New Silk Road Leads Through the Balkans – China and Southeast European Countries

At this year’s Sarajevo Business Forum, held on May 4th and 5th 2016, 760 million USD investment/credit of the Chinese Exim Bank into the energy sector in BIH was signed. But this investment did not come out of blue, neither has huge Chinese delegation composed of 150 officials and business people from a couple of provinces who attended this year’s SBF 2016.

The People’s Republic of China has entered the 21st century with the self-esteem of an economic superpower, but also with the sense of duty to regain its lost universal fame after the so-called “century of national humiliation”. Its economic growth, averaging 10% annually over the last 30 years, as well as its successful balancing on the global political scene, enabled China to start expanding into the markets of the United States of America, the European Union and African countries. However, this expansion has not progressed without obstacles – Chinese investments and companies encounter in third markets not only political opposition, but also severe competition, especially in technology-demanding sectors. Since 2008, when the financial crisis spread from the USA into Europe and the countries in the Euro-zone got caught up in debt problems, the attitude towards China and its economic power started to shift.

It was in this light that intensification of the relations between China and the countries of Central and Southeast Europe have started. The number of investments and the volume of trade exchange keeps growing. The bilateral relations are gaining a momentum, marking the beginning of renewal of the historical Silk Road, which had connected the Far East with Europe by land and sea routes for centuries.

The “New Silk Road” not only constitutes an infrastructural link between China and European countries, thus shortening the transportation of goods and equipment, but it also aims at enabling distributional, market and technological positioning of Chinese companies in the European continent. In this analysis, we want to examine the prerequisites for economic expansion of China, as well as current situation and future prospects of economic relations between the People’s Republic of China and the countries in Southeast Europe, in particular in view of anemic growth of the European Union and of ever more imminent rebalancing of the Chinese economy.

New Silk Road Leads Through the Balkans – China and Southeast European Countries

Balkan Triangle – European Perspective as Pythagoras Theorem

This is a tale of the enlargement soft power which helped transforming relation between countries in the triangle Zagreb Belgrade Sarajevo.  At the territory of this triangle, there are approximately fifteen million people of different ethnic and religious backgrounds who have been deeply divided throughout the history over the issue of past and who can hardly agree on the contents of a history textbook, but who are nonetheless very similar and economically and culturally mutually interdependent. Observing this triangle as a geometric shape, the lines Zagreb – Sarajevo and Sarajevo – Belgrade are catheti, while the line Belgrade – Zagreb represents a hypotenuse of this triangle. If for a moment we convert the relations between the states into a geometric form, by using the Pythagoras’ Theorem we could conclude, of course symbolically, sums of (squares) of relations of Sarajevo with other two capitals is equal to the (square) of the relation between ZAGREB and BELGRADE, as its hypotenuse. This geometry lesson and its perhaps forced application on the regional relations leads to a unique conclusion which very much fits the reality: Zagreb and Belgrade always held and still hold the key to regional relations, particularly at the territory that is the subject of this analysis.

Balkan Triangle – European Perspective as Pythagoras Theorem

Regional Reconnection – the New Paradigm

Over the course of the last 20 years, “the Balkans proper” (in this case, the former Yugoslavia plus Albania), with its great-power nationalisms and wrong ideologies, has practically eaten up its very substance and, as such, is unlikely to join Europe, which during this time has developed and grown on entirely different premises. It has become obvious that an all-encompassing strong desire for EU membership can be achieved only if the Balkan people embrace the very same principles of mutual connection on which the French, the Germans, and others have built the contemporary EU.

Are the Balkans really ready for this absolutely necessary change? The analysis asserts that slowly but surely the time is coming, and, together with this, and even more importantly, people are coming to understand this. Moreover, this time around, the connection is based on economic interests as the ideology of the new era, or, as the renowned journalist Tim Judah put it in a nutshell – on the logic of an economic Yugosphere. While it may be true that in public discourse, anything bearing the political and geographical determinant of “Yugo” still has a predominantly negative connotation, in real life, over the last ten years or so, there have been changes that carry within them all the most important ingredients for a new Balkan mix.

Regional Reconnection – the New Paradigm