The Budapest-Belgrade-Skopje-Athens high-speed rail is part of the Belt and Road Initiative (BRI) initiated by the People’s Republic of China, that is, the European part of this large geostrategic project, while the second is the railway line Singapore-Kunming Rail Link (SKRL) on Asian soil. The Belt and Road Initiative began to be implemented 11 years ago, and to this day it “drags” with it the dilemmas of whether, in addition to economic needs, it also brings a major geopolitical breakthrough for China in Europe and Southeast Asia
Author: Stojan Sinadinov
One of the first fascinations with technological progress, recorded with the camera of the brothers Auguste and Louis Lumière, is the train: “Arrival of a Train at La Ciotat” from 1896, the title of one of the first shots in the history of cinema in general. When the Lumière brothers first presented this footage in front of an audience, some of the viewers ran out of the room (mostly restaurants or fairground tents) in panic, thinking that the train filmed in close-up was really rushing towards them and going to run them over…
As technological progress constantly rushes towards more and more achievements, so do the expectations placed upon it. Recently, we have witnessed the great fascination of the political elites from the countries along Corridor X with the Budapest-Belgrade-Skopje-Thessaloniki-Athens high speed railway and the intensive campaign for its realization.
Does the Belt and Road Initiative have a lifeline?
The new government coalition in North Macedonia emphasizes that project, even to the detriment of other geostrategic projects, such as Corridor VIII and the railway connection between Skopje and Sofia.
The journey between Skopje and Belgrade will be 2 hours and 15 minutes, this will mean that the journey between Skopje and Thessaloniki will be somewhere between an hour and 20 minutes to an hour and 30 minutes. This will mean that it will take 4 hours to travel from Skopje to Budapest, that will mean that Skopje—Athens will be traveled for 6 hours, which will be a complete opening of Macedonia, said Nikoloski during the official two-day visit to Belgrade (September 4, 2024), while the video is on his Facebook profile.
At the recent meeting (October 7, 2024) in Skopje between the prime ministers of N.Macedonia and Serbia, Hristijan Mickoski and Miloš Vučević, the media noticed a considerable insufficiency around the issues of European integration of the two countries, at the expense of topics such as high-speed rail and gas pipeline:
It is a very important issue for Serbia to hear the strategic decision of Skopje regarding the railway Corridor X. I believe that it is the interest of both North Macedonia and Serbia to connect by a high-speed rail, said Prime Minister of Serbia Miloš Vučević. The answer that Miloš Vučević heard in Skopje is that a strategic determination of this government led by VMRO-DPMNE is the construction of this railway, as well as the interconnector that should connect the country with the gas that will be delivered to Greek Alexandropuli (Voice of America).
And while Mickoski leaves—or rather, places the fate of the Corridor VIII rail line in the lap of Brussels, he grabs the high-speed rail with both hands.
The Budapest-Belgrade-Skopje-Athens high-speed rail is part of the the Belt and Road Initiative (BRI) initiated by the People’s Republic of China, that is, the European part of this large geostrategic project, while the second is the railway line Singapore-Kunming Rail Link (SKRL) on Asian soil. The Belt and Road Initiative began to be implemented 11 years ago, formatted as “17+1” (China+16 post-communist countries from Central, Eastern and Southeastern Europe, including North Macedonia + Greece), then it was reduced to the format “14+1,” because the Baltic countries left this initiative, and the Russian invasion of Ukraine greatly affects the geopolitical order in Europe. However, to this day, it “drags” with it the dilemmas of whether, in addition to economic needs, it also brings a major geopolitical breakthrough for China in Europe and Southeast Asia?
The Balkans, with its geostrategic position on the EU-China pathway, is one of the core regions in the design of the One Belt One Road initiative. Within the Balkan countries, considered in the broadest possible sense, the Western Balkans can be singled out as a sub-region from a political point of view — Western Balkan (WB) countries are not EU Member States, but also from an economic point of view — they are generally poorer countries when compared to the others (Greece, Croatia, Slovenia, Bulgaria and Romania), with an average GDP per capita amounting to only 1/3 from the EU’s average…, reports the analysis of CRPM —Center for Research and Policy Making.
The multinational consortium of experts who provide an informed analysis on the rising influence of the People’s Republic of China within the countries of Central and Eastern Europe (CEE), China Observers in Central and Eastern Europe (CHOICE), believes the implementation of high-speed rails in the “Belt and Road” projects so far on European and Asian soil has resulted in a discrepancy between initial ambitions and actual results.
Since the initiatives in Southeast Europe and Southeast Asia share many similarities, a comparative examination can tell us more about the BRI, its modus operandi, and its effectiveness when it comes to high-speed rail development, says in the analysis of CHOICE (the acronym of the think tank has no accidental allusion).
Incompatibility with European norms in railway infrastructure
Efficiency is not the strongest dimension in the realization of this project. It seems that the reason for the standstill lies in the incompatibility of European standards and Chinese technology, which also led to major disagreements between Hungary and China and strained diplomatic relations last year. Chinese constructors do not know how to make a safety system on the railway line according to European standards, which is why the project for the Belgrade—Budapest high-speed rail was stopped by the EU this year.
In Hungary, the upgrade of train tracks on the Budapest-Belgrade section, financed by China through loans from the state-owned Chinese Export Investment Bank is anticipated to conclude by 2025 after a 12-year construction period. Nevertheless, the pursuit of this objective has been cast into doubt as construction has come to a halt. The latest hurdle is the failure of Hungarian and Chinese companies to adhere to European standards potentially resulting in a significant additional delay, the analysis reads.
