Regional Dimensions of the Belt and Road Initiative

A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E

REGIONAL DIMENSIONS OF THE BELT AND ROAD INITIATIVE

TAMÁS PÉTER BARANYI – ALESSANDRO D’ONOFRIO – BIANKA RESTÁS – VIKTÓRIA ANNA PAPP – ORSOLYA TALÁROVICH – TAMÁS KOZMA – ÁDÁM ÉVA – PÉTER DOBROWIECKI – ZSOLT CSEPREGI

COMMENTARY AJRC-Analyses 2019A04

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E

AJRC-Analyses Series of the Antall József Knowledge Centre

Publisher-in-Chief: Péter Antall Managing editor: Tamás Péter Baranyi Editorial office: Antall József Knowledge Centre H-1093 Budapest, Czuczor Street 2

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© Tamás Péter Baranyi – Alessandro D’Onofrio – Bianka Restás – Viktória Anna Papp – Orsolya Talárovich – Tamás Kozma – Ádám Éva – Péter Dobrowiecki – Zsolt Csepregi, 2019 © Antall József Knowledge Centre, 2019 ISSN 2416-1705

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E REGIONAL DIMENSIONS OF THE BELT AND ROAD INITIATIVE

TAMÁS PÉTER BARANYI – ALESSANDRO D’ONOFRIO – BIANKA RESTÁS – VIKTÓRIA ANNA PAPP – ORSOLYA TALÁROVICH – TAMÁS KOZMA – ÁDÁM ÉVA – PÉTER DOBROWIECKI – ZSOLT CSEPREGI

I. Introduction The aim of present paper is to analyse and compare different approaches to the challenges and opportunities that Europe and Asia face in terms of connectivity, especially in the light of China’s Belt and Road Initiative (BRI), as well as the EU’s Asia-Europe connectivity plan. The paper primarily focuses on the economic, political, and geopolitical dimensions of the topics at hand. Firstly, the authors touch upon different approaches to connectivity and compare the EU’s connectivity plan and BRI. Secondly, the developments of BRI will be presented along with actual cases that show how BRI projects have been realized so far. In the next chapter, a summary of the main pillars of the EU’s connectivity strategy will be provided, which will also look at the strategy’s key elements and the EU’s considerations behind it. Fourthly, the role of Central Asia in these initiatives, as well as China’s and the EU’s current and potential role in the region will be analysed. The fifth chapter will shed light on the EU and China’s attitude towards the Middle East and the different ways they engage with this turbulent “in-betweener” region. Finally, the Visegrad Cooperation’s (V4) role in the China-CEE Cooperation and the BRI will be assessed together with each V4 country’s approach towards BRI and possible ways for deepening connectivity between China and Europe.

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II. From “systemic rival” to “a union values”: The EU–Asia Connectivity Plan vs the Belt and Road Initiative For the first time in this century, there is not only one single plan for tackling the connectivity of Eurasia: there exist at least three. The European Union, albeit limited in scope, is a compelling political, administrative, and economic player. This older vision of an expanding Europe—with a strong transatlantic counterpart—is now challenged

by Chinese attempts to build connectivity through the Belt and Road Initiative. In the following pages we compare the common and contrasting

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E traits of BRI and the EU–Asia connectivity strategy adopted in 2018. The issues covered by Eurasian connectivity are naturally not only economic, but also political in nature, so an outlook on the political environment will also be provided.

After decades of unhindered transatlantic priorities on the European continent, the 2010’s saw a radical change in outlook in European politics. In the wake of the global financial crisis of 2008, Europeans were short of capital, and the U.S. was not in a position to boost European economies. It was precisely in this setting that China launched its One Belt One Road Initiative in 2013—a comprehensive plan of enhancing trade, investments, and connecting the “two halves” of the Eurasian landmass. The Belt and Road Initiative involves China and many other countries in Eurasia with the goal of making infrastructural connections, facilitating investments, enhancing trade relations, people-to-people contacts, and easing administrative burden. A fresh Chinese attempt to fill the gap left by European and American capital spurred criticism in the West. Europeans tend to point to trade imbalances and the lack of greenfield investments, and to the role of multinational corporations that facilitate most of the trade between the two parties. Also, taking a specific example, Hungarians welcome large infrastructural investments by the Chinese but they would need more of their own involvement and the positioning of the project into a larger development idea.1 The Chinese side, however, never fails to mention the paradox that China is still not considered worthy of a “market economy” status by the European Union, but Europeans still expect Beijing to design their trade vis-à-vis Europe, which would clearly contradict free market principles.2 The BRI project came under more systemic criticism from the European side because of a perceived lack of openness to Western companies, transparency, and sustainability. An economic cautionary tale is that of Sri Lanka, which joined the BRI, accepted Chinese loans, and welcomed Chinese business, but found itself in a vicious cycle of serious debt trap. Corruption is also an oft-cited reason for which joining the BRI might not be a good idea.

