The Diplomat
Overview
The Belt and Road in Europe: 5 Years Later
Associated Press, Darko Vojinovic
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The Belt and Road in Europe: 5 Years Later

Europe is essential for the BRI as initially envisioned by Beijing. But what do European countries think about the initiative, five years after its launch?

By Nadège Rolland

This fall will mark the fifth anniversary of the launch of what is now called in English the Belt and Road Initiative or BRI. Five years on, the jury is still out about the BRI’s nature and actual outcomes, but Beijing’s promises of investments in infrastructure projects across Eurasia and beyond have undoubtedly managed to capture the world’s attention. The BRI’s real objectives and multilayered ambitions are still not well understood, but there’s an emerging awareness that its impact will be felt far beyond the realm of infrastructure construction. What has become very clear is the BRI’s importance for the top Chinese leadership: Now that the BRI has been enshrined in the Chinese Communist Party (CCP) Charter, and its offshoot, the “community of shared future,” has been included in the People’s Republic of China Constitution, it is harder for skeptics to continue to claim that the BRI is an empty slogan that will soon fade.

This is not to say that the BRI will necessarily succeed. Beijing is trying to play up its success, but there are also growing examples of BRI projects hitting roadblocks, and mounting suspicions that the “win-win” outcomes might not be delivered as promised. A port and airport in Sri Lanka, a railway in Laos, a bridge in the Maldives, a military base in Djibouti, and a wharf in Vanuatu have become miniatures of the larger Belt and Road story: A story of boundless ambition that includes a dream of national rejuvenation and regional dominance, propped up by propaganda campaigns, elite capture, economic leverage, sovereignty loss, unmanageable debt levels, and geostrategic schemes.

The original “Yi Dai Yi Lu” – One (continental) Belt, One (maritime) Road – stretching from China to Europe across the Eurasian continent and the Indian Ocean has expanded and morphed into multiple economic corridors and new tracks leading into Africa, the Western hemisphere, the Arctic, the South Pacific, and now even extending into outer space and cyberspace. The notional lines hastily drawn on a Xinhua map published in 2014 and since then widely reproduced worldwide by other media outlets and consulting firms may not give much of an indication of the BRI’s actual geographical scope anymore, but they still frame the domain that Beijing considers as the greatest extent of its natural sphere of influence.

The highly symbolic value of the BRI has long been lost in its English acronym, but unwrap it, and you will find what lies at the heart of both the Silk Road Economic Belt and the 21st Century Maritime Silk Road: An obvious reference to Han and Rome, two powerful and prosperous empires, exchanging merchandise, technology, and cultural traditions from one end of the continent to the other. The inclusion of Europe into the BRI is the logical consequence of Beijing’s persistent perception of Europe as China’s natural counterpart on the other end of the Eurasian landmass. Europe is not only the cradle of a great civilization but also a vast market and economic powerhouse, and, as importantly, a potential major pole within a long sought-after multipolar world that can eventually defy the American hegemon’s rule.

Europe’s response to the BRI cannot be generalized, as is always the case with Europe; 28 does not equal 1, and the European Union does not include all European nations. The picture is therefore far from unified. One common reaction among European governments was a certain amount of circumspection during the first months that followed the launch of the BRI. Back in 2014, specific details were sparse about the types of projects and financial arrangements planned by the Chinese government, or the Chinese entities that would be in charge of the BRI’s day-to-day management, not to mention Beijing’s overall motivations and objectives. Before jumping aboard the BRI train, most European countries wanted to spend some time trying to understand what it was all about in order to assess whether and how cooperating under the Belt and Road framework would serve their own national interests.

To coax and nudge them in a favorable direction, Beijing deployed its usual assortment of persuasive instruments: diplomatic meetings, high-level official visits, “track-2” dialogues, media reports, business forums, and academic conferences. Relayed and reiterated through these multiple official and semi-official channels was one key message: The BRI would usher the world into prosperity. This sounded like music to the ears of European political elites in the wake of the global financial and eurozone crises. European economies had all suffered sharp downturns and most were still struggling to find their way toward recovery. The injection of potentially large amounts of Chinese capital sounded like a proposal too good to be turned down. After initial curiosity came a wave of enthusiasm that can roughly be dated from 2014 to 2017.

Starting in 2014, China went full speed ahead in Europe and initiated dozens of projects under the BRI umbrella. Hungary and Serbia were the first to sign memoranda of understanding (MoUs) on transport infrastructure with China that year. In 2015, nine European countries signed BRI MoUs with China (six EU member states – Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Slovakia – and three non-EU members: Albania, Montenegro, and Serbia). These states were followed by Latvia in 2016, then Croatia, Bosnia and Herzegovina, and Greece in 2017. Additional agreements were signed specifically for transport-related issues, customs and financial cooperation, industry development, trade, and people-to-people exchanges. In all, 20 EU member states and 11 other European countries signed BRI-related MoUs with China between 2014 and 2017. Among them, Poland, Hungary, and Serbia were the most actively engaged under the BRI framework. 

