the U.S. Air Force seemed to confirm Chinese misgivings about the post-Cold War international system. The war rekindled Chinese disdain towards the U.S.-led unipolar order, and the military unilateralism and ideology of liberal interventionism that underpinned it.
After the Yugoslav Wars, China prided itself on enjoying a friendly relationship with the Balkans, but the ties that developed were generally bilateral and focused narrowly on areas like trade. In 2005, China and Croatia agreed on "a comprehensive cooperation partnership," which sought to promote closer ties between the two countries in areas like trade and culture. In 2009, Serbia signed a strategic partnership agreement with China, proclaiming China "the fourth pillar of Serbian foreign policy" alongside the European Union, the United States, and Russia. In doing so, Serbia sought both to emphasize the importance of China's support on the issue of Kosovo and to seek commercial opportunities for its under-performing economy. In 2010, Serbia initially wanted to boycott the Nobel Peace Prize ceremony honoring Chinese human rights advocate Liu Xiaobo, as a sign of solidarity with China, though it gave in later under heavy E.U. pressure. In 2008, as Greece was in crisis, COSCO Group, the Chinese state-owned shipping and logistics company, gained a 35-year concession to operate the container port within the Greek port of Piraeus.
In 2012, China developed an initiative known as "16+1," intended to promote Chinese cooperation with 16 countries of Central and Eastern Europe, including the Balkan countries of Serbia, Montenegro, Albania, Macedonia, Croatia, Bulgaria, and Bosnia and Herzegovina. However, despite all these initiatives, no one perceived China as a major strategic player in the Balkans, largely due to geographical distance. China was seen purely as a bilateral partner with whom occasional transactional and/or technocratic cooperation took place in areas like trade, not as a country that played a major role in the region's geopolitics through military and diplomatic presence or through concentrated economic statecraft.
This, however, has changed dramatically in recent years and today the Balkan countries have embraced a number of Chinese infrastructure projects. Starting in 2016, the character of China's involvement in the Balkans began to change.[iii] That year, COSCO Group acquired a 51 percent stake in the port of Piraeus. In Macedonia, Chinese state-owned Exim Bank has provided loans for the construction of two highways by Chinese contractors. Also in 2016, Chinese President Xi Jinping visited Serbia, where he signed an agreement that resulted in what Serbian officials estimate to be 5.5 billion Euros worth of investment in the country's infrastructure. In Albania, China has been making similar investment overtures, as it perceives that country as part of the "Maritime Silk Road." In Montenegro, the Exim Bank is financing — through a loan — an upgrade of the highway that connects the port city of Bar with Serbia.[iv]
According to the critics of Beijing's regional policy in the Balkans, some of the investments contradict the European Union's procurement rules, regulated by precise EU legislation. Instead, these investments resemble the Chinese model of state-owned enterprises, to which projects are allocated on the basis of political bartering. For the hawks in Brussels, this also poses a Chinese political and economic threat to the European Union's position in the Balkans by weakening the political will of these countries to follow the leading role of the European Union.[v] As long as the European Union is unable or reluctant to integrate these countries, they will receive further impetus for closer ties with China.
At the same time, however, China's approach to the region is different from that of the other actors. In contrast to the European Union, China has shown no intention to engage in ambitious nations-building, does not demand a military presence like the United States through NATO, and, unlike Russia, does not want to act as a destructive force, trying to divert the Balkan countries from accession to the Western institutions. In lieu of all that, China simply offers political friendship through pragmatic bilateral cooperation and through investments that are badly needed to repair the crumbling infrastructure of the Balkan countries. In this way, China is buying political influence in the Balkan capitals while promoting "One Belt, One Road", connecting to European markets and offsetting the slowdown in the Chinese economy.
China's stronger role in the Balkans has provoked concern in the European Union. China is not seen as a geopolitical rival of the same rank as Russia. The European Union, however, sees China as a political and regulatory threat, as the investments it offers do not comply with Brussels' regulatory and environmental standards.[vi] For their part, some EU members believe that China is weakening the Balkan States' commitment to copycat the European Union in terms of policies and regulations. On the other hand, economically and socially lagging Balkan countries like Serbia know that they will not be joining the EU in the foreseeable future. China's short-term solutions to development issues tend to override the long-term political considerations of EU membership. In addition, unlike EU funds, such as the Western Balkans Investment Framework (WBIF), which are often weighed down by long waiting procedures and severe compliance restrictions, the above-mentioned Chinese investments are allocated through quick decision-making unburdened by strict sets of compliance requirements. This lets Balkan leaders use Chinese-backed loans and investments to improve national infrastructure and derive local political dividends with disregard for the tough and costly rules in areas such as the environment, which the poorer Balkan countries can hardly afford.
China's focus on the creation and development of physical infrastructure helps it form and strengthen the long-term political relations which underlie the "One Belt, One Road" initiative. Yet the key success this initiative has been Beijing's ability to shape the so-called intangible infrastructure within the policy area through intergovernmental agreements, trade accords, customs unions and grants have boosted its foreign relations, trust and image. Under Xi Jinping's government China has been concluding serially commercial deals with worldwide, with particular attention to the countries along the conceptual "One Belt, One Road" route. Officially, even at present China is working on 19 free-trade agreements, 14 of which are de facto being implemented already. The Xi Jinping support team is also actively concluding customs agreements across Eurasia, from Taiwan to Finland, plus a key accord with the EU, and a potential deal with the UK. Last year, Beijing also joined the 70-plus countries signatories to the Customs Convention on the International Transport of Goods.
