Thewesternbalkans
China’s Belt and Road Initiative (BRI) was launched in 2013 and aims to improve infrastructure in Asia, Europe and Africa. The EU announced the Global Gateway Initiative (GG) in December 2021, which aims to support the development of sustainable infrastructure worldwide.
The holding of the 3rd Belt and Road Forum for International Cooperation and the 1st Global Gateway Forum almost simultaneously in October 2023 incites parallels and comparisons between the world’s two leading global initiatives.
The EU launched GG as a response to BRI and the European Commission chief Ursula von der Leyen called Global Gateway a “true alternative” to the Belt and Road Initiative. Von der Leyen didn’t try to mask the EU’s intention to rival China and declared: “We are good at financing roads. But it does not make sense for Europe to build a perfect road between a Chinese-owned copper mine and a Chinese-owned harbor”. This is a clear signal from Brussels about the focus on rivalry with China in the global race for infrastructure projects.
Western media also embraced the GG as an alternative to the BRI, while official Beijing hailed the GG as a consensus between China and the EU on connectivity, as well as reducing Europe’s dependence on the US. The EU’s response is in the spirit of Josep Borrell’s “Sinatra Doctrine” (referencing to his song „My Way“), based on two pillars: continuing cooperation with Beijing, while at the same time strengthening the EU’s strategic sovereignty.
Although the vast number of GG projects and investments will be directed to Africa and Southeast Asia, the Western Balkans (WB) countries undoubtedly remain among the priorities. Historically, the EU has had much more investment in the WB than China, which is a latecomer to the region. However, China is very active and already has an established place in the economy of the Western Balkan countries. For its part, the EU has ambitious plans for the region, set out in the Economic and Investment Plan for the Western Balkans, adopted by the EC on 06.10.2020. The Plan, that has become the core of the GG for the Western Balkans, aims to spur the long-term economic recovery of the region, support a green and digital transition, foster regional integration and convergence with the European Union.
A comparison between BRI and GG shows some similarities:
– At the heart of both initiatives is the idea of connectivity;
– Comparability of mobilized financial resources on a global scale, with the EU far ahead of China in terms of invested funds in WB. The EU remains the leading economic partner, with 70 % of total foreign direct investment and 81 % of exports. According to the Balkan Investigative Reporting Network (BIRN), China invested €32 billion in the region in 2009-2021. In Serbia alone, Chinese investment reached €10.3 billion.
– Both initiatives pursue geopolitical goals and serve the own strategic interests. Both China and the EU adhere to de-risking, although Beijing does not admit it. The long-term goal is to secure influence, raw materials and markets;
– Both the EU and China are balancing economic interests and geopolitical considerations;
– Both initiatives are oriented towards organizing what has already been achieved and rebranding old projects, which reminiscent of the familiar “old wine in new barrels”. All Chinese projects in the Balkans fall under the BRI umbrella, even those from before 2013 or private projects that have nothing to do with connectivity. GG also repackaged previous initiatives. After the EU’s Connectivity Strategy from 2018 failed, it was rebranded as the Economic and Investment Plan for the Western Balkans;
– Security interests are represented in both initiatives, albeit in a deeper, more implicit strategic plan;
– Focus on standardization: The BRI has moved in recent years from “hard connectivity” through infrastructure links to “soft connectivity” through the creation of uniform rules, standards, certification and intellectual property rights – which is also a priority of the GG.
Despite a number of similar features, BRI and GG show substantial differences in the principles and approaches applied. A number of projects of the value based European initiative oppose the Chinese projects. BRI projects involve large Chinese state-owned enterprises, political banks and government agencies, while GG is oriented on the private sector in operationalizing and financing the projects.
While the BRI focuses on building physical infrastructure, often with a Chinese-centric approach, the value based GG emphasizes sustainability, transparency and adherence to high environmental and social standards.
The WB are part of Beijing’s long-term strategy to build Chinese-funded transport infrastructure in South East Europe, connecting ports, capitals and important socio-economic hubs in the region. In a long-term China’s incursion and presence in the WB and securing access to the EU market is linked to the goals of reviving Eurasia’s role as the world’s largest economic market.
At its core, the EU’s Global Gateway is a multifaceted strategy aimed at enhancing connectivity between Europe and the rest of the world. This strategy encompasses a range of ambitious projects, including investments in infrastructure, the energy sector, digital connectivity and sustainable development in countries outside the EU. The goal is to facilitate trade, promote economic growth, and strengthen diplomatic ties with key partners. GG is based on six principals: democratic values and high standards, good governance and transparency, equal partnerships, green and clean, security focused and catalysing private sector investment.
One of the most significant differences between the BRI and the GG is that China does not impose any political conditions on the countries participating in the BRI, while the EU`s Economic and Investment Plan for the Western Balkans is built on the foundations of a performance based and reform oriented Instrument for Pre-Accession Assistance (IPA III) for the period of the 2021–2027, proposed by the EU Commission.
The main instruments of the EU are the Stabilization and Association Process (SAP) and the accession process. Launched in 1999, the SAP is the strategic framework supporting the gradual rapprochement of the Western Balkan countries with the EU. It is based on bilateral contractual relations, financial assistance, political dialogue, trade relations and regional cooperation.
