Serbia on the “Silk Road” of China

Just before the Forum, Serbia has signed memorandums and protocols on cooperation with China worth 3.2 billion euros, according to the statement of the Vice-president of the Serbian Government Zorana Mihajlovic.

However, the authorities failed to clarify whether the announced Chinese projects in Serbia are investments or credits. From the way of the Government and most of the media present information to the public, the impression is that the money from China is a direct investment, although for the most part the “Silk Road” project is actually based on loans for building infrastructural corridors in Serbia, through which China can reach the European market.

The public learned that the “investments” from China are actually loans only when Minister for Infrastructure and Vice-president of the Government Zorana Mihajlovic signed the commercial contract with China for development of the railroad Belgrade-Budapest last year. The distance to be reconstructed is 30 kilometers, and the loan is 319 million euros worth.

This contract is pending for approval by the European Commission because direct business deals or political arrangements are subject to verification in the process of joining the European Union. 

At the Forum for International Cooperation, Serbian delegation was led by Prime Minister and President-elect Aleksandar Vucic. He was accompanied by four ministers, the Mayor of Belgrade Sinisa Mali, and 15 other representatives of Serbia.

When asked whether he expects a positive response from Brussels, PM and President-elect Aleksandar Vucic avoided giving a straight answer.

“You see how those in favour of liberalism and free market run away from liberalism and free market when there is a stronger player capable of making this kind of miracle,” said PM Vucic.

China’s privileged role in financing the projects in Serbia raises the question of transparency and, at the same time, the issue of corruption. Serbia’s infrastructure needs modernization and every kilometer of newly build road is important for the country’s economy. What is problematic is the question of how much those loans will cost Serbian tax payers in the end. The lack of information about agreements on loans and investments is raising eyebrows in Serbia, especially from the moment Serbia became a part of the new “silk road” in which China will invest a billion euros.

The only major Chinese investment in Serbia is the purchase of the steel mill in Smederevo at a cost of 46 million euros, with a projection that the total investment in this company would be at least 300 million euros.

While China is financing projects from Europe to Asia with ambition to renew “the silk road” and connect the two continents, the question in Serbian public remains: why the loans are presented as investments and under what conditions they were given to Serbia.