Strangely enough, Russia has so far been keeping quiet about China's influence on the Balkans. The most probable reason is that, historically, the two powers have not been at odds in the region, China being too far away and lacking Russia's historical experience here, but also because of Russia's inability to compete against Chinese economic might.[vii] Russia also probably views China's economic and political influence as a useful tool in weakening the attractiveness of the Western institutions in the eyes of the in the Balkan capitals. All this fits the general trend in the Balkan countries, which readily accept the advantages and opportunities offered by non-Western actors while the European Union procrastinates on the region's integration.
Nevertheless, one should not overstate Chinese influence in the region. First, although the One Belt, One Road Initiative, if fully implemented, will decrease the geographical distance between Beijing and the Balkans, China will still be too far away to exercise influence in the same way as the West does. Second, while China is looking for commercial and cooperation opportunities, it does not want to get involved in local rivalries and disputes. This became evident in 2010, when China – previously a supporter of Serbia's effort to seek an advisory opinion from the International Court of Justice on the legality of Kosovo's independence – refrained from delegating its own judge in the proceeding. While this did not significantly harm China's cooperation with the Balkan countries, it speaks to the Chinese tendency to show restraints in disputes where its own national interest is not directly involved. Third, unlike Russia, China is not interested in derailing the European Union's incorporation of the Balkan countries. Rather, it encourages that process because it thinks this will make its own investments safer, and it views engagement in the Balkans as a way of boosting ties with the European Union. Balkan leaders should not fall into the trap of perceiving China as the alternative to the European Union.
Finally, despite the growth in Chinese investments, Balkan countries remain more economically dependent on the European Union than on China. E.U. investment in the region outweighs that of China. As the recent report from European Bank for Reconstruction and Development suggests, despite the increase in Chinese investments, the Balkan region "remains firmly anchored in Europe."
While Chinese influence in the Balkans should not be exaggerated, it is higher now than at any other time in modern history. China has become more active in the Balkans primarily by capitalizing on the fact that the European Union failed to prioritize the Balkans, keeping it on the sidelines. The European Union nonetheless still holds greater leverage in the Balkans. It is still the region's largest trading partner, accounting for 76 percent of all trade. The cultural and social ties between E.U. countries and the Balkan countries are incomparably stronger than those with China, and geographical proximity favors the European Union as well.
However, to use all of these advantages, the European Union needs to behave less like a bureaucratic and technocratic player and more like a geopolitical and strategic actor. This means that the European Union must engage the Balkans with more urgency and attention, based on careful political and strategic assessment of every country individually. The European Union must mobilize its own financial instruments more swiftly and make them available to the Balkan countries so they can address their dire development problems. It must do so while at the same time being more understanding of the fact that the impoverished countries of the region will not be able to follow the same standards as its most developed members. Finally, the European Union should send a strong political message that these countries will join the union eventually, to avoid fomenting insecurity. As to China, it should be viewed not with distrust and not as a long-term political alternative, but as an economic alternative, which in the context of the free market and foreign relations can provide what the Balkan countries need here and now.
[i] Martino, Martino, China in the Balkans "firmly in play in the coming years", OBC Transeuropa – Osservatorio Balcani e Caucaso, достъпна на https://www.balcanicaucaso.org/eng/Areas/Balkans/China-in-the-Balkans-firmly-in-play-in-the-coming-years-184178
[ii] Vuksanovic, Vuk,The Unexpected Regional Player in the Balkans: China, November 2017, достъпна на https://warontherocks.com/2017/11/unexpected-regional-player-balkans-china/
[iii] Munter, Cameron, B92, "China's rising influence in Balkans must be understood", достъпна на https://www.b92.net/eng/news/world.php?yyyy=2017&mm=08&dd=29&nav_id=102189
[iv] Bennett, Vanora, What China's "Belt and Road Initiative" means for the Western Balkans, EBRD, достъпна на http://www.ebrd.com/news/2017/what-chinas-belt-and-road-initiative-means-for-the-western-balkans.html
[v] Krustev, Ivan, Europe is facing a potential crisis in the Balkans. It has to act soon, The Guardian, достъпна на https://www.theguardian.com/commentisfree/2018/feb/21/europe-crisis-balkans-eu-membership-russia-china-turkey
[vi] , Michael, China in the Balkans: The battle of principles, European Council on Foreign Relations, достъпна на https://www.ecfr.eu/article/commentary_china_in_the_balkans_the_battle_of_principles_7210
[vii] Dudik, Andrea and Misha Savic, Gordana Filipovic, Europe Exposes Its Weakness to Russia and China in the Balkans, Bloomberg, достъпна на https://www.bloomberg.com/news/articles/2018-05-16/global-powers-square-up-for-influence-in-europe-s-balkan-flank
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