1 week ago

Diplomatic World_nummer 56.


THE BELT AND ROAD INITIATIVE: CHINA’S ROLE IN THE DEVELOPMENT OF THE EU China, in the past few years, has been actively expanding its economic horizons. It is developing, among others, a railway project in Africa, a multibillion dollar fund to develop infrastructure in most sectors in Brazil, a transport link in East Africa and a railroad through Asia 1 . Europe is also not forgotten, with China currently working on establishing the Belt and Road Initiative. The Belt and Road Initiative (BRI) is a Chinese development strategy which promotes co-operation and connectivity between more than 60 countries through Asia, the Middle-East and Europe. Accounting for 60% of the world’s population and 35% of total trade, the BRI is modern China’s most ambitious foreign project yet. 2 As of yet, the EU’s stance is not yet unified and the BRI still raises controversial debates. However, the advantages that a co-operation can bring can no longer be ignored, thus, a plan needs be created detailing the Union’s opinion on the matter. Until this is done, proceeding with the initiative will prove difficult, even for individual member states. It was not until 2017 that the BRI started to gain considerable traction across the globe, bringing the question of whether the EU should become part of the initiative, to the forefront. Recently, the benefits of the BRI, such as the development of infrastructure in crisis-hit member states and the creation of new jobs, has started to outweigh concerns put forward by Brussels. Foreign Direct Investment (FDI) created over 250.000 new jobs in Europe in 2016 alone, this with 35 billion euros (or a 77% increase since 2015) coming straight from China 3 . If China were to increase their investment to further develop the BRI then the amount of jobs could only grow. 98 When the BRI was initially put forward in 2013, Brussels was unfavorable towards the idea of a large trade route with China, due to, among others, concerns that the whole construction would only work one way (European companies would still face considerable difficulties in penetrating the Chinese market). Additionally, until recently, the EU has been marred with crises, such as: immigration, populism, the Russian resurgence, Brexit, and the Catalonian crisis. All of Brussels’ resources were focused internally rather than on foreign trade. A large part of FDIs (up to half in 2015) went towards southern European countries such as Portugal, Greece, and Spain, thus offering a potential solution to their economic predicaments and to the economic crisis in general 4 . Another important factor, especially in eastern and southern European states, is that the ultimate destination of both major trade routes is Europe. Therefore, while Brussels itself is not particularly clear on its stance towards this initiative, individual member states have become more receptive towards it. 5

While there are countries who are in favor of the BRI, there is no consensus. The Nordic community has not shown much interest as of yet, mainly due to their well-connected nature coupled with lower levels of transit. Moreover, even countries which are interested in the initiative, such as Germany and the Netherlands, have raised concerns about the long-term implications that the BRI would have in the EU. 6 It is clear that such extensive foreign investment, although in general beneficial, does not come without its downsides for Europe, especially due to a lack of regulations and a unified position 7 . This internal division is already impacting European politics and decisions. In July 2017, EU member states with major Chinese backing, opposed the notion that China’s claims to resources in the South China Sea were illegitimate and contrary to international law. This was not the only case. Weeks before, Greece opposed a declaration that China was not respecting human rights, as well as a proposition to tighten screening measures for Chinese investments. 8 Furthermore, allowing unregulated foreign goods into Europe could create a domino effect and start a race to the bottom. It is indisputable that the EU has very elaborate consumer protection legislation as well as high quality standards for products, which should be preserved. Thus, if the EU and China want to guarantee sufficient standards; international regulations and safeguards are pivotal to this. If these standards are neglected, then either country could suffer from a loss of quality. This lack of safeguards is also one of the reasons why Brussels has been reluctant towards the BRI: it is too young of an initiative, with many unclear features. Such a project would require a clear basis in three aspects: economic, political, and legal. The benefits of having the BRI, however, do not have to be overshadowed by these disadvantages. The EU can turn this uncertainty into an advantage if they manage to coordinate with the member states and shape the future policies of the initiative. The European acquis communautaire, as it currently exists, could serve as a standard to establish the regulations of the BRI. Certain EU member and non-member states have gotten ahead of the curve and started negotiating with the Chinese. The 16+1 summit (between China, Central and Eastern European countries) has already met 6 times with usually fruitful results such as the agreement to redevelop the Budapest-Belgrade Railway; yet, Brussels still lags behind. A reason for this is that if China develops its initiative fully, the EU-dominating countries such as Germany, France, and Italy would lose a large portion of their influence. However, this can also be easily remedied if there is supranational coordination from the start. The longer the EU waits before participating and intervening, the more it will fall behind and lose influence at the negotiating table. To gain influence, Brussels has applied pressure to have more say in BRI-related institutions such as the Asian Infrastructure Investment Bank (AIIB), which provides investment for related infrastructure undertakings. Although not used for this purpose yet, it would allow the EU to actively impact the project. As it currently stands, European countries hold a total of 20% of the bank’s executive board, yet the AIIB remains firmly controlled by China (75%). 9 Thus, if the EU took advantage of its representation in the AIIB, it could exert its influence over the guidelines that affect the BRI’s financing. 10 This sort of plan of action needs to continue for the Union to be able to actively participate in the initiative’s decisions. Europe should start by negotiating fallback measures in case of political instability along the Belt and Road routes, this includes outside and inside of the EU. As an example, a significant number of BRI countries, such as Thailand, Russia and Indonesia will face elections in 2018, and without an international agreement, the EU could witness the collapse of the BRI in a set of events that would be completely out of its control. 11 Additionally, the expansion of the EU’s trade links and liaisons with Asian and Middle-eastern countries has to be coupled to a control system that could guarantee that its security will not be jeopardized by the initiative. This control is essential to avoid problems arising from the “who” and “what” enters Europe, otherwise there is 99