No matter how deep and strong the relationship a country’s government shares with another nation, it is not necessary for the people of that country to have the same sentiment and feeling towards that nation. This is what several Balkan countries, including Serbia, Montenegro and North Macedonia have learnt the hard way over several years.
In Serbia, a landlocked country in the west-central Balkans, people have taken to the streets for more than a month to protest against the government, its corruption and a China-led project which led to the death of 15 people and injuries to several others, while leaving three people, aged between 18 to 24, fighting for their lives.
On November 1, an outdoor canopy of a railway station in Serbia’s Novi Sad collapsed, months after the completion of a three-year renovation of the station by China under its ambitious Belt and Road Initiative. China Railway International Co (CRIC) and China Communication Co. (CCC), involved in the modernisation of Serbia’s railway infrastructure, were reportedly behind the construction of the outdoor canopy of the Novi Sad railway station.
The incident has drawn Serbian nationals’ attention towards opaque and corrupt practices of Chinese firms. It has also cast a shadow on the country’s President Aleksander Vucic’s administration for allowing Beijing to develop the Baltic nation’s rail project under the East Asian country’s BRI. The incident is not only a domestic crisis but also a “potential blemish” on China’s ambitious BRI, Nikkei Asia said.
In the western Balkan region, countries like Serbia, Albania, Bosnia, Kosovo and Herzegovina, Montenegro and North Macedonia have attracted a sizable amount of Chinese investment for their various projects. Serbia has lured billions of dollars from China, mostly in the form of loans for BRI-led infrastructure and energy projects. Straddling between Europe and Asia, it has secured around $7 billion investment from China, and of this, $2.2 billion investment has been attracted in January 2024 for renewable energy projects.
Though almost all China-led 21 projects in Serbia have been found to be in the thick of controversy, it is the railway project, as per media reports, which is currently generating storms in the country. For example, the 2021 construction agreement for the reconstruction of railway infrastructure from Novi Sad to the Hungarian border talks about the “reconstruction, adaptation, and extension” of the building of the railway station in Serbia’s second city, without mentioning categorically which parts of the building would be affected, BalkanInsight.com, an English language news portal published from across Balkan states in Europe, said.
China is also involved in a project that incorporates connecting Serbia by rail with Greece’s Thessaloniki Port and Budapest, the Hungarian capital. It is being constructed under the BRI scheme and as such, the Novi Sad railway incident has cast shadow on Beijing-led ambitious initiative and opacity and corruption involved in its execution. Till July, 2023, total investment by China under its BRI crossed $1 trillion. In the western Balkan region, which has witnessed a significant expansion of Chinese influence over the past decade, Beijing has invested from 2013 to 2023 around $32 billion in about 122 projects, according to Balkan Investigative Reporting Network data.
Most of these Chinese investments have not been actual FDI, rather loans provided under high interest rates by China’s Exim Bank, the Silk Road Fund, and financial vehicles. These investments in the region are mainly in infrastructure, energy, and communication technology.
But only few projects have been concluded, while most have been delayed, some have stalled, and others, given the lack of transparency and corruption involved, are shorn of any information about their status, BalkanInsight.com said.
This incongruity in China-led BRI is more shocking in the case of Montenegro. A decade ago, Montenegro, which became the first European country to be a part of Beijing-led BRI, gave a green signal to China Road and Bridge Corporation for the development of the Bar-Boljare highway, which links the Port of Bar in the Adriatic Sea with Serbia.
Conceived and planned in 2013, the 165 km Bar-Boljare highway could have become a showpiece of China’s quality road construction work. Financed by China’s Exim Bank, however, only 41 out of 165 km of this highway has been completed—all this at the cost of $20 million per km, making it one of the most expensive highways per km in the world.
It has raised questions about the financial feasibility of the project and the unsustainable debt associated with it as it has contributed to Montenegro’s sovereign debt rising to 103% of the GDP. According to the 2023 US State Department report, Montenegro has one of the highest public debt-to-GDP ratios in the Balkan region.
Similarly, a storm is brewing over Bosnia and Herzegovina’s 40 km long Banja Luka-Prijedor highway. In 2018, a contract for building the highway was awarded to China-backed Shandong Hi-Speed International (SDHS). The 297 million euros highway project has kicked up controversy—first, due to hush-hush manner in which the contract was signed with Shandong Hi-Speed International and second, permission given to the Chinese company to collect tolls on the highway for 30 years, from which it is expected to generate revenues of 30 million euros per year.
If there is not enough vehicular traffic on the highway, the Bosnia and Herzegovina government has committed to pay the differential to the Chinese company from the entity budget. Given this, in the past two years, political parties as well as common people in Bosnia and Herzegovina have lodged several protests against this project for its being unviable and financially unsustainable. Interestingly, details of the contract over the highway project have not yet been published because it has been made a classified item due to alleged Chinese pressure, Sarajevo Times said.
However, for North Macedonia, it has become untenable to mitigate debt from China. It borrowed more than $800 million from China’s Exim Bank for the construction of the Miladinovci-Shtip highway and the Kichevo-Ohrid highway.
While the Miladinovci-Shtip highway was completed in August 2020, the Kichevo-Ohrid highway has not yet been completed even as 10 years have passed since Chinese company Sinohydro got the award to construct the highway.
It is feared that the construction cost of the Kichevo-Ohrid highway would now rise to $1.2 billion—if interest payments are included. Plethora of corruption allegations have been levelled against the highway project. Besides, on account of delay in completing the Kichevo-Ohrid highway, it is becoming unsustainable for the cash-strapped North Macedonia.
Overall, North Macedonia is on the verge of becoming yet another Balkan country to find itself in the trap of China’s huge debt because of its blind move to have infrastructure built up with money financed through the Beijing-backed BRI. But then, more than month-long protests in Serbia have signalled that people are now no more indifferent to corruption and exploitation that China’s BRI projects are loaded with. Voice of discontent has also started rattling other Balkan countries against Beijing for thrusting unsustainable projects on them in the name of development assistance.
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