Other European countries did not sign BRI-specific agreements but the creation of the Asian Infrastructure Investment Bank (AIIB) offered them the opportunity to show their support to Beijing’s Silk Road endeavors. After the United Kingdom publicly announced its decision to join the bank in March 2015, Germany, France, and Italy immediately followed. Eventually, 16 EU member states (Austria, Denmark, Finland, France, Germany, Iceland, Italy, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, and the United Kingdom) rushed to become founding members of the new bank, without coordination among themselves, and despite explicit U.S. concerns about the new institution. They justified their signing up as being motivated by their intention to “shape from within” the AIIB’s standards and decisions, and their determination to make sure that good governance standards would be respected.

At the EU level, China’s attempt to boost international cooperation under the BRI umbrella coincided with the announcement, at the end of 2014, of a $358 billion Investment Plan for Europe (also known as the Juncker Plan) principally focused on infrastructure construction. Chinese diplomats regularly underlined to their counterparts in Brussels the evident compatibility and overlap between the two plans, both mainly focused on improving connectivity. In addition to local transportation infrastructure development projects, Chinese government representatives pushed for deeper cooperation in areas such as telecommunications and clean energy, domains in which Europe is a global high-technology leader. The EU signed a partnership with China to develop 5G networks in September 2015.

Europe’s early enthusiasm for the BRI was evident in an interview the president of the European Commission, Jean-Claude Juncker, gave to Xinhua in May 2015. Europe, he noted, “stands to benefit from better connections with Asia’s dynamic economies” that the BRI promised to bring about. Soon after, in September 2015, China and the EU signed an agreement to establish the EU-China Connectivity Platform that would serve to promote joint cooperation on infrastructure investment and transportation services. Through the Platform, the EU sought to ensure that such investment would “rely on free, fair and undistorted competition based on regulatory convergence, a level playing field and sustainability.” As part of this effort, both parties agreed to compile a list of potential investment projects.

Nevertheless, most Chinese investments in European infrastructure occurred outside of the Connectivity Platform framework. Over a relatively short period of time, the accelerated Chinese buying spree that involved a variety of transportation projects in Europe such as highways, railroads, and port infrastructures, gave concrete shape to the BRI. Chinese state-owned enterprises (SOEs) COSCO and China Merchants obtained full or partial control over several European container terminals that together comprise 10 percent of Europe’s total port capacity (Piraeus, Valencia, Bilbao, Zeebrugge, Antwerp, Rotterdam Euromax, Kaipëda, Marseilles, and Savona-Vado Ligure) and have also showed some interest in investing in Kirkenes (Norway); Anaklia, Poti, and Batumi (Georgia); Zadar and Rijeka (Croatia); Lysekil (Sweden); Constanta (Romania); and Gdansk (Poland), among others. The development of ports was generally coupled with agreements on the construction of railways to enable the dispatch of freight inland. In addition, over 39 rail connections linking Chinese cities such as Yiwu, Chongqing, Zhengzhou, and Chengdu to European endpoints such as London, Duisburg, Amsterdam, Madrid, and Lodz became active; volumes of freight quintupled between 2013 and 2016. China’s investments in road and rail were concentrated at the eastern borders of the EU, in the Balkans and the Central and Eastern European countries, with 15 investment projects located in Albania, Belarus, Bosnia and Herzegovina, Macedonia, Montenegro, Serbia, and Turkey, amounting to a total of 7.7 billion euros. These countries constitute the necessary links that enable the BRI’s extension westward from China into Western Europe.

In addition to various European governments, several large European companies showed an increased interest in the perceived opportunities presented by the BRI. Siemens embraced the initiative and signed a dozen cooperation agreements with Chinese SOEs such as China Railway Construction Group, China National Chemical Engineering Group, and China Civil Engineering Construction Group. The development of trans-Eurasian rail freight lines and the increase of freight volume gave a new impetus to companies such as Eurotunnel and DHL, while the European shipping and logistics sector, seriously hit by post-global financial crisis sluggishness, welcomed increased traffic due to the multiplication of Belt and Road connections. The BRI was also seen as a potential boon by British financiers (financial integration is one of the “five links” that constitute the BRI) who intend to position London as “the premier global center for funding and facilitating BRI projects” and as a “natural western hub” for financing the BRI, while Lloyd’s expressed its readiness to “support the many Belt and Road projects.”

