Looking to the future Cooperation of Central and Eastern Europe and China – Serbia in particular

Looking to the future Cooperation of Central and Eastern Europe and China – Serbia in particular

Zivadin Jovanovic*

March 25, 2020

The time of adjustment

The world is undergoing a period of great development, great change, and adjustment. The international order is changing with the acceleration. The fall of the Berlin Wall thirty years ago (1989) has marked the end of the bipolar World Order. The “winners” of the Cold War adopted a policy of expansion, interventionism and domination. NATO illegal aggression on Yugoslavia 1999 represented the peak of uni-polar world order but, also, the beginning of its downfall.

Today, the process of multi-polarization of global relations has already gone far beyond the point of no return. It is impossible any longer that any single power imposes own will or own interests above the will and interests of the others. The driving forces of this historic transformation towards the world of equals, shared responsibilities and community of shared future are China, Russia and other countries of growing potentials.

The global Belt and Road Initiative (BRI) launched in 2013 by President Xi Jinping has become the new paradigm integrating development and peace, building humanistic future of mankind. The worldwide support and acceptance confirm the visionary essence of the Initiative, trust to China, her enormous potentials in the economy, science and culture, as well as the mankind’s thirst for peace, justice and better life.

Encompassing so many fields of cooperation and being inclusive and open to the whole planet; connecting markets, cultures and moral values; upholding tradition and identity; introducing connectivity, modernization, innovations and strikingly new technologies to be the core of the Initiative – all this makes BRI a unique achievement and an unprecedented pattern for a better future for humanity.

It is high time that those who had enjoyed privileged positions learn how to accommodate to multi-polarity, true partnership and democratic governance of the world economic, financial and political relations without hegemony and dominance.

Brexit done, Europe reexamining itself

Prolonged turmoil around the terms of Great Britain (GB) leaving the EU brought to the surface deep political and structural deficiencies of EU. Open questions include, among others: EU with more or less unity (centralization)? What are the prospects of “an EU moving in different speeds”? Will security be provided by NATO, by an EU army, or combined? What is the future of transatlantic axis in the light of growing disagreements on trade, gas suppliers, relations with Russia, climate changes and the financing and burden-sharing of NATO?

What are prospects of future EU partnership with USA, Russia and China? First structural reforms, then accepting new members (from the West Balkans), or those will be parallel processes? How to speed up scientific and technological development if internal discord prevails? How to provide rational energy security (gas) and avoid US sanctions because of “North Stream 2” and all other “streams”?

First published by “China Investments Magazine”, Beijing

Will they continue financing the EU through member countries’ contributions or introduce EU direct income taxes? How to manage ”sovereignistic” tendencies of the type of “Visegrad Group”, or USA bilateral approach towards EU member countries, particularly to Poland and the Baltic states?

Those are but some of the hard questions facing the new EU Commission (Government) headed by Ms Ursula van der Leyen, former defence minister of Germany, who took the new office on December 1, 2019. Her general answer is that the new Commission will be a geopolitical one and will pursue a policy of “the European way”.

She is critical of the “language of confrontation and unilateralism,” decisive to “promote and protect Europe’s interests through open and fair trade”. At the same time, she is ready to protect “European prosperity and values” addressing the “risks … where the market does not manage to do so”.

As for Great Britain, hard negotiations are ahead to reach a soft FTA (Free Trade Agreement) with the EU, which will take at least another year, or so. London will probably expand and strengthen economic ties with traditional strategic partners USA, Canada, Australia and New Zealand. Thus “The Five Eyes” might become a kind of economic G-5?

European Green Deal

The top priority of the new European Commission will be “European Green Deal”. The objectives are to reduce CO2 emission by 50% by 2030 and to make Europe the first climate-neutral continent by 2050 meaning that CO2 emission will be reduced to the level of nature’s capacity to absorb and process it.

This was announced by Ursula van der Leyen, the new President of European Commission (EU Government), in her speech to the European parliament. The Green Deal is not a portfolio or sector but, “a must” for the whole EU economy, “industrial strategy that enables our business … to innovate and to develop new technologies while creating new markets”.
It is seen a program for the total reorganization of the EU economy. The ambition, obviously, is even broader. The new EU Commission needs “to glue broken cups”, to use the recent words of the German Chancellor Angela Merkel.

According to van der Leyen, the European Green Deal requires “massive investment from European and national levels”, as well as from capital markets. While official budgeting is still to be proposed, German, British and other influential business newspapers published that the entire EU program may cost 300 billion a year or 3 trillion Euros in the next 30 years. Officially, the European Investment Bank has been designated to play the role of European Climate Bank. All future trade agreements will include green clauses according to EU standards.

