China is changing Serbia from within – The diplomat
Chinese businessman Wang Feng was an unexpected guest at the inauguration of Serbian President Aleksandar Vucic in 2017. On the afternoon of the event, Wang had an exclusive time slot with the new Serbian President, to discuss his plans for the future and have his photo taken in front of the blue and yellow flag of the EU.
On the same day, Wang met with staff members from the Office of the President, the Serbian Development Office and the Serbian Development Office to discuss “prospects and opportunities to build on the Belt and Road Initiative.” , focusing mainly on obstacles such as land, transport, tax policy and work visas.
At that time, few Serbs recognized the Chinese businessman, nor the Shandong Linglong tire company he represented. Today they are better known. The popular Serbian National Football League was renamed in honor of the company and is now called “Linglong Tire SuperLiga”. With this sponsorship and a substantial ongoing investment, the Chinese company aims to be one of the largest suppliers of tires for the European automotive industry.
This, and a number of other Chinese investments, is seen as a boon to Serbian leaders stressed by high unemployment rates and an outdated, uncompetitive industry. Since Vucic took office, ties with China have grown stronger, with significant investments in coal-fired power plants and heavy industries such as copper mining and smelting, and the revitalization of a decrepit steel mill. .
The investments were accompanied by massive Chinese loans, high-level political meetings and the purchase of Chinese weapons. In 2019, Serbia even invited Chinese security forces participate in joint exercises.
A recent European Parliament resolution shed light on Serbia’s love affair with China and expressed concern over Beijing’s growing influence over Belgrade. Of particular concern are the lack of transparency of Chinese investments and loans, as well as the inability of investors and lenders to conduct environmental and social impact studies.
The European Parliament called on Serbia to strengthen its legal compliance standards for Chinese business activities and warned Belgrade that its behavior undermines the country’s European accession process.
The gradual weakening of legal requirements for Chinese investments in Serbia is a real concern. Our legal analysis, carried out in collaboration with Serbian lawyers, shows that China’s influence has had an overall negative impact on the legal system. Its business activities have increased the number of loopholes in the law, which provided exceptions for heavily polluting large-scale infrastructure investments, mostly from Chinese companies or funded by Chinese state loans.
Several new Serbian laws and procedures have made it easier to invest under the radar. One of these is the 2019 Public Procurement Act, which weakened regulations governing competition, access to public information, and environmental protection.
Another is the law of February 2020 on “special procedures”. This legislation allows the government to designate infrastructure projects as urgent, and therefore to ignore procedural rules applicable to public procurement. Instead, they are subject to special procedures, as they provide strategic partnerships in projects of particular importance to the Republic of Serbia.
The Serbian government often declares that projects, especially Chinese investments in polluting industries, are of national interest so that the laws can be applied flexibly. In addition, government authorities often refuse requests for information that are made in whole or in part under freedom of information law, thereby preventing citizens and civil society from holding government accountable.
In September 2018, a year after Vucic’s inauguration, the president visited Beijing and signed a memorandum of understanding with Shandong Linglong for the construction of a tire factory. The Serbian government then declared this factory a project of national importance. Neither this decision nor its legal basis has been explained or made public, and it is not clear whether this decision allows the project to effectively circumvent Serbia’s legal framework.
Following the signing of the MoU, ownership of over 96 hectares of land was transferred to Linglong International Europe directly and without the money changing hands. Due to the special status of the project, the investor was exempted from paying a fee to re-designate agricultural land for construction.
Local citizens asked for information on the implications that the Linglong factory could have on their health, the environment and the safety of workers. To date, however, no information on these concerns has been provided.
Similar behavior has been observed in several other investments involving Chinese players in Serbia. This is bad news for Serbian citizens, which suffer from air pollution, shrinking civic spaces and increasing levels of corruption. It could also bode ill for Serbia’s EU membership negotiations.