Despite rapid, ongoing progress, as BRI projects began to take shape, a number of potential risks and problems became more evident. Starting in 2017, signs of increased European skepticism and a tougher attitude toward BRI began to surface in public.

Signs that the winds were changing were already noticeable when, in order to give Xi Jinping a resounding international endorsement of the BRI’s great achievements and potential, Beijing organized the Belt and Road Forum in May 2017. The European response was, for the most part, lukewarm at best. Only six EU members sent their head of government (Poland, Hungary, Greece, Italy, Spain, and the Czech Republic); Serbia’s prime minister and Switzerland’s president also attended. France, Germany, Romania, and the U.K. were only represented by ministers or former ministers. The EU declined to formally endorse the BRI during the the forum.

For European officials, the BRI’s main defect seems to lie in its failure to abide by international standards. In his speech at the forum, European Commission Vice President Jyrki Katainen acknowledged that “China is at one end of the Belt and Road – Europe is at the other,” and that increased cross-border links could present huge opportunities – with one caveat: if it is done “the right way.” Elaborating on this provision, he listed nine principles that the BRI had so far failed to adhere to, including among others, market rules and international standards, transparency, sustainability, and interoperability. Short of adhering to these principles, he implicitly warned, the BRI would fail to fulfill its promises.

When expressing his concerns, Katainen may have had in mind one particular example that had come to light a few months earlier. The Budapest-Belgrade high-speed railway, one of China’s flagship BRI projects in Europe, is supposed to facilitate the connection between the Chinese-controlled Greek port of Piraeus and Eastern Europe. China’s Eximbank lent money to Hungary and Serbia to cover the $2.8 billion cost, but there were suspicions about the terms of the agreements that were not made public. In February 2017, the European Commission started an investigation into the project to verify if the tendering process for the Hungarian section of the line had been done in accordance with EU laws (Serbia is not a EU member; its negotiations with China do not fall under EU purview).

The toughening of the European Commission’s position on the BRI was only one manifestation of a broader concern over China’s aggressive efforts to buy up portions of Europe’s critical infrastructure and key industries. This was evident in Juncker’s annual State of the Union address in September 2017 when, in a thinly veiled reference to China, he proposed a new EU framework for investment screening. Europeans, he noted, “are not naïve free traders. (…) If a foreign, state-owned, company wants to purchase a European harbor, part of our energy infrastructure or a defense technology firm, this should only happen in transparency, with scrutiny and debate.” Juncker’s speech reflected Europe’s general growing unease about China’s investments and their impact on the long-term competitiveness of advanced industrial economies such as Germany, France, Italy, and the U.K. The “Made in China 2025” plan, China’s regular violations of intellectual property rights, and a series of high profile state-driven takeovers of European companies in strategic sectors, have prompted these countries to consider ways to better protect their economic interests in sectors such as critical infrastructure, energy, information and communication technology, transport, and finance – some but not all of them related to the BRI.

Individual EU member states have also warned that the BRI poses a threat to the broader European agenda and Western goals and ideals. In April 2018, 27 of the 28 ambassadors to Beijing (with the exception of Hungary) signed a report that denounced the BRI project as “run[ning] counter to the EU agenda for liberalizing trade and push[ing] the balance of power in favor of subsidized Chinese companies,” and accused China of exploiting the “unequal distribution of power” when engaging on a bilateral basis with European countries. Adopting a similarly cautious approach, albeit without being as overtly critical of the initiative’s problematic aspects, both French President Emmanuel Macron and British Prime Minister Theresa May declined to officially endorse the BRI during their official visits to China, respectively in January and February 2018. In his Xi’an speech, Macron alluded to the BRI’s unspoken geopolitical objectives, cautioning that the roads “cannot be those of a new hegemony, which would transform those that they cross into vassals.”

A few weeks later, addressing the Munich Security Conference, outgoing German Foreign Affairs Minister Sigmar Gabriel was more straightforward. The BRI, he noted, is “not a sentimental nod to Marco Polo but rather stands for an attempt to establish a comprehensive system to shape the world according to China’s interests. This has long since ceased to be merely a question of economics. China is developing a comprehensive systemic alternative to the Western model that, in contrast to our own, is not founded on freedom, democracy, and individual human rights.”

As Gabriel pointed out, the problem with the BRI is not only that it fails to abide by the liberal rules that the EU upholds, but also that it undermines the values that are fundamental to the European identity and constitute the glue that binds Europe together. Nowhere is this more evident than in Central, Eastern, and Southern Europe. The BRI has shrunk the geographic distance between China and Europe, not only thanks to the multiple transportation connections now available, but also through the increased Chinese presence and activity in these areas. The tempo of Chinese diplomatic, economic, and cultural interactions with these countries has intensified under the so-called “16+1” framework, which has evolved from a discussion forum at its inception in 2012 to an instrument openly claiming to support the BRI since the 2015 Suzhou summit. China’s relentless courting of EU latecomers and candidates for EU membership, buttressed by promises and actual deployment of investments under the BRI umbrella, has given it access and undue influence that is undermining both the EU’s cohesion and its norms.