Van der Leyen promised to present the detailed plan on the implementation of Green Deal to the European Parliament (EP) within 100 days from taking office, stressing that “the world needs EU leadership” on protecting the environment.

Some observers, however, consider that the proposed Green Deal may provoke a new financial bubble bigger and costlier than that of 2007/8. Others assume that the Deal is a new attempt to save the neoliberal multinational corporative system from inevitable downfall. Some go back recalling the 1985 EU (EEC) “Eureca” long-term project of new technologies development which apparently has not delivered results as expected. Time will be the true judge on that.

Some specific EU Commission’s priorities include a) Affordable, clean and secure energy; b) Massive investment in innovation, research, infrastructure, housing and training; c) Robotization and digitalization accompanied by “unified European approach to cyber security”.

CEECs-China (16+1)

The format of cooperation between CEECs (Central East European Countries) and China was introduced in 2012 but soon after became connected to BRI – the Belt And Road Initiative.

This format includes now China and 17 countries of Central, Eastern and South-Eastern Europe (the Balkan peninsula countries). Twelve out of the 17 CEECs are EU members, while five are candidates for membership.

Connecting CEECs and BRI has been a logical evolution since the BRI is a global multidimensional integration and CEECs are a natural bridge connecting Euro-Asia.

As time goes on, the connectivity role of CEECs gains new energy and additional importance. The long- term strategic role of CEECs will be fully in action by pairing BRI with the EU Strategy on connecting Europe and Asia.

CEECs-China cooperation is strategically important, an integral part of the overall China-EU cooperation – in terms of volume, quality and particularly, for its growing connectivity role.

On the other hand, this format of cooperation plays a significant role in upgrading the level of socio-economic and technological development and modernization of CEECs thus helping their development and alleviating social-economic discrepancies between the regions in EU.

It should be noted that more than 25 million people from the CEECs, or so-called “New Europe”, has migrated to the Western parts of the EU looking for better-paid employment and higher living standard. This “internal migration” or “brain drain” deprives CEECs of the highly educated young people thus hindering development objectives.

The official EU statistics (Eurostat), for example, shows that 17.3% or 87 million of the total population of the EU (around 500 million) live on the border of poverty. Most of them live in, or come from, the CEECs. Creating new job opportunities and helping upgrade living conditions for these people, CEECs-China cooperation should be regarded as a centrally important factor facilitating solutions of those serious problems.

Great achievements

In the past eight years, remarkable results have been achieved through this format of cooperation. Trade and investments have been rising at an unprecedented pace. Land, sea and air infrastructure, people-to-people connectivity have opened an enormous space for exchange of goods, services, information, science, culture and, particularly, tourists.

Joint investments in energy, food production and industry, industrial parks based on new environment-friendly technologies have contributed to overall modernization of the economy and the rise of budget income as well as to the reduction of unemployment.

Common understanding

These results have been based on important common understandings. First, that cooperation presupposes full respect of the principles of sovereignty, equality, non-interference and mutual benefits (win-win); second, that cooperation is always in compliance with national and international laws, regulations and standards (WTO); third, that cooperation respects openness, connectivity and coordination; fourth, the 17+1 format is natural and an essential part of China-EU relations complementing China-EU Strategic Comprehensive Partnership; fifth, that each country bears responsibility for own development priorities and, sixth, economic cooperation and people-to-people exchange are two equally important components of peace, stability and prosperity.

Multi-polarity and inclusiveness of the global governance underline the importance of this approach and open up new avenues for 17+1 cooperation.

Ten years ago, the most important preoccupation of CEE countries was to cope with and alleviate the consequences of the world financial and economic crisis (2008 – 2012). The same countries today and in the next decade, strive to further upgrade, expand and modernize their infrastructure, strengthen their economies, adopt new technologies, upgrade living standards, diminish discrepancies, create employment, get internal migrations to a normal level and eliminate poverty.

These objectives are, by all means, very important, legitimate and in harmony with 17+1 cooperation.

There is no doubt, therefore, that the past fruitful cooperation represents a very solid ground for setting up even more ambitious objectives for 1+16 cooperation in the next decade. This will not only be the best way to address the needs of national economies and peoples’ expectation for a better life but at the same time also serve as an important contribution to China–EU cooperation and to further implementation of the BRI, in general.

The more uncertainties and clouds over the economic, financial and social fields, in Europe and globally, the more needed it is to keep up the pace and strengthen positive trends of CEECs-China cooperation.

