15 Oct 2021
Adding or Subtracting, Multiplying or Dividing: The Equations of the 17+1 Initiative
While writing this entry, I am waiting for my Covid-19 booster shot, just like circa half a million of my fellow citizens in Serbia, which means that it would be the third jab that I will get this year. Meanwhile, I was infected with corona virus in May and had mild symptoms of the disease, but this had happened after I got vaccinated with two doses of the Vero cell / Sinopharm vaccine by mid-February. This situation sums up briefly the dubious situation that Serbia is currently in. While the citizens of many countries of the world are waiting for their first jab and will most probably continue to wait at least until 2022, Serbia has different set of problems. Serbian government obtained enough jabs for the country’s population very early in 2021. However, due to widespread disinformation’s of the anti-vax movement and general distrust among the citizens, the estimations are that around 40% of citizens are vaccinated in Serbia, which is not enough for the collective immunity, and leads to further spread of the infection and potential appearance of new mutations of the virus . Earlier this year, the mass vaccination with Vero cell / Sinopharm vaccines in Serbia raised many questions: how much it costs , under which circumstances was it registered and approved  and whether Serbia’s mass vaccination program is in fact the third phase trial of the vaccine efficiency . The doubts have further increased since the European Medicines Agency (EMA) is still reviewing and has not approved the Sinopharm vaccine, while the procedure commenced in May 2021 . However, the fear of disease and death seemed to have trumped all the above mentioned legal and formal concerns, as the global race for vaccine was gaining traction. At the beginning of vaccination process in February 2021, Serbia had second highest rate of vaccination in Europe, just behind United Kingdom. Today, as I am writing, the country is ravaged by the virus, with more than 50 deaths and more than 7000 infections per day, which is among highest infection rates globally .
New cases and deaths from Covid-19, JHU CSSE COVID-19 Data, accessed 21.10.2021.
Vaccination rollout for Covid-19, Our World in Data, accessed 21.10.2021.
Although the modus operandi of Serbian government regarding the purchase of the vaccines was criticized, especially within the context of the geopolitics of Serbia’s cordial relations with PR China and Russian Federation while accessing European Union, many countries were looking (South)East and seeking ways and means to follow the example of Serbia. The prime minister of Hungary declared that he was waiting to see how the vaccination plays out in Serbia , but Hungarian government had announced that it is not going to wait for Brussels but start the procurement procedures for Chinese vaccines. Western media wrote about the “healthcare Silkroad” of the Chinese government as a way of salvaging the ruined initiative 16+1 with the “mask diplomacy”, and how the loyalty of Serbia – unlike the other members of the initiative – actually paid off . As the process of vaccination in European Union got off to a rough start in December 2020, the discrete signals were sent by European Union high officials that they too are open to diversifying the sources of vaccines, and not opposed to Russian or Chinese companies providing them . Painfully aware of the country’s peripheral status, Serbian government diversified the suppliers from the onset, and even started negotiations to produce the Sinopharm and Sputnik V vaccines .
Source: Covid: How Serbia soared ahead in vaccination campaign, https://www.bbc.com/news/world-europe-55931864, accessed 10.2.2021.
But what is this Initiative 16+1 and how is it currently related to Serbia? In 2012 the initiative 16+1 (also known as Cooperation between China and Central and Eastern European Countries (China-CEE, China-CEEC) was kick-started by the Chinese Ministry of Foreign Affairs. This initiative was formed as a as a transnational cooperation forum, which should’ve brought together the 16 countries of Central and Eastern Europe on one side and China on the other side, in various cooperation projects within the Belt and Road Initiative. The following countries are members of this initiative: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, North Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia. With the entry of Greece in 2019, the initiative formally changed its name to 17+1. This cooperation platform between the countries of Central and Eastern Europe and China was formed after the China-Central and Eastern Europe Economic and Trade Forum was held in Budapest in 2011, and every year since then a meeting was held in one of the member states . Every member state has national coordinators, while the secretariat is situated in Beijing. The meeting planned for 2020 was supposed to take place in Beijing, but was cancelled due to the Covid 19 pandemic, which was seen as an opportunity to launch activities and interventions to counteract the projects that have been either negotiated or considered within this initiative: in Czech Republic China’s General Nuclear Power was excluded from the bidding for the expansion of Dukovany nuclear power plant , in Croatia a 50-years concession for the port of Rijeka was halted as it became clear that the consortium of Chinese companies offered the highest bid , Romanian government decided to bar Chinese companies from the public infrastructure projects, namely, highroad constructions which was extensively done by Chinese companies like Synohydro and PowerChina , while one of the last moves of the previous US administration was to halt the construction of the Huawei’s 5G telecommunication infrastructure in the Eastern and South-Eastern Europe.
