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A Tale of Two Summits

China’s meetup with Central and East European countries was a stark contrast to the earlier EU-China event.

by Martin Ehl 17 April 2019

At the entrance of the Hotel Palace, in the Croatian coastal city of Dubrovnik, a young Chinese man in a dark suit and tie, carrying a Nike sports backpack, was in charge, swiftly organizing the arrival and departure of numerous delegations coming to meet Chinese Prime Minister Li Keqiang. Li made the hotel his headquarters during last week’s meetings with Central and East European leaders.

 

The Chinese logistical team had been in town for a month before the two-day period of official meetings on 11-12 April, and the scene at the door was a perfect illustration of how China imagines its cooperation with European countries – following China's rules, with the Chinese in command, while the Croatian bodyguards and policemen followed orders and guarded the doors.

 

Each prime minister had been given 10 minutes to speak with Li, and anyone who managed to prolong it to 15 minutes was considered some sort of diplomatic hero.

 

Chinese diplomats launched the 16+1 group in Warsaw in 2012; this became 17+1 in Dubrovnik, with the addition of Greece. The group is aimed at increasing Chinese influence in Central Europe, from the Baltics to the Balkans, through promises of various kinds of cooperation and projects.

 

The group now consists of Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, North Macedonia (until recently called the Former Yugoslav Republic of Macedonia), Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia. The +1 represents China.

 

This summit's host country, Croatia, signed seven intergovernmental agreements, and individual governments reported others, but there was no summing up on the Chinese side, and no joint position at the end of the summit.

 

A business forum, held alongside the governmental event, offered networking opportunities, as well as the occasion for official signature of contracts already agreed.

 

For the European countries at the summit – especially for the non-EU members among them – the promise of Chinese investment is irresistible. Yet in the 17+1 format, they each negotiate bilaterally with China, not in a group, a set-up which leaves every country except China in the position of guessing what the others have asked for, or received. This has the potential to stir up jealousy.

 

When asked by a group of Czech journalists whether any other country besides Greece planned to join the group, Prime Minister Andrej Babis gave an unusually blunt answer: “I do not know. That’s their project.”

 

The event in Dubrovnik was the eighth political summit of its kind, and the contrast with the EU-China summit – two days before that, in Brussels – could not have been starker.

 

In Brussels, after hard negotiations, Prime Minister Li yielded to EU demands for fairer treatment of European companies in the Chinese market and for the prevention of China's misappropriation of foreign technology. The result was a commitment, expressed in a joint EU-China statement, to work on improving both those issues, among others.

 

With the EU's clear demonstration that the joint approach can achieve results, both Brussels and the big European players consider the 17+1 group a Chinese attempt to undermine EU unity.

 

The benefits for the region of the “17” – Chinese-financed and -built projects – are certainly debatable. For example, a Chinese highway project in Montenegro, using Chinese workers, is still unfinished but has already resulted in soaring Montenegrin debt, from 63 percent of GDP to 80 percent today. And if Montenegro is unable to pay, the collateral is Montenegrin land. The same happened in Sri Lanka, where China now owns the new port of Hambantota that it built on similar terms.

 

The Chinese government and Chinese companies have not yet succeeded in agreeing on any major infrastructure projects in the region (these would join other parts of the Belt and Road Initiative, as China’s growing influence is being packaged around the world). However, the Chinese traditionally work and think in longer timescales than Europeans. And when Greece joined the group at this summit, it was a clear signal that the biggest proposed Chinese project, a railway from the port of Piraeus in Greece – where COSCO, the Chinese state-owned shipping company, has invested heavily in terminal capacity – through the Balkans into Central Europe, is picking up steam.

 

The United States is pushing back with new vigor against China’s growing influence in Central Europe. U.S. Secretary of State Mike Pompeo visited the region in February 2019, to stiffen the NATO alliance.

 

Opposition has also been visible in the Czech cyber-agency NUKIB's decision to raise security concerns, in late 2018, over working with the Chinese companies Huawei and ZTE, and with Poland’s arrest of one Huawei employee, accused of espionage.

 

Yet Central Europeans are torn between their desire to exploit the potential of the Chinese market, and listening to warning signals about the price they might have to pay.

 

Czech Prime Minister Andrej Babis knows a bit about this. As a businessman, he lost a good sum of money in China more than a decade ago [link in Czech]. In Dubrovnik, he was visibly cautious speaking about the Chinese, and concentrated strictly on business. This provided a marked contrast to the Czech president, Milos Zeman, who visits China frequently and speaks uncritically of the regime there.

 

As a politician under investigation for misuse of EU funds, Babis might not be the best model, but with regard to relations with China, his cautious and restrained approach could serve as an example for the entire region.

Martin Ehl
 is chief analyst at Hospodarske Noviny (HN), a Czech business daily. He 

was reporting on the 8th Summit of Central and Eastern European Countries & China (11-12 April) for HN.

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