Modernization of infrastructure

The modernization of the infrastructure will remain among top CEEC priorities in the next decade. Concretely, the Three rivers corridor (Vardar-Morava-Danube), encompassing high- speed railway and highways – also known as European Corridor 10 – needs to be finalised and extended to provide full capacity functioning of the Land and Sea Express Line linking the Greek port of Piraeus by land with Central Europe and the Baltic Sea.

The high-speed railway Belgrade-Budapest is already under construction. The first extension should provide connections south of Belgrade, to Nis-Skopje (North Macedonia)-Thessaloniki-Piraeus (Greece). At the last 16-1 summit in Dubrovnik in April 2019, participants took note of the initiative to further extend the Belgrade-Budapest high-speed railways to the Three Seas – Black, Adriatic and Baltic Seas.

The realisation of this project would include the participation of almost all CEEC + China + some other EU member countries. In this perspective, it may already be time to rename the present Three Seas Ports Cooperation into the Four Seas Ports Cooperation encompassing additionally Aegean Sea ports (Greece). The more so since at the Dubrovnik ECCE+ China this year Greece has been formally accepted as fully-fledged participant thus transforming this format of cooperation into 17+1.

Cooperation in investment will continue to feature high on the agenda, particularly in industry and energy sectors. In this regard, it is important to note the strict EU requirements regarding green technologies and public procurement procedures. From now on, every new cooperation agreement will have to include provisions on meeting the green development requirements.

It is generally considered that Europe lags behind China and the U.S. in developing new technologies, particularly in AI, artificial intelligence. Conscious of this, the EU starts to pay special attention and devise considerable funds in an effort to diminish the gap. The problems for the CEECs is even greater because of less developed economies, particularly of countries which remain EU candidates for an undefined period (Serbia, Montenegro, Bosnia and Herzegovina, Albania and North Macedonia).

Modernization of railways, highways, ports, power plants, bridges, logistics, implementation of “green,” digital and AI technologies rank among CEECs top priorities in the years to come. China – the country with highest achievements in new technologies, G5 and green development – has proved in practice to be a reliable and safe partner to continue cooperation with.

Serbia and China are trusted partners

Serbia has been a very active and successful participant in the 16 (17) +1 cooperation ever since its inception. This success is rooted in the long tradition of friendly relations between Serbia and China based on mutual trust, respect, and mutually beneficial bilateral and multilateral cooperation.

The two countries share common objectives in international relations, such as peace, respect of international law and UN Charter; world order based on principles of sovereign equality, territorial integrity and non-interference in internal affairs.

They support each other in international forums; Serbia supports the One-China policy and China supports One-Serbia policy with its the Autonomous Province of Kosovo and Metohija as its integral part (according to UNSCR 1244). For Serbia, it is of paramount importance to be a traditional friend and comprehensive partner of China which, for the time being, is the second strongest economy in the world, permanent member of UN Security Council and the leader in building the new inclusive governance of the world relations based on international law, particularly on the UN Charter.

China is the powerhouse of the global economic growth in the 21st century with a rising modern economy, science and technology in service of a better life. No other country in the world ever invested so much creativity and resources in the new development initiatives, new international institutions and organizations serving the wellbeing of mankind as China did (SCO, BRICS, New Development Bank, Asian Infrastructure Investment Bank).

Being the second strongest economy in the world and the first in foreign trade turnover, China contributes to the world GDP rise more than all other major economies put together (USA, EU, Japan). In cooperation with other countries of growing potentials, China plays a key role in building the new, multi-polar, open, just and inclusive World Order without domination or hegemony. China commands the strongest diplomacy, too.

Traditional friendly relations and win-win cooperation

Traditional friendly relations and win-win cooperation have been crowned by signing the joint Declaration on Comprehensive Strategic Partnership during the first state visit of President of PR of China, Xi Jinping to Serbia in 2016. This historic visit has pushed ahead intensification of cooperation in all fields from trade and investment to defence, security and people-to-people exchange. The political dialogue on the highest level is remarkably intensive.

In the first half of 2020, the President of Serbia, Aleksandar Vucic, will make his fourth visit to China on the occasion of the 17+1 Summit while the President Xi Jinping is expected to pay his second state visit to Serbia towards the end of the year.

In 2016 Chinese steel giant He Steel Co. acquired Smederevo steel factory employing 5.050 people paying € 46.7million.

Two years later, the factory became Serbia’s first exporter having exported products valued at 749 million USD. Having in mind jointly constructed bridges, railways and factories, it is logical that Serbia and China call each other “steel partners”.

At the end of 2018, one of the biggest Chinese mining company Zijin Mining bought Cupper Mining Bor Enterprise (5.000 employees) investing € 550 million immediately and accepting to invest additional €1.26 billion in the next three years. After the first year of operation under the new management, it has been announced that the Bor Mining is Zijin’s best investment among their investments in 11 other countries. With its new owner, the Bor is becoming number 1 copper mining and processing company in Europe.

Thermo Electric Plant “Kostolac B”, valued at € 1.2 billion, is in the final stage of construction by CMEC and financed by Chinese Exim Bank.

The first Chinese bridge in Europe – the “Mihajlo Pupin” (€ 260 million) over the Danube River – and 22 km of adjacent highways built by China Communications and Construction Co. (CCCC) was opened in 2016 by Chinese Prime minister Li Keqiang. Since then, through cooperation between Serbian and Chinese companies, a number of major modern bridges have been erected across Serbia, especially connected with Corridor 11 (Belgrade-South Adriatic).

In 2016, President Xi Jinping initiated the construction of the Chinese Cultural Center in Belgrade. Now the Center of 37.000 square meters, valued at € 45 million, is almost ready to be opened (Confucius Square No. 1, Belgrade). On the other hand, Serbia’s Cultural Center in Beijing has already been opened. Thus, the common care for cultural and people to people exchange is proven in practice.

Zivadin Jovanovic

Chinese companies in cooperation with Serbian partners have been intensively engaged in the construction of several strategic railways and highways:

  1. High-speed railway Belgrade-Budapest, 335km, valued about € 2.58 billion (Serbia), and has been under construction. Loans are from China and Russia. The Belgrade-Novi Sad section will be completed soon, by China Railway International, CCCC and Russian construction companies. The Dubrovnik CEECs Summit held in April 2019 noted serious interest of the participating countries in extending this railway to three Seas – Adriatic, Black and Baltic.
    Serbia is highly interested in construction (modernization) of the high-speed railway section Belgrade-Nis (Corridor E10), requiring an investment of about € 800 million. Further southern extension, Skopje (North Macedonia) – Thessaloniki-Piraeus (Greece), and also the extension of the eastern branch Nis-Sophia (Bulgaria)-Istanbul (Turkey) are extremely important for the efficient operation of the Land and Sea Express Line, drastically cutting the time and cost of transport of goods from the Mediterranean (Greek) ports, across Europe, up to the North and Baltic Seas.
  2. Corridor 11 Belgrade-South Adriatic highway, 483 km, an investment of about € 3 billion, is under construction by CCCC. Extensions to Timisoara (Romania)-Black Sea and Trans-Adriatic to Bari (Italy), is envisaged.
  3. Belgrade transit highway circuit, 69 km. with 8 bridges, including the Ostruznica Bridge 2 km over the Sava River, as well as 6 tunnels, is in the final stage of construction (CCCC). The section Surcin-Obrenovac (17,6km), including the third major Chinese-built bridge over the Sava and Kolubara rivers’ confluence (1.581 meters), has just been opened and provides a modern link between strategic European corridors E10 (Central Europe) and E11 (South Adriatic, Monte Negro, Italy). The Section Belgrade – Cacak (120 km), already functioning, was constructed by the China Bridge and Road Construction Co. (CBRC). In January 2020, an MOU was signed with China Shandong International for construction of auto-route Belgrade-Zrenjanin-Novi Sad (113 km), valued at € 600 million.

Thanks to such diverse cooperation with China, Serbia has become regional leader in construction and modernization of highways.

Chinese Investments in Serbia’s industry has been growing continuously. In addition to Smederevo He Steel and Zijin Bor Mining Co., new greenfield investments are coming. Shandong Linglong Company has just started an investment of € 990 million in the construction of Feng Shi Pneumatics factory in the town of Zrenjanin, which will employ 1200 people.

The City of Kragujevac, the traditional centre of Serbia’s car industry, has been chosen to host Yanfeng’s first factory on Europe’s soil for car-parts (interior) production. Another motor vehicle parts factory has been established in Obrenovac by Chinese “Meita” company valued at € 150 million and employing over 3.000 workers.

Regarding future cooperation, optimism based on positive experience, mutual will and pragmatism prevail.

First and foremost it is necessary to continue and finalize all the projects which have been under construction in the field of infrastructure, industry, energy production and others.

Modernizing railways and highways of the whole Corridor E10 and completing the modernization of the Land and See Express Line is, probably, top priority. Related to this are preparations for possible extensions of the Belgrade-Budapest high-speed railway to the three Seas – Adriatic, Black and Baltic. Consideration may be given to connectivity of four (instead of three) Seas by adding Aegean Sea and its Thessaloniki Port.

