China's engagement in the Balkans is motivated by the desire to penetrate the European Union market, and a significant number of infrastructure projects in which Chinese companies participate testify to the strengthening of its presence in Montenegro, according to "Vijesti" interlocutors.
They are reminiscent of China's Belt and Road Initiative (BRI), which represents a policy and investment program aimed at developing infrastructure and accelerating the economic integration of countries along the route of the historic Silk Road, with a focus on the countries of Asia, East Africa, Eastern Europe and Central Asia. east. The goal of the Maritime Silk Road is to connect China by sea with Southeast Asia, Indonesia, India, the Arabian Peninsula, Somalia, Egypt and Europe.
Senior researcher at the Belgrade Center for Security Policy Vuk Vuksanovic says that after the war in Ukraine destroyed the arm of the Belt and Road initiative, which was supposed to connect China to Europe via Russia, Ukraine and Belarus, Southeastern Europe is emerging as a potential alternative corridor to European markets.
"China sees the Balkans as a link between Europe, which is a big market for China, and wider Eurasia, due to the proximity of the Balkan peninsula to the Middle East, Turkey and Africa," said Vuksanović to "Vijesta".
Analyst of the Digital Forensic Center (DFC) Marko Banovic he assessed that Montenegro and the wider Balkan region represent an important geopolitical point for China, as they enable the economic and potentially political expansion of its influence towards the heart of Europe.
"Despite its significant economic presence in the entire Balkans, Chinese influence is currently limited due to the lack of strong political support. The exception is Serbia, where the ruling structures and the media close to them represent an important lever in spreading Beijing's influence," Banović told "Vijesta".
He reminds that Chinese infrastructure projects offer favorable credit arrangements and relatively fast construction, which is why Chinese companies often manage to stay ahead of the competition.
In Montenegro, Chinese companies have won significant state jobs, such as the ecological reconstruction of the Pljevlja Thermal Power Plant worth 60 million euros. The work was awarded to a consortium led by China's DEC International.
China's Shandong won the contract to build the Tivat-Jaz boulevard, worth 54 million. A tender for the new section of the Bar-Boljara highway is also underway, for which several Chinese companies have applied.
The beginning of the construction of the highway, i.e. its priority section Smokovac-Mateševo, brought a stronger Chinese presence in Montenegro, which is why warnings still arrive today from several international addresses.
Not only did the Chinese company CRBC (China Road and Bridge Corporation) get the job, but at the end of 2014, a loan of 943,99 million dollars was taken from the Chinese Exim Bank with a grace period of six years and a repayment term of 14 years. Repayment of the principal began in 2021, which is why the Government asked for help from the EU to refinance the Chinese loan.
At the beginning of the year, the Ministry of Finance concluded a hedging arrangement with four banks for a loan from Eksim Bank. The hedging is concluded until the end of the loan repayment, until 2035, with a review of the conditions after two years. After hedging, Montenegro pays the loan in euros at an interest rate of 0,98 percent, while before it was paid in dollars at an interest rate of two percent. This is the second time hedging has been done and so far only one of the seven paid installments has been paid in dollars, the Ministry of Finance said earlier.
The Chinese loan increased the national debt to more than 70 percent of the gross domestic product (GDP), which is why Montenegro received warnings from domestic and foreign experts that it was entering "debt slavery".
In addition, the contract with Exim Bank states that Montenegro "waives immunity based on sovereignty or otherwise for itself or its property, except property related to diplomatic-consular missions and military property, in connection with any arbitration proceedings in accordance with the contract". The arbitration is in Beijing.
It is also defined that the Chinese can stop paying the loan or immediately demand payment of the principal and interest "without further requests, notifications or other legal formalities", if, among other things, Montenegro does not pay the principal, interest to Exim Bank or "to its creditors in general". , which have nothing to do with the Chinese.
Experts have warned that such a clause in the loan agreement creates the possibility of a dependency relationship and that a similar scenario was in Sri Lanka, which failed to settle its debt, so it gave Chinese companies 85 percent of the Hambantota port for 99 years without management fees.
In the 2020 “Nations in Transit” report, Freedom House states that China uses weak and corrupt systems to expand its influence in foreign countries through a strategy of debt diplomacy, in which a more economically powerful country makes huge loans to developing countries, making these countries credit default. burdened and exposed to its influence.
The first major business arrangement between China and Montenegro was the procurement of ships for Montenegrin and Barska plovidba. During 2010 and 2013, the government issued state guarantees of $93,7 million to Chinese companies for the purchase of four ships. The ships were built by the Chinese company Poly Technologies, and the loan was provided by the Chinese Exim Bank.
According to the data of the Ministry of Finance, the total foreign debt of Montenegro amounted to more than 4,4 billion euros or 55 percent of GDP at the end of September.
Of this, the debt to the Chinese Exim Bank is 633,58 million, or 8,5 percent of the total.
They support the EU integration of the region
Banović emphasizes that China, unlike Russia, is not opposed to the membership of Montenegro and other countries of the Western Balkans in the EU, but Chinese officials even emphasize their support for the European integration of the region.
