Illustration: Peter C. Espina/GT
According to recent media reports, the European Union (EU) is investigating a China-funded rail project which aims to link the Serbian capital of Belgrade with Hungary's capital,Budapest. China will undoubtedly integrate cooperation with the Central and Eastern European Countries (CEECs) into the broader framework of China-EU infrastructure ties and comply with EU regulations. But we also hope that the EU will handle the issue fairly and remain farsighted. They should put the interests of the people first and seek cooperation with China that will bring tangible benefits to Hungarians and other Europeans instead of following bureaucratic instincts. China and the EU should also work together to find a model for infrastructure cooperation acceptable to both sides and avoid sowing distrust in the future.
The Financial Times reported on Monday that the EU was assessing the financial viability of the railway and looking into whether the project would breach the EU laws that require public tenders for large transport projects. The $2.89 billion project to modernize the Budapest-Belgrade railway was announced in 2013 and will serve as a European example of China's One Belt, One Road initiative and will link both EU member countries and non-EU countries. Both Serbia and Hungary have been ready for construction to commence.
Speaking of investigations, given that Hungary is an EU member, the project must comply with EU regulations. This is by no means new. Previously, the Hinkley Point C nuclear power project in the UK was given the go-ahead after it passed the European Commission's review. But the railway project also involves Serbia, which is a non-EU member. The question is how much EU rules can govern cooperation between EU and non-EU members. The EU is experiencing a tough time and may seek to assert its authority by ramping up inspections and reviews, but the EU may have hit a dead end. It is unknown whose interest the EU's investigation represents. From the perspective of Serbia and Hungary, the project should be given the green light if it is feasible and can benefit both countries. But the EU needs to defend its authority and assert its power. It is unclear whether the need for pragmatism in getting the project done will outweigh the need for the EU to preserve its authority.
China always hopes to cooperate with the EU in infrastructure projects which remain an investment priority for the EU. But the EU is torn between the actual need for funds and construction cooperation with China, and the fear of China's growing influence due to its involvement. The EU may attempt to create some trouble for China through review proceedings or may not want to award the best projects to China at all but leave them to EU contractors.
To qualify for construction projects, Chinese contractors should familiarize themselves with EU laws and rules. There are lessons to be learned from the unsuccessful attempt by the China Overseas Engineering Group (Covec) to break into the EU infrastructure construction market several years ago. Covec was awarded a contract to build a 50-kilometer highway between Warsaw and the German border in 2009 but the contract was later aborted after Covec ran into financial difficulties due to its lack of familiarity with the local market and incompliance with the rules. We need to learn from that example and be transparent and clean when dealing with local partners. Otherwise, any malpractice may tarnish China's reputation.
On the political level, China should actively engage in talks with all parties involved. Given the railway project involves both Serbian and Hungarian governments, it is necessary for China to communicate with its counterparts. As long as some ground rules are laid out, it will be easier for Chinese contractors to improve their practice. Meanwhile, China should also communicate with the EU and convince the EU of the potential in engaging with China in infrastructure projects. For the EU, it is practical to seek funds from China in order to create more jobs and boost GDP growth. What benefits could China get from these projects? This is also a question both parties should consider. With the Budapest-Belgrade railway as a starting point, China and the EU should communicate efficiently and seek to find a feasible model for infrastructure cooperation in order to avoid misunderstanding and conflicts.
The author is director of the Department of European Studies, China Institute of International Studies. email@example.com