China in the Balkans: Macedonia, Albania seek Beijing’s funds for projects

Two decades after the Yugoslav wars of the 1990s, the Balkan region is still going through a rigorous process of reconstruction and reconciliation. Time has not healed all the wounds in this part of the world yet, but efforts are made, with considerable success, to sustain a culture of cohabitation, and to ensure economic development, as well as political and social stability. China’s increasing activism in this part of the world, while being part of Beijing’s ‘going out’ strategy, is also welcomed by the governments of the countries in question as it brings much needed investment into efforts for economic development. Following Chinese president Xi Jinping’s visit to Serbia earlier in June, Asia Times columnist Dr. Altay Atlı went on a tour of five Balkan countries, observing China’s engagement with the region and the reflections it spurs among the local population.

Third and Final Part

SKOPJE and TIRANA – First time visitors to Skopje, capital of the Republic of Macedonia (or the Former Yugoslav Republic of Macedonia as the United Nations officially recognizes it), are struck by two things: the multitude of oversized monuments and old looking but newly built government buildings scattered around the city, and the countless splashes of brightly colored paint on almost all of them.

China's Sinohydro is constructing two highway sections in Macedonia, between Kicevo and Ohrid, and between Miladinovci and Strip

China’s Sinohydro is constructing two highway sections in Macedonia, between Kicevo and Ohrid, and between Miladinovci and Strip

These new monuments, buildings, statutes such as the 22-meter tall Warrior on the Horse (said to depict Alexander the Great), those of a Byzantine emperor, a Bulgarian tsar, numerous Macedonian heroes, and the Roman arch of triumph, were constructed by the government as part of the “Skopje 2014” program which meant to give the city a more classical look by the 20th anniversary of the country’s independence.

The problem is that all these new constructs not only risk to turn this sympathetically modest Balkan town into a pseudo-antique theme park, but they also come at a hefty cost for Macedonian taxpayers, with the final price tag varying wildly from the officially announced 80 million euros to 500 million euros plus as estimated by civil observers. For many, this is a sheer waste of money, especially as one third of the country’s population is still living under the poverty line.

The colorful paint splashes on these monuments were thrown by protesters during a series of anti-government demonstrations starting last year over a wiretapping scandal, and reigniting this year in April into a fully fledged political crisis following President Gjorgje Ivanov’s decision to stop investigations against political figures involved in the scandal, including former prime minister Nikola Gruevski, who had launched the money guzzling “Skopje 2014” project.

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Many are dismayed in Macedonia these days, including a Chinese company. The wiretaps revealed a number of corruption cases, one of which involved Sinohydro, China’s infrastructure giant, which was awarded the construction of two highways in the country through a tender, which, as claimed in the leaks, violated standard bidding procedures and allegedly granted the company certain privileges that might have crossed the boundaries of what is legal.

The last thing that the Chinese would want is to get involved in such scandals and harm their reputation in the Balkans. Macedonia is important for the Chinese and their infrastructure projects, as this landlocked country is the connecting link between the port facilities they have bought and are currently operating in Greece on one side, and their economic stronghold in the Balkans, Serbia, on the other.

As the Macedonian political crisis continues to unfold, Sinohydro resumed its work on Macedonian highways. Driving from Skopje to Ohrid in the south, one can easily see on the way the company’s construction sites, information signs and even workers’ barracks decorated with Chinese characters.

The company is constructing two highway sections, between Kicevo and Ohrid, as well as between Miladinovci and Strip, with a total length of 110 kilometers. While Sinohydro waits for the political dust to settle, Chinese state-owned companies in other sectors are also showing interest and getting active in Macedonia.

China Railway Rolling Stock Corporation is supplying Macedonian Railways with electric trains, and energy infrastructure companies are interested in undertaking new projects after the good example of Kozjak Power Plant, built by China International Water and Electric Corporation more than a decade ago.

Macedonians want the Chinese to complete these projects, but additionally they want them to come and visit the shores of their beautiful lake in the country’s southwest as well.

