The West’s competition with China in the Balkans – European Council on Foreign Relations

In 2021, Montenegro’s economic infatuation with China has left it on the brink of financial collapse. The first repayment of the $944 million road construction loan from the Export-Import Bank of China was due in July. And defaulting on that loan could have had disastrous economic consequences. For example, a default could have triggered contractual clauses that led to the seizure of infrastructure assets by the Chinese state bank. Therefore, some sort of reckoning seemed to be in sight. But, after many political dramas, two American banks and a French one came to the rescue.

Suddenly Western observers were forced to acknowledge China’s attempted economic takeover of this NATO member state: politicians quickly held hearings in the European Parliament and convened workshops on the issue; the European Commission and key member states rushed to organize expert briefings; and, in due time, research bodies produced weighty “global” analyses, attempting to reshape Western policy in the face of the crisis. Ultimately, the creeping Chinese appropriation of the EU candidate country was prevented. And that should stimulate a more structured and convincing Western approach.

China’s strategy

The signs of Beijing’s push into southeastern Europe have long been clear. Perhaps the most obvious of these are Serbia’s transformation into a regional hub for Chinese activities and the development of various energy and infrastructure projects in the Western Balkans. But there are lesser dynamics at play, such as Beijing’s continued interest in maritime infrastructure along the Adriatic coast and the gradual expansion of its diplomacy beyond economic affairs.

Political factors have also propelled the implementation of China’s strategy in Southeast Europe. These include the continuing geopolitical stalemate in the region, the lack of a clearly defined EU response to third country activities in this region and the recent suspension of Montenegro’s accession process to the EU. EU. At the same time, Western Balkan countries continue to need effective policies and tools to bridge their development gap with the rest of the continent, further inviting Chinese overtures. For most people in the region, the resurgence of geopolitical competition is the new normal. And, for many, this change is to be welcomed.

Signs of Beijing’s push into southeastern Europe have long been clear

However, Beijing is beginning to encounter major difficulties. He has lost the edge of discretion now that China’s activities in the region – including the conditions attached to various forms of engagement with the country – have drawn the attention of politicians, protesters and researchers. The NATO membership of countries such as Albania and North Macedonia sealed several areas of cooperation with China, such as critical infrastructure, 5G technology, data and e-governance. It can be said that the European Union investment plan for the Western Balkans is a belated and insufficient political response. But it was formulated as a direct reaction to Chinese involvement and will go some way to addressing the shortage of high-quality infrastructure in the region.

Meanwhile, there is growing popular dissatisfaction with China-related projects. For example, civil society organizations organized a blockade in February 2022 to protest against the construction of a tire factory in Serbia; Bosnian coal miners staged a strike in December 2021 to protest labor and environmental standards at a factory based in Tuzla; and non-governmental organizations have long been concerned about the environmental impact of a motorway construction project in Montenegro.

In addition, Beijing has traditionally felt most comfortable dealing with de facto autocratic regimes (such as that of Serbia under President Aleksandar Vucic and Montenegro under President Milo Djukanovic) and entrenched governments (the one of North Macedonia under the VMRO). But, in recent years, China has had to deal with power transitions in North Macedonia and Montenegro. The new governments of the old country oriented their foreign policy more firmly towards the West, while – as mentioned above – Podgorica relied on Western banks to contain the potentially drastic consequences of a default. on its huge Chinese debt.

The Western response

Elements of a more coherent Western response are emerging. The aforementioned EU economic and investment plan for the Western Balkans has the potential to mature into a new targeted development framework. And the adoption of the EU Global Gateway strategic initiative is a notable sign of the evolution of political thinking about infrastructure and its importance in the new geopolitical normal.

At the national level, the new German government has affirmed its commitment to the region, adopting a broader geopolitical perspective. France, meanwhile – as holder of the Presidency of the Council of the European Union – takes a similar approach. Moreover, there is a new group of members of the European Parliament who have pledged to do more to counter the actions of China and Russia in the Western Balkans.

Further, the Biden administration has increased U.S. engagement in the region, both building on previous policies (the “Clean Network” initiative in critical infrastructure) and expanding new territories with the adoption of sanctions targeting individuals destabilizing the region. The creation by the G7 of the “Build Back Better World Partnership”, with a decisive contribution from the United States, indicates a more profound shift in strategic thinking on regional influence.

But China is unlikely to be deterred by a change in Western approaches. Geopolitically, Beijing abhors irrelevance – and it will view a decline in influence and its partial removal as an affront. Therefore, China has undertaken various efforts to respond to the changing context in the Western Balkans and beyond. One is a tilt towards a “green” agenda in the “Belt and Road” initiative and in the “16+1” format of cooperation with Central and Eastern European countries. Another is a greater focus on small and medium-sized businesses, as China recognizes the limitations of only engaging with large companies. After Lithuania’s departure from what was ’17+1′, Beijing is visibly shifting its focus to the Western Balkans. China has also learned to operate in more complex political environments, as shown by its growing diplomatic activities in Bosnia.

Meanwhile, Russia’s war on Ukraine could lead to deeper Sino-Russian cooperation in the Western Balkans and could accelerate EU and NATO efforts to integrate countries in the region. Neutral foreign policy postures such as that of Serbia are now more likely to become untenable.

Overall, as China faces headwinds after years of operating in a largely permissive environment, it is also readjusting its approach in the face of heightened geopolitical competition. In the struggle between the West and China in the region, this is now the game.

The European Council on Foreign Relations does not take a collective position. ECFR publications represent the views of its individual authors only.

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