The ends of the Chinese Silk Road reach the molten gold in Serbia's El Dorado. Red lanterns with Chinese characters swing in front of the entrance to the headquarters of the copper and gold mine in Majdanpek, a small town in eastern Serbia. A dull rumbling explosion is heard in the distance. Engineers in orange safety vests smoke morning cigarettes over the abyss of a mighty mine crater. They chat in Chinese.
Apartment blocks devoid of aesthetics are more common in the city center. Janko Nikolić is an unemployed locksmith and head of the Wallachian Party, a national minority in eastern Serbia. He heard from the police that 5.000 to 300 and "over 400" undeclared contract workers from China officially live in the mining town, which has shrunk to about 1.000 inhabitants, he told us at the Golden Inn hotel. "But no one knows exactly how many there are." At some point, the local population will become a minority, Nikolić fears: "Half the city already belongs to the Chinese."
Quietly, but by no means secretly, China is marching towards Europe. "One Belt, One Road" is the official name of the prestigious project for the new Silk Road since 2013. New highways, bridges and railways or modernization of ports, railways and power plants: Beijing intends to shorten transport routes around the world and open new markets for Chinese products - investing billions of dollars in infrastructure.
The exploited Balkan states have become Beijing's bridgehead. China wants to redirect container traffic between Asia and Europe from the North Sea to the Mediterranean route - and is encouraging this reorganization by expanding ports in Piraeus, Greece, and Trieste, Italy. The construction of a high-speed railway from Belgrade in Serbia to Budapest in Hungary serves to better connect Central Europe with China.
Since 2012, China has hosted the so-called "17 + 1 summits", held every year. Goal: intensification of economic relations with the countries in the anteroom of Europe or i.e. the "soft" eastern wing of the EU. The heads of government of China and, meanwhile, 17 partner countries are exploring the possibilities of new major projects. China "always treats us with respect", Serbian President Aleksandar Vučić praises the "iron friendship" with Beijing.
However, Beijing never selflessly makes its billions of loans and investments available. It finances major projects mainly with loans from the state-owned Import-Export Bank of China-EXIM while simultaneously selling the services of its state-owned construction companies. The advantages for local companies are limited: not only the material but also the workers often come from China. Chinese loans are attractive to many governments in the Balkan countries because they are easy to obtain - without feasibility studies or environmental impact studies: which are common for EU projects. The downside is that recipients risk overplaying themselves, sinking deeper and deeper into loans and thus becoming dependent on Beijing.
One example is Montenegro. As the smallest candidate for the EU, in 2014 it raised a loan of 944 million dollars for the construction of a smaller section of the planned highway from the Adriatic port of Bar to Serbia. Affected by the consequences of the corona crisis, Montenegro is now having problems repaying this large loan.
How big is the dependence on Chinese loans?
The appeal for help that Deputy Prime Minister Dritan Abazović addressed to the Committee on Foreign Affairs of the European Parliament in March sounded almost desperate: "Please help us return the money so that we can break Chinese influence."
But how much does the Balkan region really depend on Chinese loans? China is not the largest foreign creditor in the Western Balkans, but it is well on its way to becoming one, as a recently published study by the Italian UniCredit Group shows.
It is striking, according to the authors of this study, that lending is "relatively large" compared to the size of recipient countries' economies. In 2020, Chinese loans already accounted for 3,4% of GDP in Bosnia and Herzegovina, 7% in Serbia, 7,5% in North Macedonia and even 20,7% in Montenegro.
According to UniCredit, China is by far the third or fourth largest creditor in most countries in the region. But when the sums of already contracted loans are fully paid, the share of Chinese loans in the total external debt will rise to 11,4% (Bosnia and Herzegovina) and 22,7% (Montenegro) in the next few years.
The authors of the study believe that the EU could counter the growing importance of China as a creditor in the Western Balkans by increasing the financing of infrastructure projects. UniCredit recommends EU candidates in the Balkan region to diversify their funding sources "before the debt repayment burden to China becomes too great".
Brussels is increasingly concerned about China's growing influence. The EU must finally fulfill the promises made to the candidates, otherwise there is a risk of "losing the Western Balkans", German Foreign Minister Heiko Maas warned at a meeting of EU foreign ministers in mid-May: "We are not the only ones there. There are competitors. And they perform uncompromisingly.
The European Union is still by far the largest direct investor and trade partner of the countries in the Balkans. But their increasing borrowing in China is accompanied by a creeping political dependence - not only among EU candidates, but also among member states, as the example of Hungary shows. Budapest recently vetoed a planned condemnation of China's electoral reform in the Hong Kong Special Administrative Region.
Beijing also knew how to use the corona crisis for propaganda purposes: by quickly delivering masks and vaccines - in contrast to the hesitant and contradictory EU. "It is now clear that European solidarity is a fairy tale," Serbian authoritarian President Vučić announced a year ago: "Only China can help us."
(Die WELT)
Translation: Mirko Vuletić
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