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Illustration: Lau Ka-kuen

Croatia’s China-built, EU-funded bridge to open over troubled waters

  • Beijing’s way of doing business and its rigid Covid-19 response have damaged its relationships in key belt and road corridor, experts say
  • Chinese investors dried up during the coronavirus pandemic but with war in Ukraine and new EU finance opportunities, they may not be as welcome this time round

On a glistening white bridge suspended above the deep blue Adriatic Sea off Croatia, engineer Davor Peric proudly shows off the smooth layer of asphalt stretching across its length.

This asphalt, specially designed to withstand salt water, is a Croatian product but most of the Pelješac Bridge is not.

The 2.4km (1.5-mile) structure was built by China Bridge and Road Corporation (CRBC), the first Chinese company to win a bid for a project co-funded by the European Union.

And the firm came equipped to impress: more than 70,000 tonnes of steel was cast in Chinese factories and brought to Croatia on seven boats. With it came 22 different vessels, including a crane with a load capacity of 1,000 tonnes, an unusual sight for a region in serious need of infrastructure investment.

The EU-funded, Chinese-built Peljesac Bridge in Croatia spans 2.4km. Photo: Handout

“When the Chinese contractors arrived, [China] was already a global power,” said Peric, associate project manager at Croatian Roads, who has been working on the project since its launch in 2018.

“The first part of the project was really showing off their strength – the number of people, the resources, equipment, the mechanisation.”

Lauded as a success, and already a popular photo stop on the way to tourist hotspot Dubrovnik, the bridge is due to be completed on July 27, connecting two historically divided parts of Croatia’s territory.

Seizing on its symbolism of connection, Chinese state media has called Pelješac a model of China’s cooperation with Central and Eastern Europe (CEE), and an iconic project of the Belt and Road Initiative, a centrepiece of President Xi Jinping’s foreign policy and the most ambitious infrastructure strategy in the world.

But could this gleaming monument to Chinese engineering prowess in the EU be the first and last of its kind?

Despite the smooth completion of the project, experts on the ground say China’s way of doing business and its rigid Covid-19 response have damaged its relationships in the Western Balkans – a strategic belt and road transit corridor and an entry point to EU markets – just as the region’s geopolitical importance is rising.

“What happened with the war in Ukraine means that one part of the [belt and road] has collapsed,” says Vuk Vuksanovic, senior researcher at the Belgrade Centre for Security Policy.

While projects involving Ukraine and Russia have halted, security concerns are also driving Central and Eastern European countries away from China and towards Washington and Nato.

The region’s cooperation framework with China, the 16+1, has been losing members and was recently dubbed a “zombie mechanism” by Andreea Brinza, a Romanian researcher specialising in CEE-China relations.

This may prompt China to double down on the Western Balkans, according to Vuksanovic.

But here, over the course of the coronavirus pandemic, various Chinese-linked projects have stalled.

Croatian Roads associate project manager Davor Peric and Ivica Granic, construction manager for CRBC, cast an eye over the Peljesac Bridge over the Adriatic Sea. Photo: Masha Borak

A thermal power plant expansion project in Bosnia and Herzegovina is being re-evaluated due to environmental concerns, while Chinese deal makers have disappeared from the region, likely due to stringent travel restrictions back home.

Chinese workers labouring on the bridge spent months isolated and unable to return home, but the heavy metal gates of the Chinese embassy in Croatia’s capital Zagreb remained firmly closed.

As Europe emerges from the pandemic, Chinese representatives are reappearing, anxiously looking for opportunities to restart cooperation, according to Zvonimir Stopic, a Zagreb-based professor at Capital Normal University in Beijing.

China plays down Lithuania rift as its belt and road investments grow abroad

“In just a few months, everything literally vanished – and now they want to restart things but the tricky part is other investors came while they were gone,” he said.

Stopic estimates Chinese deal making has returned to a level last seen 10-15 years ago, when investors from China started arriving.

But Covid-19 is just one part of China’s deteriorating relationship within the region.

“The Western Balkans seem more and more disenchanted with China,” said Ana Krstinovska, president of the North Macedonian think tank ESTIMA.

“In every country, the situation is a bit different. But the common ground is that there are numerous issues with the implementation of the large infrastructure projects according to the Chinese model.”

A five-hour drive south of the Pelješac Bridge, where Chinese workers in white hard hats are putting the finishing touches ahead of the grand opening, lies Montenegro’s Bar-Boljare highway – nicknamed “the road to nowhere” by locals.

