Chinese ambition to get closer to the European market as the largest trade partner, in addition to the “silk route” project that has already become epic, reflects also in support to construction of the high-speed railway Belgrade – Budapest. After having bought Greek port of Piraeus, China plans to provide railway transportation for its goods from Athens to Budapest, meaning to one of the most challenging markets – central Europe. This is the context in which the presence of Chinese Prime Minister Li Keqiang during the signing of Serbian and Hungarian railways cooperation agreement announcing modernization and construction of Belgrade – Budapest railway, on 17th December 2014 should be seen.
Mid last year, Serbian party expressed expectations “to have soon financial model proposal of Chinese side”. Indeed, at the end of November 2015, during the Summit of the Heads of Government of China and the 16 countries of Central and Eastern Europe in Suzhou, Serbian Minister of Energy, Aleksandar Antic, signed Framework Agreement on modernization and reconstruction of Belgrade – Budapest railway. Prime Minister Vucic declared on that occasion that the value of the investment was to be negotiated, but he explained that the conditions of the China Eksim Bank loan for railway financing were known, with annual interest rate of two percent. “General Contract on modernization and reconstruction of Hungarian – Serbian railway connection on the territory of Serbia was signed at the Summit among the Serbian Government as financier, Serbian Railways Infrastructure JSC as investor and Chinese consortium as contractor. The value of the Contract shall be known after signing the commercial contract, the concluding of which is provided for not later than 30th November 2016. Potential creditor of this project is China Eksim Bank from which the financier and the investor should ask loan approval within 15 days as of the day of commercial contract concluding. Chinese side is responsible for construction, procurement and installation of material in railway infrastructure”, explained then actual Director of “Serbian Railway Infrastructure”, Goran Maksic.
Although the operational economic cooperation of China is in the hands of Government, it would not be surprising to have experts in delegation of Chinese president who would offer to the authorities in Belgrade “commercial model” for high-speed railway construction.
In railway construction, there are three essential elements: lower structure (bases and rails), upper structure (electrical network and signalization) and vehicle (train), as often explained to journalists former Director of CIP Institute of Transportation and former Minister for Transportation Milutin Mrkonjic. “A half of the work relies on fixed installations – lower structure of the railway track, and 50 percent on technology and trains”, says Mrkonjic. In the news from Suzhou at the end of the last year, only railway infrastructure was mentioned, which could imply construction of lower and upper structure.
“I am almost sure that Chinese side will say to Serbia – since you asked for railway track, we will give you favorable loan and construct the railway track, but we also have plan to convince you to take our vehicles as well”, predicts Gradimir Stefanovic, owner of English consulting company GSTC Ltd. and UITP consultant-ambassador (International Union for Public Transportation).
Stefanovic suggests to Serbian side to take very seriously and to prepare itself accordingly for negotiations with Chinese investors: “We may accept Chinese signalization, electrification, communications and trains. But, I emphasize, all these have to be in accordance with EU standards and directives. In negotiations, Serbia should insist always and exclusively that the trains must fulfil standards of interoperability prescribed by EU and must prepare solid analysis of potential risks of interoperability of the “key in hands” model which may be offered to us by Chinese side”.
Interoperability is a key European word that must be often and always pronounced by Serbian side when talking with Chinese financiers and contractors related to Belgrade – Budapest high-speed railway. That shortly means – one and the same train goes throughout the entire European network. “It is not our aim to go by train from Belgrade do Budapest, but to go by the same train to Berlin or to Edinburgh. That means one and unique technology”, explained Grada Stefanovic.
European Union applies Directive 2008/57/EC on the Interoperability of the Rail System on its territory. To ensure that the train could go from Belgrade to Berlin or Edinburgh, the train must be moving on the rails with exactly prescribed thresholds and carriers, rail fastenings sleepers, a certain kind of turnout points and intersections, unique signalization and radio-communications, it must be made under the regulations prescribing the exact width of the glass, noise level, type of rolling bearings, axis assemblies, lubricants for axle boxes, light type, behavior of aerodynamics in tunnels and on the lateral wind blows, technical criteria for coordination between supply (substation) and rail vehicles in order to achieve interoperability… All these prescribed on 80 pages.
“If we do not prepare ourselves seriously for discussions with Chinese side, it may happen that we agree everything, they make railways and trains, and then, at the entrance into Hungary, European regulations stop us telling us that such Chinese train may not enter the territory of the Union since it is not in accordance with regulations. This also means that the train of German railways may not come into Belgrade”, explained Stefanovic.
“If the railway track and the train do not comply with all requirements of the Directive 2008/57/EC, it means that the journey from Belgrade to Berlin lasts 15 hours, the same as so far. It means that we spent the money in vain, says Mrkonjic.
Asked if Serbia, as loan seeker, may ask from Chinese side to deliver to us technology and trains under the European standards, Mrkonjic claims: “we may and someone has to say that. None of us should be afraid that we will not get the loan if we insist on interoperability. Serbia must require that Chinese trains, if they are offered to us by Chinese side, fulfil European standards as those made by Alstrom or Simens. We must say to Chinese side that we want train complying with all European requirements until 2050. If the life time of the train is 30 years, than it must have all European standards and directives during such lifetime period. Otherwise, we just spend money in vain. Serbian side should have experts who have made five high-speed railways so far to say what all possible risks of such business are.”
It’s Serbian interest to realize the high-speed railway connecting Serbia with EU in as fast as possible and as pragmatic as possible manner. Chinese side appeared as interested-investors and constructors so far. And that is good, but Serbia must take care of what European Union has to say on that subject.
Therefore, Milutin Mrkonjic stands for a more simple option, existing from 1991: “It specifically means that Serbia is to ask from European financial institutions – EBRD and EIB – 1.5 billion euros of privileged loans for construction of high-speed railway on the north section of Corridor 10 and to buy technology and trains from European producers including also some Serbian companies as cooperators in production of parts for trains. This is the best concept. Our authorities in negotiations with Chinese side must think in a comprehensive manner since Corridor 10 includes also 300 km of the railway track to the south of Belgrade, toward Skopje and Athens. It means that the high-speed railway track and trains have to be identical throughout the entire route, to be made by the same producer, i.e. to have interoperability in Serbia”.