Asking the question whether there is a Chinese strategy for the Western Balkans, the Konrad Adenauer Foundation in its research published in 2019 points out that China is present in the Republic of North Macedonia mainly with projects in the public sector, including public contracts and development aid (grants and preferential loans).
Most of the contracts are concluded by Chinese state bodies, the presence of private companies is relatively rare. This approach largely fits with China’s traditional inclinations to work with state officials rather than NGO’s or businesses. It also reflects a domestic regime where the state (or party-state, since the lines between the two are blurred) is omnipresent and regulates all aspects of international interactions. North Macedonia is a beneficiary of Chinese financial resources in the form of loans from Chinese state banks and development cooperation. It was the first country of the 17+1 platform to use the 10 billion USD credit line for infrastructure projects. In addition, it is the first European country where China implemented the development cooperation model already tested in Asia and Africa through the full financing and construction of a primary school (“Rajko Žinzifov” in Kisela Voda Municipality). According to Chinese procedures, all projects implemented with Chinese funds must be implemented by a Chinese, usually state-owned enterprise. The contractor may be directly appointed by the Chinese government, as was the case with CVE for the construction of the Kozjak hydroelectric plant; or chosen by the Macedonian authorities among several companies preselected by the Chinese institutions, such as Sinohydro for the construction of the Kichevo-Ohrid and Miladinovci-Shtip highways, according to the research.
The research highlights that China needs friends when adopting documents in the EU Council, especially when it comes to the Common Foreign and Security Policy.
Experience shows that countries which have very intensive cooperation with China, such as Hungary or Greece, are crucial for blocking documents that express critical positions towards China (Euractive, 2016). Thus, more allies in the forum where decisions are made unanimously would mean less criticism of China on sensitive issues, such as its policies towards Xinjiang, Tibet, Hong Kong, Taiwan, the South China Sea, etc., states one of the conclusions of the research.
The technology of debt slavery
A key economic tool in the realization of these infrastructural undertakings are the loans of the countries of the Belt and Road Initiative taken by the Export-Import Bank of China. However, those loans in the past years, with which other projects should be (should have been) implemented, turned out to be almost an introductory episode in “debt slavery.”
The Montenegrin and Macedonian loan agreements from China are almost identical in terms of amount, interest rates and repayment terms. The amount of the credit arrangement for the highway in Montenegro is 944 million dollars. The Macedonian authorities borrowed a total of 963 million US dollars on two occasions. This amount is the total amount specified in the laws, by which North Macedonia as a state guarantees the performance of the obligations from the loan agreement with the “EXIM” bank. It should be noted that not all funds provided by the loans have been withdrawn and used. Mainly due to the fact that the deadline for the completion of the Kicevo—Ohrid highway is constantly being postponed. Instead of being completed within the stipulated time in 2018, after six annexes to the agreement that were voted in the North Macedonian Assembly, the deadline for the completion of the construction work has been extended until December 31, 2026, says the research of ResPublica.
This research states that as of March 31, 2024, the debt of North Macedonia toward the Chinese bank “EXIM” amounts to 481.09 million euros: for the built Miladinovci—Shtip highway, the country owes China 132.04 million euros, and for the Kichevo—Ohrid highway, the debt amounts to 349.05 million euros.
The overall external debt of North Macedonia to China is 8.7% of the total external public debt and 3% of the country’s gross domestic product (GDP), lists the research of the Konrad Adenauer Foundation.
To complete the mosaic, it is worth recalling the point of the recent visit of Hungarian Prime Minister Viktor Orbán to North Macedonia and the meeting with his host, Prime Minister Mickoski—it expresses the interests of Hungary, “China’s best friend in the EU and NATO,” for a high-speed rail connection with the port of Athens. How is Hungary handling its share of the high-speed rail?
The renovation of the Hungarian section of the railway is the most expensive Hungarian railway investment of all time. The original budget of 400 billion forints (about 1 billion euros, [Editor’s Note]), was already estimated at 750 billion forints at the beginning of the project. It is almost certain that the final price will be even higher, despite the fact that the renovation will be carried out on a flat section. In addition, most of the renovation costs, 85% will have to be financed with a Chinese loan, Index reports.
We also need to mention the “reminder” we received from strategic partners, that Skopje cannot change the transport policies of Brussels and not build the railway line to Sofia.
Contrary to Mickoski’s assurance that the EU partners understood and accepted his arguments for the railway to Bulgaria, the Special German Representative for the Countries of the Western Balkans, Manuel Sarrazin, recently said that Skopje cannot change the transport policies of Brussels. He warned that the new government of North Macedonia has lost interest in the construction of Corridor VIII and gives priority to Corridor X. According to him, the European transport Corridor X is of strategic importance for the region.
The research of the Institute for Democracy “Societas Civilis”—Skopje (IDSCS) under the significant title: “Plunged into a dead end: The misguided faith in Chinese corrosive capital for the construction of highways in North Macedonia,” published in 2020, is a completely clear and comprehensive chronicle of how Beijing managed to effectively channel its corrosive capital into North Macedonia by exploiting its governance gaps.
Corrosive capital coming from China, in the form of uncompetitive loan conditions set by Chinese state-owned banks, poses a threat to democratically established institutions and the market economy. This also raises serious questions about the resistance of the authorities in North Macedonia to corruption and their willingness to ignore the rule of law and execute projects of this kind in a non-transparent and non-inclusive manner. It seems that China’s way of working is reversed from the political and economic model and freethinking values that North Macedonia strives to achieve through its alliances (NATO) and future membership in the EU, the conclusions of this research state.
Indeed, people have long ceased to feel fear at the sight of a speeding train approaching, whether at a real train station or on a movie screen or TV. But how scared should the countries along Corridor X be of the Chinese investment “train” and its modalities in light of the geopolitical environment?