"It is important for China to gain a stronger foothold in the region, which is strategically important as a link to the EU market. However, it should be borne in mind that Chinese investments and loans often follow non-transparent procedures, which in countries with weak and politicized institutions opens up space for corruption. Such a way of acting can slow down the fulfillment of EU standards and threaten European integration," said Banović.
It indicates that the Chinese presence in the Balkans has been rapidly strengthening over the last decade, mostly through infrastructure projects (roads, railways, energy plants) that realize the strategic connection of the region with the Chinese initiative Belt and Road, then favorable credit arrangements and media, educational and cultural initiatives .
He explains that favorable credit arrangements mean that Chinese banks offer loans on terms that often seem competitive with Western sources of financing, making it easier for developing countries to accept such offers.
"Chinese cultural centers, scholarships for students from the region, support for media content and information exchange are tools of 'soft power' that further strengthen China's image and influence," said Banović.
As he reminded, a number of infrastructure and industrial projects are being implemented in Serbia, and political cooperation with China is intensive and at the highest level.
"Also, Serbia is one of the few countries that has signed a trade agreement with China. It is important to emphasize that China is expanding its influence in other countries of the region through Serbia," said Banović.
Vuk Vuksanović says that Serbia is at the very center of Chinese interest in the Balkans due to its strategic geography and status as a candidate for EU membership, as Beijing believes that if a practice succeeds in Serbia, it can be reproduced first among Serbia's neighbors and then among EU countries. .
"That logic is present in the infrastructure, defense industry, high technology, defense and pharmaceutical sectors. Green technologies will potentially be added to that list," he said.
This only shows that, as he says, China, unlike, for example, Russia, would be suitable for a country like Montenegro to join the EU.
"If the countries of the region do not enter the EU, China will not be harmed, but if they do, it will benefit, since their engagement in the Balkans is motivated by the desire to penetrate the EU market," Vuksanović said.
It is not a significant investor, but it is a trading partner
China is not a significant investor in Montenegro, and a significant inflow from that country was recorded in 2020.
According to data from the Central Bank of Montenegro, from 2006 to the end of 2019, investments from China amounted to around ten million euros, and in 2020 they would jump to 71,2 million euros.
After that, there is a drop in investments from China again, so they were 2021 euros in 6.438.000, and 2022 thousand in 882. No significant inflow of investments from China was recorded last year.
China, on the other hand, is one of the largest foreign trade partners of Montenegro, right after Serbia.
According to Monstat data, the largest foreign trade partners in imports last year were Serbia (trade 661,7 million euros), China (424,7 million euros) and Germany (368,2 million euros).
According to the data obtained by "Vijesti" from the Central Register of Business Entities (CRPS), the number of active companies in which a legal or natural person from China is a shareholder/founder is 235.
According to the latest population census from 2023, 59 Chinese citizens were recorded as having their usual place of residence in Montenegro, they told "Vijesta" from Monstat.
As they explained, the usual place of residence is the place where a person usually spends the day, regardless of temporary absence for reasons of recreation, vacation, due to treatment... as well as the place where a person resides continuously, at least one year before the reference moment of the census or is arrived at the usual place of residence during the 12 months before the reference moment of the census with the intention of staying there for at least a year.
China is seen in a positive context by 66 percent of citizens in Montenegro, and 88 percent in Serbia
A regional public opinion poll conducted by the International Republican Institute (IRI) showed that 66 percent of Montenegrin citizens see China in a positive context, while in Serbia that percentage is 88 percent, Nova ekonomija announced.
30 percent of Montenegrin citizens said that they were aware of Chinese investments in the country, but within that percentage, 66 percent of them mentioned the Bar-Boljara highway construction project.
Almost a third of Montenegrin citizens think that economic benefit is the goal of economic cooperation, only a few percent more believe that it comes with political demands, and almost a fifth believe that the goal of investment is to spread influence and gain control over certain elements of the state.
When it comes to the role of the media in creating the perception of China, that country is not a daily topic in the Montenegrin media and is not on the agenda as often as in Serbia.
"The country has also clearly defined its Euro-Atlantic orientation, and is a member of the NATO alliance. In the end, it is obvious that a certain percentage of citizens have not forgotten what kind of problems the state got into because of a loan that came due in a very complex period of time, and brought Montenegro to a situation where it has to seek help and ways to solve the debt crisis on the international stage. ", the research states.
According to the research, from September to October 2024, only two reports on China were broadcast on the Montenegrin public service RTCG, compared to a larger number of reports on private channels, such as Nova M and Prva.
"Nevertheless, the topic of China is still peripheral in the Montenegrin media, with only nine out of 24 reports being fully devoted to this topic," the research states.
The coverage of topics mentioning China in the Montenegrin media was wider, including international topics such as China's relations with North Korea, Taiwan and the European Union. Reports on China's role at the BRICS summit and its role in proposing a solution to the war in Ukraine were a significant part of the coverage.
"Compared to Serbia, media coverage in Montenegro remained neutral, with 70,1 percent of reports being moderate in tone, and Chinese leadership, including President Xi Jinping, being portrayed favorably, but only briefly," the report says.
Bonus video:
