By Cheryl Tull
Outside of Podgorica, the capital of Montenegro, lies the beginning of a highway. The road — a 25-mile section of a proposed 270-mile highway that would run from Montenegro's Port of Bar on the Adriatic Sea to Belgrade, the capital of neighboring Serbia, was achieved in part with a $1 billion loan from the Chinese government. Additionally, the road is being built by Chinese workers employed by a Chinese company, which shows how much China is involved with this project. The only problem is that neither road nor bridge has actually been paid for yet. The terms of the loan are so harsh and burdensome that the Montenegrin government has been scrambling to find a way to arrange an easier payment schedule with Chinese creditors. Whatsmore, former Justice Minister Dragan Soc commented recently that once completed, the road won't lead anywhere anyway: "We make a joke: It is a highway from nothing to nothing”. This story is one of many throughout the Balkan countries. It involves the collision of China’s Belt and Road Initiative, the constant struggle to catch up to more developed countries, and the power of money and infrastructure.
Chinese investment in the Balkans really started significantly in the last decade thanks to the Belt and Road Initiative. The BRI, for short, is a foreign policy and strategic goal comprising the connection, coordination, and integration of countries in Africa, Asia, and Europe. It was unveiled by Xi Jinping in 2013 and is considered the centerpiece of his administration. The BRI’s influence has been seen in a variety of forms from the construction of ports, railways, and roads to risk mitigation tools and investment loans. Xi’s goal is to invoke the fabled Silk Road which connected the West and East while simultaneously continuing to cement China’s position on the world stage. As a result of this ambitious agenda and its continued economic growth, China wields a much larger amount of political and economic influence in the Balkan states than it did previously.
Within the last decade, Chinese firms have committed $2.4 billion in net foreign direct investment to the ‘Western Balkan Six’ – Albania, Bosnia-Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia – according to their central banks, along with $6.8 billion in infrastructure loan commitments, although this is less than what the recipients initially envisioned. Besides infrastructure and financial investments, China has also been flexing its soft power as well. A 2021 brief from the Foreign Affairs Committee found that China has established seven Confucius Institutes in the Western Balkans. Confucius Institutes are Chinese-state-funded institutions whose stated goal is to spread Chinese culture and language, a clear example of how China intends to try and carve a space for itself in this region. The biggest state by far to have thus benefited from China has been Serbia, whose president described his country’s relationship with China as one of “steel” after China bought out Serbia’s main copper and steel mines, key industries in Serbia’s economy.
However, China’s generosity isn’t without its side effects. Chinese loans are given out with few explicit conditions, which means that in countries with corrupt or non-transparent governance, elites can quickly and easily rack up millions of dollars in debt to China and its government. Besides the $1 billion already owed by Montenegro’s government, Serbia is projected in 20 years to hold more than $7.9 billion in Chinese loans. When you combine that overwhelming debt with China's control of much of Serbia’s infrastructure and key industries, it becomes a perfect storm of “debt-trap diplomacy”. In fact, critics have pointed out that if the Balkan countries fail to repay the loans, China can request political favors or exercise unfavorable contractual clauses such as the seizure of assets or even land/territory. This is not only a clear violation of these states’ sovereignty but a blatant attempt to turn them into quasi-puppet states.
This is important to the U.S. because China’s policies of attraction and investment in these countries will, if left unchecked, begin to cultivate a base of support that China can use to help justify its actions at home and abroad, such as its constant standoff with Taiwan. Vladimir Shopov points out that China’s involvement in the Western Balkans increasingly seems to have a self-reinforcing dynamic, as local actors’ engagement with the country is now maturing based on a clear structure of varying, wide-ranging incentives linked to status, career opportunities, and material gains. China intends to cultivate friendly relationships with enough developing states in order to emerge as a stronger source of authority and respect than the U.S. Considering that the current international order was built using America’s position of hegemony following the end of the Cold War, this represents a profound threat to America’s interests and its goals across the world.
To fix this, I advise three policy recommendations. These can and should be used in combination with one another in order to achieve the best possible results for American policymakers and the administration. The first of these is political, involving both the U.S. and the EU. The problem right now is that states in the Balkans feel as though they have been ignored by both the two powers and as a result, they are looking for countries that will stand up for them and help them succeed. Such an example of this can be seen in March 2020, when the president of Serbia, Aleksandar Vučić, declared that Serbia would turn to China due to the EU failing to provide his country with financial and medical assistance to help limit the spread of COVID-19. Indeed, Vučić called China “the only one who can help”, and when doctors arrived in Belgrade from Beijing, Vučić kissed the Chinese flag.
Although this is one isolated case of a leader theatrically declaring his disapproval of the EU, the real fact is that the EU is closer to these countries geographically, culturally, and historically. Indeed, the Balkans are European countries at heart, and the EU is the best possible institution to help solve their problems and guide them. Therefore it can and should offer more financial reinforcement and investment to them for both pragmatic reasons and for the ideals of pan-Europeanism that form the guiding principles of the EU. Combine this with possibly shortening or modifying the accession process, and the EU could give hope to these countries that they do not have to ruin themselves by running to China for cash. Admittedly, the EU is facing its own set of challenges and can’t always attend to the Balkans, and that’s where the U.S. steps in. One possibility would be to travel to these states and at the very least make the U.S.’s presence felt again by the people and leaders of these countries so that they know the U.S. is still committed to prosperity within their countries and in the region at large.
This leads to the next recommendation, economics. Chinese loans, as previously shown, are so attractive that the political elites of these countries are willing to run headlong at them without any consideration for what that might do to their countries’ economies or peoples. In fact, going back to the example with Montenegro, there is now major exasperation and frustration with the prior administration for making such a risky deal. "We are now [a] victim of the extremely bad decision of the former government," said Deputy Prime Minister Dritan Abazovic to Euronews this spring. To counteract this rash behavior, the U.S. and EU could sponsor the exchange of financial advisors to help serve these governments by advising them on what the loans entail and the possible consequences of being unable to pay them.
In addition, the U.S. should use its resources to increase awareness among Balkan peoples so that they better understand what exactly their governments might be getting them into and if necessary, forcing them to stop. Half of the problem with this kind of deal is that the government is corrupt enough to hide it from the people, leaving the consequences for them when they least expect it. This awareness can take the form of grants to expand the free press within the countries so that they may be allowed to give the full truth of what is happening without fearing government retribution. In this way, the U.S. and the EU can help to posit themselves as an alternative to China, one that will not rob them of their resources or industries and chain them financially.
Finally, the U.S. must increase the social reputation of democracy among the Balkan countries by emphasizing its values, namely liberty, freedom, and pluralism. This can be done by opening up and sponsoring non-profit, non-aligned institutes that can provide a fair and balanced viewpoint, unlike the Confucius Institutes which only dictate the autocratic method of Beijing. In this way, the U.S. and EU can nurture citizens of the Balkans states to help develop better ideas for improving their countries without succumbing to the temptations of blindly following one country or another. This also helps because it creates spaces for criticism and debate, something that isn’t always received well in certain Balkan countries and certainly not in China. By doing this, the US can help show the Balkans that democracy has its advantages and increase the EU’s and its own soft power there.
In conclusion, while China is digging deep roots into the Balkans, they are not unbreakable. Ultimately the Balkan countries are in the same position as many others worldwide, just aiming to develop and compete on the world stage. The U.S. does not suddenly have to become a sentinel in the region or hyper-fixate on it, but by taking steps to offer support to the Balkans while working with institutions and organizations like the EU and others, it can uphold the values of fairness and liberty that promote better governance in those countries. It will be a long time before we may see tangible evidence of this, but if the U.S. wants to maintain a foothold in the region, it must act soon.
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