The town of Ohrid is a UNESCO World Heritage Site and together with its lake, beaches and pleasant environment, it has turned into a popular tourism destination. Turks, Serbs, Greeks and the Dutch are the main frequenters of Ohrid, but the town is willing to tap into the Chinese market as well, not only by drawing more Chinese, but also receiving Chinese investment to improve tourism infrastructure.

“The Chinese do not really come here,” says a tourism operator in Ohrid, “they go to Skopje as part of their group packages.”

Bureaucrats’ delegations are exchanged between Ohrid and Chinese towns in order to discuss possibilities for improving the tourism linkages, but concrete results are yet to be achieved.

Shared communist heritage

After Ohrid, it takes only a short drive and a relatively unchallenging border crossing into Albania. Once in Albania, one enjoys the familiar Balkan scenery of green hills, valleys, and villages with their small houses, perhaps with the less pleasant addition of the communist dictator Enver Hoxha’s countless still-remaining bunkers.

The shared communist heritage makes the relationship between Albania and China a special one, but today these two countries’ ties are shaped predominantly by the dictates of capitalism.

Albania must improve its economic infrastructure, it thus welcomes Chinese investment, whereas for China having a strong presence at this country on the Adriatic coast, with a key position on the “21st Century Maritime Silk Road” and rich energy resources is a key component of its “16+1” strategy aimed at Central and Eastern Europe.

The Port of Shëngjin in Northern Albania is developed by China Communications Construction Company

The Port of Shëngjin in Northern Albania is developed by China Communications Construction Company

Despite historical ties stemming from the communist era, revitalizing the links in post-communist times took a while for Beijing and Tirana, mainly due to Albania’s backward economic conditions. However, a brief glance at Chinese initiatives undertaken over the past one year clearly shows that business is rapidly growing.

In March earlier this year, Shanghai-based Geo-Jade Petroleum bought the controlling rights in two Albanian oil fields from a Canadian company for a sum of $442 million. Of the two fields, Patos-Marinza is the biggest on-shore oil field in the entire European continent producing 11,900 barrels a day, whereas the other field, Kuçova, is producing an additional 400 barrels.

Since Albania has a key location on the Trans Adriatic Pipeline, which is currently under construction and will carry Caspian gas through Turkey, Greece and Albania to Italy and the rest of Western Europe when it is completed, China’s entry into the Albanian energy sector has to be considered as a critically strategic move.

Chinese companies are also actively involved in Albania’s transportation infrastructure. The Port of Shëngjin in Northern Albania is developed by China Communications Construction Company. In April, a consortium of China Everbright and a Hong Kong company had announced the conclusion of a deal to take over Tirana International Airport. In the meantime, there are plans for the highway connecting Tirana with the Macedonian border to be upgraded by Chinese companies using Chinese funding as well.

Macedonia and Albania, as well as the other three Balkan countries we have traveled through for this series in Asia Times, namely Bosnia and Herzegovina, Montenegro and Serbia, all adopt a similar stance when it comes to dealing with China. Facing pressing needs to improve their economies and to improve the people’s living standards, these countries prioritize the upgrading of their economic infrastructure, building highways, railroads, ports and factories, and to improve their services sector with a special emphasis on tourism where they have the highest competitive advantage.

In all these areas, Chinese contributions are welcome. However, this is a rather pragmatic approach on behalf of the Balkan countries, who remain committed to the objectives of European Union accession and NATO membership, and whose main economic anchor remains with Europe, by far the region’s largest source of investment and development aid.

China, in this picture, is a complement rather than a substitute for the Balkan countries’ European partners; an additional source of funding and know-how, but not a replacement.

As business volumes with China increase, so do concerns. For instance, the hundreds of Chinese workers imported into large-scale infrastructure projects are not always well-received by local people who are suffering from acute unemployment problems. However, at least for the time being, benefits overweigh the drawbacks.

For China, on the other hand, this region is of vital importance as a gateway into Western Europe. As long as expectations are kept realistic, growth of bilateral relations through the all-weather principle of mutual economic benefits can serve Beijing’s multilateral initiatives like the “16+1” and the “One Belt, One Road” very well.

Dr. Altay Atlı is a scholar and a freelance writer based in Istanbul, Turkey.

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