Chinese project in Serbia raises familiar concerns over Beijing’s investments in the Balkans
Questions over a Chinese contract to build a multimillion-dollar sewage system in a Serbian town have raised flags among activists who say it’s a microcosm of how Belgrade treats Chinese entities.
The project in the Serbian town of Kragujevac has been published without competitive bidding or public procurement, raising questions of transparency and corruption over how Chinese companies and the Serbian government operate in the country.
The construction of the new 360 kilometer sewer network in the central city of Serbia began in November and was directly entrusted to the Ministry of Infrastructure, then awarded to the China Road and Bridge Corporation (CRBC), an international construction company based in Beijing, without competitive bidding. process for the offer.
The project is part of a larger Serbian-Chinese venture called Clean Serbia that was launched in 2021 by the Serbian government in 65 cities and municipalities and is worth $3.6 billion.
The goal of the initiative is to upgrade, repair and, in some cases, build entirely new water management systems across the country to provide better drinking water, control pollution and clean water. expanding access to modern sewage systems, which government statistics Pin up more than a third of Serbian households do not have access to it.
But as city officials in Kragujevac say their town needs a new sewage system to deal with their decades-long sewage and pollution problem, several opposition councilors are raising concerns transparency regarding the lack of known information about the offer and how it was delivered to the CRBC.
“I haven’t received any response except that the Chinese company is the main contractor,” Veroljub Stevanovic, an assembly councilor from Kragujevac who previously served as the city’s mayor, told RFE/RL. “Of course, the city [wastewater problems] need to be resolved, but first [we need to know] what is the real cost to get this and what are the terms of this loan.
In addition to corruption issues, the direct agreement between the CRBC and the Serbian government – as well as the lack of a bidding process for other companies to submit competitive bids – is a pattern wider which activists and watchdog groups say is how Serbian officials work with Chinese companies.
“It is essentially a reflection of the weakness of the representatives of our state, who wholeheartedly accept such arrangements,” Nemanja Nenadic, director of the Serbian program at the corruption watchdog organization Transparency International, told RFE/RL. “One side of the equation is what a foreign partner requires to make a deal, the other is whether the Serbian side is ready to accept [those demands].”
Beijing and Belgrade
Beijing has a close relationship with Serbian President Aleksandar Vucic and has steadily deepened its ties with Serbia and across the Balkans over the past two decades.
Belgrade’s ties with China have since spread to a wider range of sectors, from trade and defense to technology and education, with billions of dollars in Chinese cash flowing into the country under the guise of the Belt and Road Initiative (BRI), China’s global infrastructure. joint venture and through bilateral agreements.
While Serbia has increasingly followed a foreign policy that look east towards partners such as China and Russia, Belgrade is also looking west towards the European Union, which is not only a major trading partner and a leading investor through the European Investment Bank ( EIB), but also plays a vital role in setting up business and workers’ rights standards for projects.
In addition to loans and investments through the EIB, the EU also offers non-reimbursable grants to Serbia and other Balkan countries for infrastructure and modernization projects, making of the block one of the most advantageous available.
Yet Chinese investment in Serbia has grown rapidly and sparked controversy, as Beijing-backed companies have benefited from tax exemptions, been allowed to circumvent labor laws and enjoyed other forms of preferential treatment. In the same way, environmental damage caused by a Chinese-owned copper mine near the Serbian town of Bor has sparked pollution complaints and protests.
A study by the Bulgarian Center for the Study of Democracy published in September 2021 also indicated that Beijing’s growing economic footprint in Central and Eastern Europe over the past decade has coincided with a declining legal and governance standards throughout the region, Serbia being cited as an example.
Questions for Kragujevac
It is in this context that concerns are raised about the process of supplying the sewage system and sewage treatment plants in Kragujevac.
Although it is known that the Chinese CRBC will take the lead on the project, few other details are known or have been publicly stated, particularly around which other local or international companies the Chinese company may engage as sub-contractors. for the lucrative deal.
According to Serbian Foreign Minister Tomislav Momirovic, Serbian companies are to represent “not less than 49%” of the total number of contractors used in the Clean Serbia initiative.
But the lack of a tendering process made this difficult to verify.
According to comments emailed to RFE/RL by the office of the mayor of Kragujevac, the cities “covered by the Clean Serbia project have no financial obligation other than to provide land for the plots on which treatment plants and other projects will be built”.
The question of the cost is also still uncertain, although a bill which should be presented to the Serbian parliament confirms one of the credit agreements for the project, mentioning a loan of 232 million dollars which must be provided by China. Export and Credit Insurance Corporation, a large Chinese state-owned enterprise under the Chinese Ministry of Finance.
Kragujevac’s mayor’s office also told RFE/RL that $217 million has been provided by Serbia to build three sewage treatment plants, in addition to the sewage system.
China’s CRBC did not respond to RFE/RL’s requests for comment on how it will select contractors and how it will ensure European standards and regulations are met when implementing the project.
In response to RFE/RL’s questions about the procurement process, the Serbian Ministry of Construction, Transport and Infrastructure said that it had long-standing agreements with CRBC and that the criteria for selecting partners for the projects were based on the availability of funds and the efficiency of the contractor.
He added that EU standards for sewage treatment and national laws on planning and construction, as well as environmental protection, are adhered to in the design and construction process.
A familiar pattern
The Clean Serbia initiative is not the first example of Sino-Serbian cooperation on water and treatment infrastructure and Nenadic of Transparency International says it fits a typical pattern of circumventing existing rules and regulations.
As with the Kragujevac project, the Serbian Ministry of Construction, Transport and Infrastructure signed two agreements with the China Machinery Engineering Corporation (CMEC) in January 2020 for wastewater treatment, which were also awarded directly without appeal tenders or public procurement process.
During the signing of the contract, the Serbian and Chinese parties stressed that EU standards would be met and said that many of the bloc’s regulations had even been modeled and introduced into existing Serbian legislation, such as the procurement law. public, which prescribes mandatory tendering. and a tendering process for all projects.
But as Nenadic points out, these articles are already not being tracked, which could be an indicator for future projects circumventing other rules, despite public statements to the contrary.
“It is possible that they will claim that certain EU standards will be met,” Nenadic said. “However, what is quite obvious is that the rules are already almost identical to those of the EU and these are not being respected.”