How China's Global Infrastructure Strategy Undermines European Integration in the Western Balkans and Beyond
The accession of the Western Balkans countries into the European Union continues to be a topic of debate amongst the EU Member States. Read how China's global infrastructure strategy may be undermining these countries' aspirations for EU membership.
China's alleged use of predatory lending for BRI infrastructure projects has led to accusations of countries being subject to Beijing's interests. / Picture: © EU and PR China crossed flags by Vindobona
The Western Balkans countries–Albania, Bosnia and Herzegovina, North Macedonia, Kosovo Montenegro, and Serbia–have been aspiring to join the European Union for years. The EU has provided each of these six countries with a perspective for acceding to the EU, and their potential accession is a frequent topic of discussion and debate in Brussels. Although the EU continues to express its intention to eventually integrate the Western Balkans into the union, China’s global infrastructure strategy, particularly the controversial Belt and Road Initiative (BRI), may undermine the enlargement process.
At first glance, China may seem unrelated to the EU enlargement process. However, China has repeatedly been accused of using the multi-trillion BRI as a means of gaining influence over other countries, including many in Europe. Given these accusations of China using predatory lending on BRI projects to influence decision-making in other countries, China’s infrastructure projects in the Western Balkans are a potential cause for concern in the EU. With some EU countries already being accused of adopting China-friendly stances because of BRI projects, the EU may not want to risk adding more countries that could create further division over how to approach Chinese-EU relations.
BRI and debt-trap diplomacy
As mentioned above, China has faced repeated allegations of using the BRI to offer loans that it knows countries will not be able to pay back. When countries ultimately default on the loan, China often effectively takes control of a key piece of a country’s infrastructure. Additionally, governments that become indebted to China via these allegedly predatory loans supposedly feel pressured to take a more pro-China stance. This strategy has become known as debt-trap diplomacy.
Although some experts believe that debt-trap diplomacy is not real and is simply based on the fear of China’s growing global influence, there are multiple examples of countries defaulting on what they view as unfair loans and countries with BRI projects hesitating to criticize Beijing.
Tanzanian President John Magufuli referred to the loans that his country received for BRI projects as “exploitative and awkward.” Magufuli said that the Chinese contractors working on the projects in Tanzania wanted to take the land and also be compensated for the project. Similarly, according to The Maritime Executive, Malaysian Prime Minister Mahathir Mohamad called the country’s 20 billion dollar infrastructure agreements with China “unequal treaties” and was concerned that the projects would leave Malaysia indebted to China.
China’s use of the BRI to exert its influence can also be seen in various European countries, including Austria. In Greece, for example, the Chinese shipping firm Cosco has invested hundreds of millions of euros to refurbish and develop the Greek port of Piraeus as part of the BRI. In 2008, Cosco acquired the rights to operate in the port, and eight years later, it bought a majority of shares in the port’s operator, the Piraeus Port Authority. Then, in 2017, Greece vetoed an attempt by the EU to condemn China’s human rights record at the United Nations.
Hungary has also seen significant investment from Chinese firms through the BRI, including 1.8 billion Euros for the Budapest-Belgrade railway project. Like Greece, Hungary has been hesitant to criticize China and has prevented the EU from reaching the necessary consensus to condemn China for alleged human rights violations, including the torture of human rights lawyers. Both Hungary and Greece also opposed a joint EU position on the South China Sea conflict in 2016.
Although Austria has not experienced massive Chinese investment in infrastructure projects like Greece and Hungary, the alpine republic has become very dependent on China for various technologies. One report by the European Think-tank Network on China (ETNC) notes a particular dependence on China for digital technologies, especially 5G technology. Vindobona.org also recently drew attention to the legal, policy and infrastructural security gaps that exist in Austria with regard to its critical digital infrastructure and, in particular, with regard to its choice of 5G network providers. Despite the concerns of other EU countries, the UK and the US regarding Chinese 5G technology, Austria, Hungary, and Greece pushed back against efforts to ban Huawei 5G in the EU.
