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August 26, 2018

Europe and the BRI


August 26, 2018

Since the Belt and Road Initiative (BRI) was officially launched in 2015, no other policy initiative has attracted more attention at home and abroad. The BRI has been billed as China’s “project of the century”.

While the US and its allies in the Asia-Pacific region – including Australia, India and Japan – have rejected the plan, we must examine how Europe perceives Chinese President Xi Jinping’s most ambitious and signature policy plan. Initially, the common response of most European countries was to wait and see how the project developed.

The UN Department of Economic and Social Affairs (DESA) Development Policy and Analysis Division Director noted that “there are myriad synergies and linkages between the BRI and the sustainable development goals (SDGs)”. Several of the universally-recognised SDGs – including poverty reduction, decent work and economic growth, and industry, innovation and infrastructure (goals one, eight and nine of the SDGs, respectively) – are directly linked to Chinese-led investments under the BRI.

In addition, the BRI has already been endorsed by the UN as a potential “accelerator and an effective vehicle” to achieve Agenda 2030 and help advance several of the SDGs in participating countries.

Although 57 countries participated in the Belt and Road Forum for International Cooperation in May 2017 in Beijing – including 29 heads of states or governments – some major powers such as Japan, Australia, India, the US and the EU stayed away from the forum. They cited various reasons for not attending the forum – from strategic and security anxieties to financial soundness and from debt and financial risks to environmental and social concerns. As a result, different countries had for multiple reasons either warmly welcomed or bluntly refused to participate in the project.

In contrast to the stance adopted by major powers, numerous other countries have welcomed the initiative. In addition, the Arctic sea lanes are now officially included in the BRI to connect Northern Europe with China. It is “likely to result in the Nordic countries, further strengthening their focus and efforts”.

Similarly, the Central and Easter European (CEE) countries also form part of the vast initiative. As per the BRI’s official document released in March 2015, the initiative aims at “jointly building a new Eurasian Land Bridge and developing China-Mongolia-Russia, China-Central Asia-West Asia, and China-Indochina Peninsula economic corridors by taking advantage of international transport routes”.

As a result, the policy document clearly mentions that the Silk Road Economic Belt aims to bring together China, Central Asia, Russia and Europe (the Baltic). Owing to their reliance on the EU, the stance of most CEE countries is still to ‘wait and see’. All rail freight transport between China and Europe has to pass through Poland which, along with other CEE countries, is an important actor in the BRI.

It is argued that in comparison to transportation via sea, “the transportation time was cut by half from 30 days to 15 days” via train from China to mainland Europe. On account of its valued geographical position, Poland has the potential to become a hub for the land-based transit of freight between China and Europe.

While there is a considerable perception that the project aims at promoting trade, investment, regional connectivity, regional cooperation as well as the promotion of Chinese overcapacity and surplus industrial products, prominent European actors have deep-rooted anxieties as China is emerging as a key development actor and funding numerous infrastructural projects in their own backyard.

At the outset, when China put forward the BRI in 2013, EU institutions adopted a ‘wait and see’ posture in the beginning and then gradually got involved. While Beijing continued to muster more support for the initiative and was largely successful in its endeavours; it failed to allay the suspicions and concerns of major European countries.

As mentioned earlier, while the Central and Eastern European countries are active and see opportunities in the BRI to modernise their infrastructure and build industries, Western European countries aren’t as active. For example, the EU’s screening on the construction of the Hungary-Serbia Railway testified its suspicious feelings. The most active proponents of the BRI are from Central and Eastern European countries as most of them have signed the Memorandum of Cooperation on the BRI with China. While there are also some reservations in these countries, the general atmosphere is in favour of the initiative.

The overall response of other European countries stands in stark contrast. For example, 27 out of 28 EU ambassadors in Beijing – with the ambassador from Hungary as the only exception – are reported to have signed a document denouncing the global infrastructural project for hampering free trade and giving a clear advantage to Chinese companies and state-owned enterprises.

Even though China and the EU have strong trade and investment ties, the bloc has criticised China’s role in member-states such as Greece, Hungary and the Czech Republic as well as its attitude towards intellectual property. The document observed that China was attempting to shape globalisation to suit its own interests, and that the BRI is “pursuing domestic political goals like the reduction of surplus capacity, the creation of new export markets, and safeguarding access to raw materials”.

As a consequence, Europe’s initial enthusiasm about the BRI is tempering as it recognises the political, economic, and security ramifications of the project – both on the Eurasian continent and on Europe’s trade and energy routes in the Asia-Pacific.

In addition, Europe is a major recipient of Chinese investments in key sectors such as energy, telecommunications, and real estate. Europe is particularly concerned about the increasing role of China in the Asia-Pacific region because it has considerable trade via routes that passed through the Indian and Pacific oceans.

More than 35 percent of all European exports go to Asia, and four of its top 10 trading partners are in the region. For export-focused European economies, the Asia-Pacific is the second largest market after Europe. As a result, Europe has a clear interest in maintaining a rules-based order and unhindered trade flows in the Asia-Pacific region.

In view of this, European interests converge considerably with countries like India, Japan, Australia, and the US that have responded to Chinese assertiveness along the Belt and Road by revitalising the Quadrilateral Security Dialogue.

While European policymakers are unsure about the Quadrilateral Security Dialogue and are still grappling with the new Indo-Pacific framing, the EU and select member-states are reassessing their security role in the Indo-Pacific. France and Britain, the two key European security players in the region, are contemplating their engagement with the Quad and other partners. We can only hope that history doesn’t repeat itself this time in the form of a new ‘Great Game’ in blue waters.

The writer is a postdoctoral research fellow at the German Development Institute at Bonn, Germany.

Email: [email protected]

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