Applicants for EU membership must fulfill the Copenhagen political criteria. One of the basic EU accession criteria, defined in Copenhagen in 1993, is the existence of a “functioning market economy and the capacity to cope with competition and market forces in the EU”. These economic criteria remain crucial today. However, all Western Balkan countries are only moderately prepared to cope with competitive pressures and market forces within the EU.
Once a WB country has been recognized as a candidate, it moves through the various stages of the process at a rate largely dependent on its own merits and progress.
The EU’s Economic and Investment Plan sets out a substantial investment package mobilizing up to €9 billion of funding for the region. It heavily focuses on infrastructure investments such as roads and pipelines, connecting railways and electricity grids in the Western Balkans. In February 2022, a first substantial package of 21 projects supporting the Plan’s investment flagships was approved. On December 8, 2023, the European Commission endorsed a €680 million new investment package to support investments in rail transport and renewable energy in the Western Balkans: reconstruction of Corridor VIII railway line in Albania and rehabilitation of Bar-Vrbnica railway line in Montenegro; construction of two wind farms in Bosnia and Herzegovina and deployment of a solar photovoltaic power plant in Albania.
The EU has a special focus on the regional project – Trans-Balkan Electricity Corridor in Serbia, Montenegro, Bosnia and Herzegovina, a 400 kV interconnection linking electricity transmission systems to those of Croatia, Hungary, Romania and Italy, and on the important national project in North Macedonia – the Corridor VIII Rail Interconnection North Macedonia – Bulgarian border.
The series of planned EU investments in the region are reminiscent of China’s project-by-project (salami slicing) model of imposing an economic presence.
China’s economic cooperation with Serbia is most advanced and institutionalized, compared to other WB countries. Serbia has been assigned the role of a gateway to Europe, which is why Chinese projects in Serbia are oriented mainly in infrastructure. Chinese economic presence in Serbia is a serious challenge for the European integration process. China’s foreign direct investment in Serbia in 2021 was €1.4 billion, as much as the entire EU. This trend will continue as China’s competing investments come without any of the conditions imposed by Brussels. Unlike the EU, China is not asking for sustainability, nor demanding that Serbia modernize its energy sector, nor recognize Kosovo. On the other hand, Kosovo is missing from the investment map of China, which has not recognized the independence of the former Yugoslav province that broke away from Serbia. China is interested in participating in some tenders regarding infrastructure projects in Kosovo that come from the EU.
Conclusions
WB countries are paying attention to both initiatives, but they are interested in whether there will be more business, whether jobs will be created, whether there will be transparency, whether corruption and debt traps will be avoided (as in the case of Montenegro, which in 2021 unsuccessfully tried to get money from the EU Commission to cover the USD 1 billion debt to China), i.e. the principle “success sells” applies here. The Western Balkans turned to China most likely because of the lack of sufficient investment from the EU and frustration with the delay in their European integration.
Local elites in WB are interested in doing business with China due to the economic benefit, the lack of set conditions (compared to the EU) and because of the specifics of the person-oriented decision-making process, which is most visible in the example of Bosnia and Herzegovina. Despite Chinese loans, local elites are increasingly frustrated by China’s uneven economic interest, focused only on certain sectors, and the region’s lack of economic progress
The BRI has been in place for a decade now, and, in order to maintain its attractiveness and effectiveness, applies flexibility and adaptability to local conditions in the WB, to the interrelationship between authorities, to funding organizations and implementing structures. Beijing can’t trump the advantages of the integration model offered by the EU to countries in the WB. However, to move from words to practice and turn political promises into reality, the GG will need to convince WB countries of the strengths of the EU’s infrastructure funding model, especially as GG narratives are not to the taste of governments in countries in a difficult transition from authoritarian to democratic governance. Attracting the private sector to infrastructure projects will be difficult due to the complicated European approval system and the low rate of profit. In addition, sustainable development, high standards and green technologies embedded in GG require more financial resources.
Cooperation or coordination between the two initiatives in the WB is only possible in certain areas. Competition and rivalry are more likely, reaching, in certain cases, to confrontation.
Beijing is not opposed, at least at a political declaration level, to the EU accession of the WB countries, but it may be part of the delaying of the process. The spread of the Chinese economic model in the WB countries dilutes their prospects for EU membership and leads to a reduction in reform efforts, a backsliding of the European agenda, an increase in populism and a loss of faith in the European perspective. For China, setting the requirements for market democratization and environmental protection is not a priority.
On the other hand, the membership of some of the WB countries in NATO and the increasing Western pressure on them not to adopt Chinese technologies in critical infrastructures will intensify the challenges to the BRI and increase the conflict fragmentation in the region.
China’s economic expansion in the WB creates certain risks for the EU: risk of undermining EU regulations, standards and plans, duplication of EU projects, dominance of China’s market power, push for protectionist measures. The wave of Chinese investments causes divisions in the EU on different levels: governments – private sector; national security concerns – market mechanism; East-West and North-South divisions.
For Beijing, the geopolitical implications outweigh the economic benefits, and the BRI has evolved from an idea centered on connectivity and infrastructure development into a global strategy to deploy Chinese influence and economic diplomacy.
