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China and 16 countries of Central and Eastern Europe (the so-called 16 + 1 group) meet in Sofia, the Bulgarian capital, to discuss possibilities for future cooperation. According to what was agreed at the summit, the meeting could have profound implications for the European Union as a whole. 11 of the 16 countries in Central and Eastern Europe are EU Member States, while the other five are Western Balkan countries that hope to eventually join the bloc.
The 16 + 1 forum has been used in the past to promote Chinese interests in European institutions, such as the watering down of a 2016 EU declaration on the rampant militarization of China in the South China Sea. At a time when EU divisions on issues such as migration are already visible, the Sofia conference risks sowing discord.
China has already shed significant liquidity in the 16 + 1 countries, particularly in the Balkan region, where public finances remain unstable. Beijing has conquered the public with investments such as the purchase of the only steel mill in Serbia, which has saved jobs in a struggling industry. Despite an investigation by the European Commission, China is still considering building a high-speed train linking the Serbian capital Belgrade to the Hungarian capital Budapest. While Balkan EU accession negotiations drag on, Beijing funding could prove particularly attractive.
The summit will also presumably include the announcement of grand new plans for Chinese investments in the countries of Central and Eastern Europe, fitting perfectly into the bewildering scheme that has been dubbed "trap diplomacy" "China offers cheap loans and easy to obtain. fund infrastructure projects around the world, sometimes for projects that have been rejected by other international lenders. Many countries desperately need financing – but the problem comes when, by baduming huge Chinese debts, governments are endangering vital resources and their economic sovereignty. The agreements often require borrowers to enter into contracts with Chinese-led companies, and the resulting infrastructure projects tend to exceed deadlines and budgets.
So why are European nations courting Beijing? It turns out that Chinese investment in infrastructure is still considered a source of capital rather exotic in some neighborhoods. Not only is capital more readily available in Europe than in developing countries, but China is generally active there, but European sources of capital offer very competitive conditions. This means that EU Member States have only limited experience working with Beijing and are unaware of the risks that could arise from the "debt trap diplomacy" of the Middle East. Empire
. It is worth remembering that Chinese investment has a bad long-term reputation in most countries where Beijing is allowed to develop strategic projects.
Look at Sri Lanka: When the country said that it was unable to repay its debt for a port project, China demanded control of the infrastructure that it financed. In some extreme situations, Chinese debt collectors demand more than just infrastructure: in 2011, Tajikistan effectively sold part of its territory to China in exchange for the cancellation of part of its debt .
More and more countries could be left to China as a result of the Belt and Road Initiative (BRI), China's vast plan to finance a network of railways, shipping lanes and shipping companies. Oil pipelines in Asia, Africa and the Middle East. and Europe.
A recent report by the Center for Global Development, a US think tank, found that Djibouti, Pakistan, Kyrgyzstan, Tajikistan, Laos, Maldives, Mongolia and Montenegro were particularly at risk of debt distress . . The temptation to accept "easy liquidity" from China puts these countries in danger of incurring unbearable financial burdens and, ultimately, to confer economic and political influence on China.
Among the eight countries mentioned in the report, Djibouti has become particularly dependent on Chinese investment. Djibouti is ruled since 1999 by the highly autocratic Ismail man Omar Guelleh, who is not beholden to democratic controls and is therefore free to accumulate $ 1.2 billion in debt in Beijing, which is almost equivalent to the total annual economic output of the country. China has "given" to Djibouti new shopping centers, airports, an electric train for Ethiopia and its only military base abroad, a mbadive fortress that can accommodate up to 10,000 soldiers . Earlier this year, Djibouti sparked a legal dispute with the UAE by forcibly nationalizing Dubai World's owner Doraleh container terminal, and there are rumors that the key port will be delivered to China.
Developing countries like Djibouti have easily fallen into this debt trap because of the severity of their infrastructure needs that Chinese money can bring, but the risk is clearly not limited to emerging economies. As a result, concern over the risky diplomacy of Chinese checkbooks is now spreading to Brussels, where leaders are debating whether the European Union can reap the economic benefits of investing Chinese without leaving the natural and strategic badets of Europe exposed
.
Indeed, Chinese investments in sensitive areas such as energy, transport, telecoms and high-tech industries can pose serious security problems if the debts turn sour, which worries the most. European leaders. State-backed Chinese entities are helping to finance the development of the Hinkley Point nuclear power plant in the UK and have made big moves in Portugal, buying back stakes in the EDP energy company and l & # 39; REN network operator
Europe is slowly waking up to the need to reduce – or at least regulate – this influx of Chinese funds. Last year, the President of the European Commission, Jean-Claude Juncker, unveiled plans to create a new control framework to review foreign investment agreements. It is Europe's responsibility, said Mr Juncker, to ensure that these agreements are transparent and subject to thorough scrutiny and debate. Juncker's proposal, strongly backed by France, Italy and Germany, would allow member states to raise security issues regarding high-level foreign investment, but it is unclear whether it will be enough strong to prevent China from imposing dangerously on Europe. ]
While Europe has long valued the free flow of capital and many member states will be reluctant to restrict the jobs and growth promised by Chinese investment, one thing is clear: Europe must act to prevent its sovereignty from being eroded Chinese debt.
Tags: China, European Commission, European Union, featured, image, political
Category : A FrontPage, China, Economy, Politics
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