October 05, 2017

The Balkans and Black Sea Region and China’s New Silk Road


Frans-Paul van der Putten (Senior research fellow, Clingendael Institute)
6 July 2017

On 24-26 May 2017, the first Balkans and Black Sea Cooperation Forum took place in Serres,
Greece. The forum aims to strengthen cooperation throughout this region in various regards,
including in terms of transport and infrastructure. One of the topics debated at the forum related to
the role of China and its Belt and Road (also known as ‘One Belt, One Road’ or OBOR) initiative to
build a modern-day silk road.
It is in the Balkans and Black Sea region that the contemporary equivalents of the silk road on land
(via Central Asia) and the maritime silk road (via the Indian Ocean and the eastern Mediterranean
Sea) meet each other and connect to Europe. A land route via the Black Sea region would provide
China with a transport corridor to Europe that avoids areas that are part of, or militarily controlled
by, Russia or the United States. It is to China’s strategic benefit if it succeeds in decreasing its
dependence on trade routes that can easily be disrupted by other great powers. The greatest
relevance of the Balkans peninsula at this time relates to the port of Piraeus in Greece, which is the
main Mediterranean base of China’s largest shipping company, COSCO Shipping. China’s
involvement in Piraeus may develop into a greater Chinese role in trade, finance and
manufacturing throughout the Balkans and Central Europe. This would then further strengthen
China’s interest in developing the Black Sea region as a part of the China-Central Asia-Europe trade
corridor.
China’s focus points
The Chinese government engages with countries in the region mostly on a bilateral basis rather
than collectively. There exists a platform for cooperation between China and 16 countries of Central
and East Europe (the so-called CEEC 16+1) that involves the Balkans region and that is strongly
focused on OBOR, but most actual projects between China and Balkans countries are the outcome
of bilateral interaction. A similar regional platform for engagement between the Black Sea region
and China does not exist. The Organization of the Black Sea Economic Cooperation (BSEC) could
potentially fill this gap, but the Chinese government has so far not yet made use of this platform to
discuss OBOR multilaterally.
Notable focus points for Chinese companies and the Chinese government in the Balkans and Black
Sea region are port management in Greece, infrastructure construction in the Western Balkans and
Turkey, agricultural production in Ukraine and the energy sector in Romania and Greece. In
addition, Chinese companies are also active in the region in telecommunication, manufacturing
and banking.
Two key countries in the region are Greece and Serbia. Both countries were visited by President Xi
Jinping in recent years. They provide China with footholds within the region from where it can build
up its OBOR activities by way of a step-by-step approach. Progress is slow: the privatization of the
port of Piraeus met with substantial delays until Cosco was able to acquire a majority share in the
port in 2016. Currently the construction of a new railway track between Belgrade and Budapest is
also being delayed as a result of concerns from the European Commission as to whether the
agreement between Hungary and China follows EU government procurement rules. Under this
agreement Chinese entities will finance and build the railway. The Chinese government and
Chinese investors appear to be waiting until the so-called Land Sea Express Route (the transport
corridor from Greece via the Western Balkans to Central Europe) has progressed further before
engaging in major new OBOR projects in other parts of the Balkans.

With regard to the Black Sea region, the involvement of the Chinese government in OBOR projects
is more limited than in the Balkans region. China seems to be cautious not to antagonize Russia
and to be taking into account Russian geopolitical sensitivities in the Black Sea region. Given their
location, both Georgia and Ukraine could potentially be close diplomatic partners and hosts to
major China-funded infrastructure projects. However, they are also former Soviet republics that
have strained relations with Russia. Judging from maps with projected railway links that circulate in
China, the Chinese government seems to favour a transport corridor to Southeast Europe from
China via Iran and Turkey rather than via Georgia or Ukraine. This suggests that China's approach
cannot be understood exclusively on the basis of economic factors: geopolitical considerations
should also be taken into account.
Seizing the initiative
In terms of geography, the potential of the Balkans and Black Sea region is promising but the
Chinese government and Chinese investors seem hesitant to commit to major projects in the
region apart from the current flagship projects in Greece (Piraeus port) and Serbia (railway to
Hungary). To realize this potential, local governments, regional organizations and the private
sector could take the initiative. The new silk road is being shaped not only by China but also by
non-Chinese actors. By investing in infrastructure and facilitating east-west (across the Black Sea)
and north-south (across the Balkans) corridors, regional actors can enhance their role in OBOR and
stimulate engagement by China.
Geopolitical implications
The new silk road will increase China’s influence in the region. This could further complicate the
unstable relationship between Russia and the West. In the longer run, Sino-US and/or Sino-Russian
geopolitical competition could destabilize the region. However, China is careful to avoid this
outcome, and its growing influence also provides new opportunities for Russia, the EU and the US
to work with China towards regional stability. The formula used to stabilize Sino-Russian relations
in Central Asia, by way of the Shanghai Cooperation Organization, could provide a starting point for
a joint mechanism for the Black Sea region that involves regional countries as well as Russia, NATO
and China.
The European Union needs to signal clearly that it favours regional development and that it is open
to cooperating with China to this end. If OBOR can contribute to the economic development of the
Balkans and Black Sea Region then the EU should take an active approach that seeks to maximize
this contribution within its strategic interests. There is a danger that countries in Southeast Europe
and around the Black Sea, whether they are EU member states or not, will increasingly feel that
their interests are ignored as a result of geopolitical and economic competition between China and
the EU as a whole, and between China and Western Europe in particular. If these sentiments are
not adequately addressed the EU’s south-eastern flank will be vulnerable to destabilizing forces
such as great power competition and conflict in the Middle East.

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