POLICY OPINION No 8 / NOVEMBER 2020
POLICY OPINION No 8 / NOVEMBER 2020

Author(s): Igor Novaković
Subject(s): Politics, Economy, Energy and Environmental Studies, Environmental and Energy policy, Security and defense, Geopolitics
Published by: ISAC - Centar za međunarodne i bezbednosne poslove
Keywords: China; Western Balkans Energy Sector; Coal Power Plants; Chinese Infrastructure Loans; Renewable Energy Transition; Environmental Standards; EU Green Deal
Summary/Abstract: In the previous period, Chinese economic activity in the Western Balkans has been predominantly linked with infrastructure and energy projects. While this cooperation is often criticized from the geopolitical and geostrategic points of view, due to the increasing polarization between the US and China, as well as the EU and China, but also for clandestine deal-making and increasing potential for the expansion of corruption, there is a number of concrete challenges for the Western Balkans brought about by the cooperation with China. Local elites usually present energy and infrastructure projects as “FDIs from China”, while these are in fact loans, often including an obligation to hire Chinese companies, use Chinese technology, materials and, in some cases, even the labor force from China. Projects are usually based on interstate agreements, ratified by the parliaments, thus superseding domestic legislation. This is particularly related to overriding import taxes for construction materials, the obligation to hold public tenders, public procurement regulations etc. There are also cases, such as the reconstruction of the Stanari thermal power plant in Bosnian entity Republika Srpska, where the local government, by altering certain laws and regulations, gave collateral to the Chinese loan provider: the company itself, as well as subsidies for exploitation of coal and water. In other words, all of these “investments” would not have been possible without direct interventions by the ruling elites and bypassing or changing the legal provisions.

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