However, Serbia seems unfazed by these events, and although the government signed the agreement in Washington to forbid the use of a 5G network procured from unreliable customers – the so called “clean 5g network initiative”  – this did not prevent Huawei from opening the Center for Innovations and Development in Belgrade mid-September 2020 . This is not the only project undertaken by the Huawei in Serbia: the company participated in the setup of the broadband infrastructure of the state telecommunication company, installed surveillance systems in streets of Belgrade, participated in setup of the data center in Kragujevac, development of the infrastructure for the public communal and educational services . Furthermore, the government continues to sign more and more contracts worth billions of dollars for various infrastructural developments and redevelopments, such as the construction of the new metro system in Belgrade, construction of wastewater treatment plants and sewerage networks in 65 municipalities, rehabilitation and/or construction of six regional landfills and planned construction of 7 powerplants, financed by the loans from Chinese banks.  The criticism regarding – what seems to be – preferential status of Chinese capital in Serbia, which is coming from the western countries, is dampened by opening and diversifying the market for similar agreements with companies and banks coming from the West – loans for high ways, direct foreign investments for companies from West subsidized by Serbian government etc . Having in mind which are the projects of Chinese companies in Serbia , the pattern is clear: while China is mostly focused onto the sectors of telecommunications, traffic and mining, on the other hand Serbia is (re)constructing its most robust metallurgical industries, proverbially labeled as long-time losers and the sores of the country’s economy, as well as decrepit traffic routes and nonexistent sub-structures which are neuralgic points of the communal organization and sanitation.
Leading Investors by number of projects (%). Source: RAS, 2021, https://ras.gov.rs/uspesne-price, 21.10.2021.
Debt Trap, Deathtrap, Something Else? Interpretations of the Presence of Chinese Capital in Serbia.
An inconspicuous office building in New Belgrade Block 21, recently turned heritage site, was leased to the Bank of China, which started its operations in Belgrade in 2016 . The bank is working with the legal entities only, primarily oriented towards corporate customers and entrepreneurs. However, its presence is considered a token of China’s benevolence towards Serbia, or at least the pragmaticism regarding the servicing of the loans that Serbian government and corporate sector had taken from China’s central bank. The loans were not as high until recently: Serbia was the top borrower among the Balkan countries, but the overall numbers were not as dramatic as the media outcry made it look: 1.3 billion Euros was but a portion of external debt, and most of it was aimed at reconstructing the large infrastructural systems – the country’s decrepit railroad, for which it wasn’t possible to borrow from other sources, or the procedures were deemed complicated, because of the lack of prepared technical documentation from Serbia’s part and the restrictions regarding the direct bargaining .
China’s investments in the Western Balkans region, https://www.slobodnaevropa.org/a/srbija-kina-rudnik-bor/30266925.html, accessed 20.03.2021.
However, the situation with the neighboring Montenegro could shed some light onto the narratives regarding the situation: the construction of the highway Bar – Boljare, worth 809 million EUR was funded by 688,2 million EUR loan from Exim bank. The road ‘from nowhere to nowhere’ matures mid-2021, and the government seeks assistance from EU in breaking the debt trap of China by helping finance the return of the loan . Similar narrative is present around Serbia’s situation, but rather amplified, as Serbia took several loans during 2020 and early 2021, and the total public debt of the country amounted to 28,161,393,966.75 EUR by 15th of March 2021, while the government continues to issue Euro bonds. The loans have been aimed mostly at traffic systems’ construction and waste management, while very little has been put towards investment into productional cappacities of the country. Meanwhile, the question of how any of the loans will be returned, as the economic basis of the country has been riuned during the wars and the exhausting transition, while the government is almost exclusively relying on direct foreign investments stimulated from the state budget – either from East or West, is put aside.
The state of the public debt of Serbia on 30th of November 2019 was 24.521.726.735 EUR, while the unsecured debt of the local governments is 401.508.234 EUR, http://www.javnidug.gov.rs/lat/default.asp?P=46, accessed 31.03.2021.
Preliminary balance of the public debt of the Republic of Serbia on March 15, 2021. amounted to 3,308,448,330,691 RSD (28,161,393,966.75 EUR), Public Debt Administration of Serbia, http://www.javnidug.gov.rs, accessed 24.03.2021.
Share of investments by sectors by number of projects (%), Source: RAS, 2021, https://ras.gov.rs/uspesne-price, 21.10.2021.
The industries that are being revived by loans from China, however, are almost all considered to be so called ‘dirty technologies’ – either investments into mining, both the existing capacities and creation of new ones, or revival and expansion of fossil fuel industrial capacities, either in field of production (rubber, tires, plastics) or energy (thermal power stations). Many experts agree, Serbia has electrical energy mostly owing to its capacities that are depending on coal, and needs to act very soon, if it were to achieve the goals of decarbonization and transition to renewables and needs to do it now in order to avoid paying penalties for the stalling and disruption of the process, as well as the pollution created in the production and consumption process . However, the patience among the citizens seems to have been exhausted, as the rising number of ecological initiatives and associations are demanding action. Furthermore, the problems with mining companies in Serbia, Zijin and Rio Tinto being the most prominent and most visible publicly, are raising questions regarding Serbia’s role in the global tech lust, as well as the global displacement of dirty technologies . Serbia seems to be in the center of these tendencies, as in the recent farewell visit Angela Merkel, chancellor of Germany, bluntly explained: to reduce Germany’s industry’s dependence from lithium mined in China, Germany and EU are very much interested in Serbia’s allegedly high reserves of borate and lithium ores . Meanwhile, to offset the negative marketing of these projects and reduce the potential for insurgence in the places where these mines were planned to open, the government is shyly announcing subsidies for individual households for the upgrades of fenestration, thermal insulation, and purchase of efficient boilers, even new regulation of prosumers’ role in energy production, which has been problematic over the course of last several years . The politicians are also stating as a subtext that Serbia would have to import photovoltaic technology (as well as other ‘green technologies’), which is strange having in mind that opening of the factories for producing batteries – presumably out of locally mined lithium – was promised .