The rapid expansion of Chinese activities and the accompanying risks of economic and political entrapment in countries like Montenegro have led to belated but heightened attention from EU institutions, according to a new report by the European Council on Foreign Relations (ECFR).
In a report titled “Eyes Wide Shut: How to Read the Chinese Scenario in the Western Balkans,” the author Vladimir Shopov warns that the European Union still does not have a clear policy towards Beijing's deepening engagement in the region.
“In 2021, one example of Chinese engagement in the Western Balkans raised alarms in the EU: Montenegro was approaching financial collapse after a huge loan from China's Exim Bank for a controversial highway project turned into a mountain of debt - at one point reaching more than a third of the country's annual budget,” he recalled.
The EU, he added, reacted with lightning speed: it quickly mapped the situation on the ground, strengthened its teams for China, and ultimately intervened to prevent Montenegro from falling into debt slavery towards China.
“The event was a wake-up call for the EU regarding the spread of Chinese influence on the Union's periphery. Yet, four years later, the EU still lacks clear 'China conditionality' for candidate countries, and the topic of China remains noticeably absent from formal accession negotiations. This vacuum is further exacerbated by the EU's unclear and wavering policy towards China,” said Shopov.
The Chinese company CRBC (China Road and Bridge Corporation) was awarded the contract to build the first section of the Bar - Boljare highway (from Smokovac to Mateševo) in 2014. At the end of the same year, a loan of $943,99 million was taken out from the Chinese Exim Bank with a grace period of six years and a repayment period of 14 years. Repayment of the principal began in 2021, which is why the Government requested assistance from the EU to refinance the Chinese loan.
The Ministry of Finance concluded a hedging arrangement with four banks for a loan with Exim Bank in 2024. The hedging was concluded until the end of the loan repayment, until 2035, with a review of the terms after two years.
The ECFR report states that the Montenegrin government is showing similar tendencies to some others in the region (Serbia, North Macedonia), signing public procurement contracts in various sectors with countries outside the EU, despite the fact that just a few years ago the country was on the verge of bankruptcy due to Chinese loans.
"In practice, it has been shown that public caution towards China was very short-lived," said Šopov.
Continuing business with Chinese companies
He recalls that infrastructure is at the center of China's efforts to position and consolidate itself in the Western Balkans and that this has led to belated but increased attention from EU institutions, including the European Commission and the European Parliament.
"However, this has not stopped new business," says Šopov, recalling that in August 2023, Montenegrin authorities awarded a contract worth 54 million euros for the Budva-Tivat road section to two Chinese companies (Shandong Foreign Economic and Technical Cooperation and Shandong Luqiao Group).
Even more impressively, he adds, Podgorica recently shortlisted three Chinese companies (Shandong Hi-Speed Group, Power Construction Corporation of China) for the construction of the 23-kilometer Bar–Boljare highway (Mateševo-Andrijevica section). i China Communications Construction Company).
"Shortly afterwards, the European Commission and the European Bank for Reconstruction and Development - which are financing around a third of the 605 million euro project - asked Montenegro to cancel the pre-qualification tender," he said.
China has positioned itself as a strong player and is using a new approach
Šopov assessed that the old slogan "EU accession is the only game in town" is no longer valid. The accession process, he added, is slow and uncertain, while the region today normally practices a strategy of balancing ("hedging") between many actors.
"China has positioned itself as a strong player and is using a new approach: less focused solely on the state, increasingly focused on society, economy, academia, culture and media. The EU, on the other hand, has an unclear and fragmented policy towards China," said Shopov.
He believes that China has identified “pillar countries,” such as Hungary and Serbia, and has stepped up cooperation with them. These countries are becoming regional centers of Chinese influence.
"Traditionally, Serbia has cooperated most actively with China, although the president Aleksandar Vučić "In recent years, it has become increasingly difficult to balance as Serbia approaches the EU through energy connections and other projects. Also, Vučić's relationship with Russia is increasingly difficult to balance as the EU tightens sanctions on Moscow and the US seeks diversification of energy sources," said Šopov.
The EU's conditions regarding China, he added, are developing in parallel with the enlargement process, but without clear rules, while individual EU members further complicate the picture.
“The result: Western Balkan elites are increasingly choosing political balancing over deep integration - and the evidence for this is growing,” he concluded.
He warns that if the Western Balkan countries join the EU, they could become promoters of Chinese interests within the Union and use veto power on decisions against Beijing, while the interests of China and Brussels increasingly clash.
EU to be more decisive in expanding towards China
In the report, Shopov listed several recommendations for the EU to reduce Chinese influence in the region.
The first is for the EU to be more decisive in expanding towards China.
"The EU cannot be a geopolitical actor without a clear enlargement policy and a clear position on China," he warned.
It is necessary, as he recommends, to harmonize requirements and incentives, define a firm timeframe for accession, and the EU must involve wider society, not just governments.
“Accession is not just legal – it is a process of bringing together citizens, economies, universities, cultures and local communities,” said Shopov.
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