The spread of China’s influence in Europe is a relatively new political and economic phenomenon. In Western Europe, China uses its business relationships with European high-tech, research and development companies to transfer technology and meet project goals – Made in China 2025. Although the region cannot offer much to Beijing, both in terms of size, as well as its technological resources, it is evident that in recent years China has multiplied its economic and political presence in the Western Balkans.
A few weeks ago, a serious environmental incident occurred in Smederevo. Dangerous black dust, of unknown origin, covered the city, nearby orchards, fields and vineyards for which Smederevo is far known. The incident was caused by the Smederevo ironworks, now owned by the Chinese state company (The China’s Hebei Iron & Steel Group), which bought the stumbled factory a few years ago (as some media reported) for less than 52 million dollars. While environmental activists described it as “environmental terrorism”, the Serbian government and company management downplayed the event, claiming it was a new ore currently in use and shipped from Turkey.
Almost at the same time, a few hundred kilometers away, in Montenegro, the Tara River appeared muddy with tons of gravel, earth and waste that was released into the water. Disposal of waste in the “tear of Europe” is not happening for the first time. Due to the 78-kilometer-long canyon and the beauty of the nature that surrounds it, the Tara River has been placed on the UNESCO World Heritage List. The environmental incidents that have been happening on the river lately are, among other things, connected with the Chinese state company that manages the construction of the highway through Montenegro.
These two drastic cases speak best of how regional projects with Chinese partners can cause a mountain of problems even though they have been described by officials as successful and economically viable.
The spread of China’s influence in Europe is a relatively new political and economic phenomenon. In Western Europe, China uses its business relationships with European companies engaged in high technology, research and development to carry out technology transfer and meet the goals formulated by the project – Made in China 2025.
Although the region cannot offer much to Beijing, both in terms of its size and its technological resources, it is evident that China has multiplied its economic and political presence in the Western Balkans in recent years.
Overwhelmed by the proverbial lack of money and the impoverished economy, the countries of the region were “conquered” by the idea of “easy money” coming from China in the form of soft loans. Regardless of whether it is Montenegro, Serbia, Macedonia or Bosnia and Herzegovina, when it comes to Chinese loans, the way of thinking and business approach is almost identical. They do not seem to be fully aware of the pitfalls hidden in the business model that a large partner from the Far East generously promotes or makes their instinct for political survival insensitive to the consequences that may arise in the future. Although things look promising at first, using soft loans and economic projects, Beijing can shackle economically weak partners in the region with unsustainable debt, exacerbating their pre-existing woes.
In the case of Montenegro, 40% of its external debt goes to loans taken by the government from Chinese banks. It is therefore perhaps the closest to the so-called debt trap experienced by many countries with similar credit arrangements with China.
There are numerous analyzes and comments about the Chinese penetration into the Balkans. Most often, they are focused on short-term positive results or medium-term economic challenges arising from this approach, but less attention is paid to the long-term consequences that such a model of cooperation can bring. The similarities and differences in the approaches of Russia and China when it comes to the region are analyzed even less often.
The history of the Russian presence in the region is several centuries long. The Kremlin’s contemporary approach includes a mixture of cultural diplomacy, strong media campaigns with elements of economic influence, primarily in the vital energy sector. Relying on historical, cultural and especially religious ties with the region, Moscow is spreading a narrative against integration into European structures, questioning the values and principles on which the EU is based. A recent report – Fundamentals of Russian Disinformation and Propaganda – published by the Center for Global Engagement at the State Department carefully analyzes Russia’s efforts to break through, undermine and change the political and information environment in the target countries, including the region.
Russia is trying to use open bilateral issues and the tense security and political situation in the region to strengthen its presence and pursue national interests. It suits Moscow if the dialogue between Kosovo and Serbia is stalled. It can strengthen its influence if divisions in Bosnia and Herzegovina deepen. The Kremlin sees a chance if the issue of Montenegrin NATO membership reopens, which is what the political actors in the Montenegrin opposition, known for their closeness to Russia, want.
Unlike Russia, China supports the stability of the region, because the policy based on soft loans and infrastructure projects will only be able to bring the desired results. Beijing does not use aggressive propaganda to export its ideology. He has nothing against EU or NATO membership. Nevertheless, the existing honeymoon in the relations between the countries of the region and China is far from an ideal partnership. It is more reminiscent of a marriage of interest in which a stronger and more dominant spouse uses his weaker partner.
It may seem absurd, but by creating the preconditions for more lasting stability in the EU region, it actually allows Beijing to profit from it. That is why China responds that the countries of the region are more integrated into the EU, but, on the other hand, the way in which the region cooperates with China harms its aspirations and jeopardizes the EU perspective.
Although at first glance they appear as rivals, and hardly anyone can remember that these two countries ever came up with any joint plan or initiative for the region, Russia and China (yet) do not see each other as political rivals in the Balkans. Despite its growing influence, it is unlikely that Beijing will ever become the new “big brother” in the region. On the other hand, given its presence for several centuries, Moscow believes that its strong presence and ability to significantly influence the vast majority of citizens of the Orthodox faith will not change in the future. Moscow has demonstrated the possibility of transforming its soft power into sharp power several times recently, not only in Montenegro, but also in Bosnia and Herzegovina, for example.
Both countries, although perhaps driven by different political motives, see the West as the ultimate goal of their policies, which directs their action in the region.
With the apparent withdrawal of the EU and the US from the region, Russia and China are emerging as desirable alternatives to the painful democratic reforms the West insists on. Neither Moscow nor Beijing are asking difficult questions about the rule of law or democracy, nor are they demanding the restructuring of inefficient state-owned enterprises. Their approach highlights government business arrangements that are conducted “from above” and based on good (away from the public and media) contacts among leaders. As the cases in Smederevo or Montenegro confirm, the issue of environmental protection in such a business model is secondary.
Russia and China often offer, at first glance, easy, but essentially risky solutions to a region that is semi-successfully struggling with numerous problems. This business approach creates an environment that opens up space for corruption at the top and has little in common with EU standards. Finally, all this leads to the erosion of already weak state institutions and further weakening of state capacities.
The problem is not in the very idea of cooperation with China or Russia. It would be insane to advocate such an idea. The problem lies in an approach that embraces a business style that favors Moscow and Beijing at the expense of Brussels, undermines democratic reforms and puts the countries of the region in an unequal, subordinate position.
The EU is by far the largest donor in Serbia. In the last 18 years, Brussels has invested more than 3.6 billion euros in projects in various fields, from the rule of law, strengthening public administration, social development, to projects in the field of environmental protection and agriculture. However, the EU does not and does not enjoy that kind of public and official support, as is the case with Russia or China. Let’s just remember the welcome in the style of a mega pop star, which was prepared for Russian President Vladimir Putin when he visited Belgrade in January last year.
Few people know that the EU has committed 3.3 billion euros to help countries in the region recover from the corona virus pandemic. On the other hand, when China sent six doctors accompanied by medical aid to Belgrade, the President of Serbia welcomed them, kissing the Chinese flag on that occasion. In this way, Serbia, of its own free will, became a stage for the demonstration of China’s global “mask diplomacy”.
We need a much more decisive and meaningful policy of the USA, and especially the EU, in the period ahead. Their approach should go beyond the mere recognition that “the Balkans can easily become a chessboard where the great powers play their game.”
As the most important political and trade partner with an annual trade exchange of over 43 billion euros, when it comes to the region, the EU should not lose its, still, main role. First of all, Brussels should revive the pale and diluted membership perspective for the countries of the Western Balkans. Without compromising the need to implement reforms, EU and US members, meanwhile, can offer more realistic and tangible investment opportunities. Along with issues of rule of law, security or migration, the EU should do more in areas where Russia and China have already made a significant advantage, and priority should be given to infrastructure and projects that strengthen energy connectivity in the region, Remarker reports.