After The Hague arbitral tribunal’s ruling on China’s South China Sea claims in July 2016, Hungary and Greece repeatedly blocked a strongly worded EU statement that made direct reference to Beijing. A year later, Hungary prevented the EU from signing as a bloc a letter denouncing the recurrent violation of human rights in China, and Greece blocked a joint EU statement at the UN Human Rights Council criticizing China’s human rights record. A group of countries that have benefited from China’s largesse is also resisting attempts by Germany, France, and Italy to strengthen the EU’s investment screening capability. According to a “Western European trade official” quoted by Politico, the critics of the proposal “threatened (…) that if the plan went through they would have to be compensated financially for the loss of investment they would have otherwise received. Greece explicitly mentioned China.”

The direct correlation between Chinese investments and the alignment of a number of countries with China’s political interests instead of Europe’s is becoming more visible. This fractures EU unity on major issues and further erodes the values on which the European ideal was built. It is one of many historical ironies that Eastern European countries that rejected the Iron Curtain and enthusiastically threw themselves into Europe's liberal and democratic arms after 1989 are now tempted to take a more authoritarian turn and look up to China as a model and partner.

Finally, many in Europe are not only concerned about the BRI per se, but about China’s rise more generally. Running along the same tracks as what is unfolding in other Western advanced industrial countries, Europe’s old democracies have been increasingly alarmed at China’s direction with Xi Jinping at the helm. Despite decades of engagement with Europe and other Western nations, China has become neither more liberal nor more open. Instead, the CCP has consolidated its authoritarian rule and its use of economic statecraft, restricted foreign access to China’s markets, and conducted a more aggressive and coercive foreign policy. Like their U.S., Australian, and Japanese counterparts, among others, European governments are trying to come to terms with the new reality of an authoritarian China deeply embedded in their national economies.

Of course, the story is not over.

Even if they are getting more realistic about the BRI’s problematic aspects, Berlin, Paris, London, and Brussels all want to continue to engage with China and find ways to cooperate, including within the BRI framework. Thus, during his official visit to China, French President Macron publicly expressed concerns about the initiative, but almost in the same breath, signed an MoU with China Development Bank on behalf of French institutional investors to work within the China-EU Co-investment Fund, a program established by the European Investment Fund and the Silk Road Fund specifically for “developing synergies” between the BRI and the Juncker Plan. Contrary to their counterparts in Washington, none of the European countries frames its relationship with China in terms of geopolitical competition, and least of all are they prepared at this point to articulate coherent strategies to actively counter the BRI. Rather, European countries are eager to preserve their commercial relations with China and continue to hope that Beijing’s behavior can be “shaped” by more engagement.

Perceiving Europe’s budding misgivings, China will work hard to get back into its good graces. Expect China to try to influence decisions that are more favorable to its interests by mobilizing the supporters it has nurtured over the years within the local political and business elites. There is reason to believe that China’s efforts may succeed. Playing on the EU’s greatest vulnerabilities – its openness and requirement for unanimity in making collective decisions – Beijing will continue to seek out the weakest links in order to neutralize any joint European response that runs counter its own interests. China won’t have to win over the 28; it takes only one or two (Hungary and Greece, most probably) to prevent a collective resolution. Outside of the EU framework, Beijing will continue to use its long-established tactics of dangling the promise of substantial investment and lucrative commercial deals to woo individual member states, prospective candidates, and the EU’s “partner countries” along its periphery. As a result, these countries will compete against each other to make Beijing happy in the hope they will be awarded the status of China’s preferred “gateway to Europe” along the new Silk Road.

Resisting this pressure will not be easy for Europe and the current state of the relationship with the United States, generating what seems to be an unremitting flow of alienation and hostility, will not make it any easier. In this kind of environment, China will naturally increase its efforts to dismiss Washington as unreliable and irrational, continue to portray itself unabashedly as the champion of globalization, and ramp up its narrative about its own irreversible and irresistible rise leading the way to the future. Rather than succumbing to the BRI sirens that are crooning promises of capital and investment, European governments should take action to better protect themselves from Beijing’s attempts to divide them, undermine their values, and exploit their openness for its own purposes.

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The Authors

Nadège Rolland is Senior Fellow for Political and Security Affairs at NBR and the author of China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative (2017).

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