Professor at the FEFA Faculty in Belgrade, Goran Radosavljevic, said today that the bilateral agreement between Serbia and the United States, which envisages the opening of an office of the American Financial Corporation (DFC) that finances projects, will not endanger Chinese investments in Serbia, but will only increase competition among financiers.
“China has a plan for financing projects for the entire region of the Western Balkans, and not only for Serbia, and its plans will not be endangered by the DFC, but competition will increase, which is good,” Radosavljevic told Beta.
On September 4, 2020, in Washington, within the normalization of relations with Kosovo, Serbia signed a bilateral agreement with the United States, which, among other things, envisages the DFC to open an office in Belgrade in order to finance projects in Serbia and the region.
Radosavljevic said that bilateral agreements are less favorable for the countries that sign it because they always imply additional conditions, among which is that companies from the creditor country get jobs.
“Serbia has signed several bilateral agreements that included financing the project, but the work on the implementation, which is almost always part of the agreement, was given to companies from the country that finances them, so most of those funds were returned to that country,” said Radosavljevic.
He added that these companies generally do not participate in tenders, and are therefore more expensive compared to loans from the World Bank, the European Investment Bank and other international financial institutions.
According to him, financing projects through bilateral agreements is “worse than both concessions and private-public partnerships”.
Many countries, he said, have resorted to lending to projects through bilateral agreements with other countries, especially since the crisis of 2008, when they found it harder to get loans from international financial institutions due to high indebtedness.
Radosavljevic said that “experience shows that DFC funds arrive more slowly due to stricter conditions and standards that must be met, including environmental ones, as well as due to higher levels of decision-making”.
“In any case, it is good that the DFC will open an office in Belgrade, which means that it will probably function more efficiently, and that is in favor of Serbia,” said Radosavljevic.
According to Radosavljevic, the agreement between Serbia and the United States, which partly refers to the 5G network and technology, will have a more negative effect than financing through DFC.
“5G technology is already widely used in Telekom Serbia and other projects, and it will cost a lot if all this is withdrawn and the situation returns to the beginning,” said Radosavljevic.
The ninth point of the agreement between Serbia and the United States states that “both parties undertake to ban 5G equipment delivered by an unverified seller in their mobile communications networks, and where it exists to be removed.” The equipment is supplied by Chinese companies ZTE and Huawei, but their names are not explicitly mentioned in the agreement.
Radosavljevic said that there was no answer as to how the issue would be resolved, and “if it had been done to a company from the West, serious international arbitration would be waiting for whoever did it.”
“Serbia is in the worst possible situation because it is cheating both sides. It has accepted Chinese technology, is committed to the EU, and has now signed an agreement with the United States. We will see what the end result of such a policy will be,” said Radosavljevic.
Among the major investments of China in Serbia is lending for the construction of Pupin’s bridge on the Danube in Belgrade, then the purchase of the Smederevo ironworks owned by Hestil, the company Zidjin privatized RTB Bor, and the construction of the Shandong Linglong factory in Zrenjanin is in preparation.
Several memorandums of cooperation were signed, as well as an agreement with Huawei on the procurement of equipment, works and services for the realization of the supervision project. Chinese investment in the construction of an industrial park in Borca has also been announced.
A loan was also agreed for the construction of a bypass around Belgrade, from Ostruznica to Bubanj Potok, and Chinese companies gave loans and worked on parts of Corridor 11 and on the Belgrade-Budapest high-speed railway project, Danas reports.
