EU-China Relations: Emerging Europe starts to question wisdom of Chinese-funded infrastructure projects - by Tamara Karelidze

A number of emerging Europe countries which have agreed big money infrastructure deals with China are beginning to reconsider their options. Members of the so-called 16+1 group, which includes 11 European Union member states (Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) and five Western Balkans nations (Albania, Bosnia, Macedonia, Montenegro, Serbia) are increasingly concerned at what they see failed Chinese promises and unacceptable conditions placed on finance.

The 16+1 group was set up in 2012 by China as a means to attract Chinese investment in infrastructure – mainly roads and rail networks – and to boost their economies. Many countries initially viewed the investment as having far fewer strings (and requiring less transparency) than European Union money. A major new report by Bloomberg suggests that they were wrong, and that alternatives, such as the European Bank for Reconstruction and Development (EBRD) may be better.

“Some of those projects that have materialised with Chinese help have attracted unwelcome attention. Mounting costs for a highway development in Montenegro prompted the Washington-based Center for Global Development to single out the country as ‘at particular risk of debt distress,’ while the tender for an as-yet unfinished high-speed rail link between Budapest and Belgrade prompted an EU commission probe,” writes Bloomberg.

“Some feeling of unease about the whole scheme has been brewing for some time,” said Jan Weidenfeld, head of European affairs for the Mercator Institute for China Studies in Berlin, told Bloomberg. The conditions attached to projects are seen by 16+1 members as similar to those offered to African states, meaning that some countries “even feel insulted,” he said. “The package just isn’t quite as attractive as China would make believe it is.”

Not that China’s much-hyped Belt and Road Initiative (BRI), which calls for massive investment in and development of trade routes, has been without trouble in Africa. Just this week Sierra Leone scrapped plans to build a China-funded 318-million US dollar airport outside the capital, Freetown. This is the first instance of an African country announcing the cancellation of a China One Belt One Road project. Both the World Bank and the International Monetary Fund had warned that the project could place an unnecessary debt burden to Sierra Leone.

Read more: Emerging Europe starts to question wisdom of Chinese-funded infrastructure projects - Emerging Europe

EU-Ukraine: EU tells Russia to withdraw but Europe's approach at odds with the United States.

Ukraine: EU Wants Diplomatic Sollution

European Union foreign ministers held out the threat of sanctions against Russia on Monday if Moscow fails to withdraw its troops from Ukraine, while offering to mediate between the two, alongside other international bodies.

At talks on the Ukraine crisis in Brussels, they agreed no deadlines or details about any punitive measures that could be put in place against Russia, but leaders of the bloc's 28 nations will hold an emergency summit on Thursday and could take further decisions.

The EU discussions were convened abruptly after Russian President Vladimir Putin seized the Crimean peninsula and said he had the right to invade Ukraine.

"We need to see a return to barracks by those troops that have currently moved (from) where they have been staying," the EU's foreign policy chief Catherine Ashton told reporters after the foreign ministers' meeting in Brussels.

"There are serious concerns about overflights, about reports of troops and armed personnel moving."
In Monday's talks, EU governments sought to strike a balance between pressuring Moscow and finding a way to calm the situation.

"We want the situation to de-escalate to the position the troops had before this began," Ashton said.
Europe's approach leaves it at slight odds with the United States, after U.S. Secretary of State John Kerry threatened visa bans, asset freezes and trade restrictions against Russia, which he accused of 19th century behavior in Ukraine.

Germany, France and Britain, the EU's most-powerful nations, were advocating mediation, possibly via the Organization for Security and Cooperation in Europe (OSCE), while not ruling out economic measures if Moscow does not cooperate.

"Crisis diplomacy is not a weakness but it will be more important than ever to not fall into the abyss of military escalation," German Foreign Minister Frank-Walter Steinmeier told reporters as he arrived in Brussels.

EU-Digest