Further attention should be given to the Four Seas and Inland Water Ports cooperation (Tianjin Conference 2018). The Danube River with the Rajna-Maina channel connections is the most important European inland water transport line (Corridor 7). For Serbia being a land-locked country with 550 km of the Danube crossing its territory, complete modernization of this corridor, particularly the ports, is a high priority.

Chinese companies have already acquired two ports in Serbia (Smederevo and Sabac). The third one port of Kostolac adjacent to Thermo Electic Plant “Costolac B” has been financed by Chinese Exim Bank and constructed by CMEC. The fourth one will be part of the Development Technological Park in Belgrade construction of which will start soon.

Construction of the Development, Technological and Scientific Park on the Danube River close to the “Mihajlo Pupin” bridge will be the first project of the kind and size in Europe. It is one of Serbia’s priorities within 17+1 and bilateral cooperation. Preparations have been completed and construction is expected to start early 2020. Meant to be a garden of science and new technologies and show window for some other countries, the Development Park will offer opportunities for the highest education, specialization and employment for about 15.000 young people from Serbia and abroad.

From there on, digitalization, green solutions, innovations in general, will find the right way to where the need be. Another similar Industrial Park is planned in Smederevo, steel City on the Danube River. Construction of the water purification factory (€ 271 million), in Belgrade by CMEC will start this year.

The armies and police of the two countries have established direct contacts and cooperation. A contingent of the Serbian Army participated in 2015 at the parade in Beijing marking the 70th anniversary of the victory over fascism. In 2020 they will have joint Serbian-Chinese military exercises. As an indicator of the fast growth of Chinese tourists visiting Serbia, in the summer of 2019 a number of Chinese police officers had been temporarily helping Serbian colleagues in the streets of major Serbian cities by providing Chinese tourists information in their mother language.

Actively participating in CEECs+China cooperation under BRI, Serbia is accelerating its GDP growth, modernizing infrastructure, and expanding trade and employment. In 2019 Serbia’s GDP rose 4% and unemployment fell to 9.5% – that is, results ranking among the best in the region. Reinforcing comprehensive partnership with China, widening connectivity and cooperation with the other CEECs and along BRI, in general, Serbia’s international position is becoming more balanced and stronger.

Many other important initiatives and projects are in the pipeline. One is the construction of three hydropower plants on the River Drina (Buk Bijela, Foca and Paunci) on the border between Serbia and Bosnia and Herzegovina (Republica Srpska). The others are water purification factories, food production and processing, irrigation schemes.

Out of 17 CEECs, 10 participating countries are situated in the Balkans Peninsula surrounded by Adriatic, Aegean and Black Seas. Some of the ports in the region command great capacities. Some of the inland waterways link the region with North Seas across the continent (Danube-Rein-Mein).

World order change

Throughout history, the Balkan has been a natural gate of Europe to and from Asia, Indo-Pacific Region, Middle East and Africa. In addition, these countries have specific common history, culture and infrastructure connectivity. It is the birth place of European culture. In the 90es of the last century, they participated in what was called SECI – South-East Cooperation Initiative.

Therefore, while safeguarding and further reinforcing the 17 CEECs+China format of cooperation, under BRI, perhaps it may be useful to study the feasibility of the specific sub-regional approach to the Balkans as the East-West and South-Nord connectivity hub of the global BRI?

People-to-people exchanges have already gained an impressive strength. Scientific, cultural-educational institutions, associations and think tanks are contributing immensely to better understanding, mutual respect and trust.

The author of this article is heading two Serbian think tanks (The Belgrade Forum for a World of Equals and the Silk Road Connectivity Research Center-SR-COREC) which are among the founders of SRTA (the Silk Road Think Tanks Association) established 2016 in Shenzhen) and cooperating with many partners in China and world over.

Tourism is flourishing. Serbia and China have abolished tourist visas and intensified circulation of tourist information making tourism the branch of cooperation with the highest rate of growth. Yet, regional approach to organization and planning would open new possibilities.

The experience gained so far, the great opportunities and a firm conviction that the 17+1 cooperation under BRI is the proper way to build a better future will all continue to serve in synergy as the strong foundation and source of inspiration for even greater achievements in the next 10 years.

Belgrade, January 2020.

First published by “China Investments Magazine”, Beijing

Zivadin Jovanovic
Born 1938 in Serbia. Foreign Minister – the last – of the Federal Republic of Yugoslavia 1998-2000.
Wikipedia about him.
Since 2005, he has served as President of the Belgrade Forum for a World of Equals. Some other articles by the author here.

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