CRBC is also behind this 445km (276-mile) highway project, which is three years late, after work started in 2015.

Paid for by a massive US$1 billion loan from the Export-Import Bank of China, the highway has prompted accusations of Chinese “debt diplomacy”.

Last year, the new Montenegro government turned to Western banks to renegotiate the interest rate on a Chinese policy bank loan that represented one-fifth of its annual GDP.

It highlighted controversial contract provisions that Krstinovska said could be used by China to gain foreign policy leverage.

Debt trap diplomacy used to ‘smear’ China, says ex-central bank governor

In places like Kenya and Sri Lanka, concerns over the seizure or potential seizure of indebted ports have led to similar accusations.

“China until now has always been lenient and allowed these countries to pay with a certain delay. However, until now, these countries have never been in a situation to make difficult choices … between the East and the West,” Krstinovska said.

These issues combine with rampant corruption in the Balkans to help tarnish the image of Chinese infrastructure in the region – a “lose-lose situation”, according to Krstinovska.

In 2018, in a scenario right out of a thriller novel, former Macedonian prime minister Nikola Gruevski fled the country to Hungary in a car owned by the Hungarian embassy, after his passport was seized over corruption charges.

02:35

Belt and Road Initiative explained

Belt and Road Initiative explained

Four years after being granted asylum, Gruevski has been handed multiple sentences in absentia, but has yet to face charges on an accusation of corruption in a case involving Chinese state-owned enterprise Sinohydro.

The company was selected to build two highways in North Macedonia, in a project that ran several years late and around €200 million (US$210 million) over budget.

“It takes two to tango,” says Plamen Tonchev, head of the Asia unit at the Athens-based Institute of International Economic Relations (IIER).

Examples of Chinese companies flouting environmental and labour standards in the region have added to the resentment.

How can China’s Belt and Road Initiative thrive when its members are at war?

Last year, Serbia was rocked by reports of slave labour used by Chinese car tyre manufacturer Linglong. In Montenegro, CRBC has been recently ordered to pay €200,000 for environmental damage caused during the highway construction.

“The only country that actually welcomes and embraces the Chinese presence is Serbia,” Tonchev said. “Even the notion of the Western Balkans being a privileged area for Chinese investment, even that could be challenged.”

Excluding Croatia, the region hosts more than 130 projects worth at least €32 billion (US$33.7 billion) linked to China, according to the Balkan Investigative Reporting Network (BIRN). Almost half of those are in Serbia.

China’s investment across the word has been stalling, according to figures from Rhodium Group and Germany-based think tank Merics.

01:58

China-Laos railway set to open in latest advance for Beijing’s Belt and Road Initiative

China-Laos railway set to open in latest advance for Beijing’s Belt and Road Initiative

And now, coupled with the economic hardships caused by strict lockdowns, China may have its own backlash against the belt and road plan.

“They realise that this billion here, a billion there strategy doesn’t really work,” Tonchev said.

Although the region is hungry for investment, many infrastructure projects are barely profitable, according to Ivica Bakota, assistant professor at Capital Normal University in Beijing.

Years before Chinese construction workers arrived on the rocky Adriatic coast, Pelješac Bridge was already locally famous as the bridge that would never be built. Construction work was launched to great fanfare twice during the 2000s, only to be abandoned because of lack of funds.

“It’s a huge project that the Croatian state budget could not handle and this is actually the main problem of this region,” Bakota said.

How China hit a roadblock on its way to central and eastern Europe

It was not until the EU stepped in that work finally started, with funding for 85 per cent of the €418 million (US$440 million) price tag, which has risen by €59 million because of supply chain issues stemming from Covid-19.

Critics say the fact the Pelješac Bridge was bankrolled by Brussels means it should not be described as a belt and road project.

“The Chinese media are touting this project as a [belt and road] project. I think this is clearly a distortion of the truth,” Tonchev said.

China Bridge and Road Corporation which built Croatia’s Pelješac Bridge was the first Chinese company to win a bid for a project co-funded by the European Union. Photo: Masha Borak

Back on the construction site, dark summer rain clouds are gathering, while faded red-coloured Lunar New Year door decorations on the construction workers’ barracks flutter in the wind.

Peric says the bridge will help unite Croatia as it prepares to join the EU’s common travel area.

For the local population, the bridge will mean easier access to essential services, and for tourists and trucking companies a faster way to reach other parts of Croatia.

But it is doubtful whether it will become the symbolic bridge between China and Europe its construction sponsors had initially hoped.

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