While it is difficult to definitively prove that countries that are beneficiaries of Chinese investment projects feel pressured to adopt more China-friendly policies, one can definitely see a correlation between the two. This correlation may prove to be problematic for EU enlargement in the Western Balkans due to China’s concerted effort to heavily invest in infrastructure in these countries.
China and the Western Balkans
In the last decade, China has ramped up investment in the Western Balkans and increased cooperation with these countries through the China-CEE and the BRI. According to the Vienna-based Institute for Human Sciences, there are currently over 122 Chinese projects in the Western Balkans with a value of roughly 30 billion euros.
Excluding Kosovo, which China does not recognize as a country, all of the Western Balkans countries have negotiated agreements for infrastructure projects with China. The Balkan Investigative Reporting Network’s “China in the Balkans” project shows that Serbia is by far the largest beneficiary of Chinese investment, with 61 projects worth nearly 19 billion euros. These include projects such as the Belgrade metro, the Mihajlo Pupin Bridge, the Budapest-Belgrade Railway, and the environmentally-harmful Kostolac Mine.
Albania’s eight projects have an estimated value of nearly 650 million euros and include the Tirana International Airport. North Macedonia has another 15 projects worth over 650 million euros, Bosnia and Herzegovina has 29 projects worth nearly 5.3 billion euros, and Montenegro has 9 projects worth over 2.4 billion euros. These numerous projects include airports, bridges, railways, mines, and much more.
Notably, Montenegro has already experienced the type of predatory lending from China described above. The Bar-Boljare Highway, which connects the port of Bar in the Adriatic Sea with Serbia, has deeply indebted Montenegro to China. According to the Institute for Human Sciences, it is the most expensive highway in the world at 20 million dollars per kilometer, and the first section alone cost one billion dollars. As a result of this project, Montenegro’s sovereign debt skyrocketed to 103 percent of the country’s Gross Domestic Product. The Montenegrin government even asked the EU for help refinancing the loan, which the EU refused.
In addition to possible debt-trap diplomacy, there are also environmental and corruption concerns when it comes to Chinese infrastructure projects in the Western Balkans. For example, Serbia continues to build Chinese-funded coal plants, which does not fit with the EU’s climate and environmental goals. Additionally, the lack of competition and transparency regarding the contracts for the projects increases the likelihood of corruption. In fact, former North Macedonian Prime Minister Nikola Gruevski and three ministers were indicted for corruption regarding the awarding of highway contracts.
Given the massive amount of money China has invested in infrastructure projects in the Western Balkans and the fact that one of the projects has already deeply indebted Montenegro to China, it is not unreasonable to imagine that some of the other loans will be nearly impossible for the countries to pay back.
When coupled with the environmental and corruption concerns, this heightened potential for the Western Balkans countries to become subject to Beijing’s influence could ultimately undermine EU enlargement, as the EU likely does not want to deal with more Member States preventing a unified stance on the increasingly important EU-China relations.
Conclusion
The examples raised provide ample evidence of the damaging effects of China's authoritarian global infrastructure strategy, including the critical digital infrastructure strategy, on the advancement of the European integration process.
The practices of the People's Republic of China that promote corruption, that support harmful trade and investment practices, that disregard and threaten data protection, intellectual property rights, human rights, cybersecurity, international law, and other international norms of conduct must be resisted.
Just as Europe is currently painfully experiencing with its dependence on Russian gas and oil, maintaining European autonomy in the key technologies of the future, defense industry, telecommunications infrastructure, AI and IoT is crucial for the EU's evolution.
Staunch pro-European politicians have been questioning China's role in national and intra-European development issues for some time, citing concerns about upholding Western democratic values, human rights, data protection, and cybersecurity.
European Think-tank Network on China (ETNC)
Permanent Mission of China to the United Nations Vienna
Institute for Human Sciences (IWM)