However, others point out that local problems are generated locally and Chinese involvement may only make them more visible on a global stage.3 Yet another criticism is BRI’s potential to become a powerful tool for soft

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1 Baranyi Tamás Péter – Csepregi Zsolt – Dobrowiecki Péter – Hári Bernadett – Pál Zsombor Szabolcs – Schwarcz Emese: China and the V4 region. AJTK working paper. 7 December 2016.

2 Ma Junchi: The Challenge of Different Perceptions on the Belt and Road Initiative. Croatian International Relations Review. 2017/78. 163–164.

3 Ken Moak: European Nations should join BRI. Asia Times. 19 April 2019. <https://www.asiatimes. com/2019/04/opinion/european-nations-should-join-bri/ > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E power activities.4 In fact, even a new term, “Chinfluence” was coined to describe how China exerts influence through its investments, trade relations, and enhanced economic activities.5 In spite of all the criticism, however, European countries do enjoy a good trade relationship with China, and specifically Eastern European nations welcome the widening of their foreign political and economic elbow room. Several new opportunities opened up in the wake of the BRI and the prospect brought about by Chinese investments.6 Of course, BRI does not exist in a vacuum. Not only this new European interest but earlier Chinese trade practices have also led the Trump Administration to herald a new era in which “trade wars” often characterize Chinese–American relations. With trade wars, tariffs and counter-tariffs often levied and exempted, the economic control became a much more political issue than it was before 2010s. Still, it was not until autumn 2018 that Europe came up with an answer to contemporary trade issues.7 On September 19, 2018 the EU–Asia connectivity strategy was announced by Federica Mogherini. The plan was emphatically not an answer to the BRI, though most observers agree that it implicitly does serve as a counterproposal to the Chinese plan. This new framework is to be built upon a set of “old frameworks”: the Trans-European Transport Network (TEN-T), the Asian Development Bank, the Asian Infrastructure Investment Bank, and a series of other, European and Asian institutions and networks. In this sense, the strategy is more likely to become an overall administrative authority and a central plan over a series of existing opportunities. It is not as inclusive as the Belt and Road Initiative, either: the strategy builds more on existing relationships and tries to administer them under an umbrella, an overarching institutional framework. As a result, the connectivity strategy is not a holistic enterprise like BRI— rather, it concentrates on individual, more important regions in both Asia and Europe.8 Bart Gaens of the Finnish Institute of International Affairs summarized the key concepts of the strategy as follows: “The EU’s connectivity strategy emphasizes three core ideas. Connectivity has

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4 Eleanor Albert: China’s Big Bet on Soft Power. Council on Foreign Relations. 9 February 2018. <https://www.cfr.org/backgrounder/chinas-big-bet-soft-power > Accessed: 31 July 2019.

5

See the webpage Chinfluence at <https://www.chinfluence.eu/ >.

Andreea Budenau: The ‘16+1’ Platform – China’s Opportunities for Central and Eastern Europe.

The French Institute for International and Strategic Affairs, Asia Focus #86. October 2018. <https:// www.iris-france.org/wp-content/uploads/2018/10/Asia-Focus-86.pdf > Accessed: 31 July 2019.

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7 Bart Gaens: Europe’s Connectivity Strategy and the Challenge of China: Rivalry, Reciprocity or Both? Finnish Institute of International Affairs, FIIA Comment. 22 December 2018. <https:// www.fiia.fi/sv/publikation/europes-connectivity-strategy-and-the-challenge-of-china?read > Accessed: 31 July 2019.

8 Angela Stanzel: China’s BRI and Europe’s Response. The American Institute for Contemporary German Studies. 17 January 2019. <https://www.aicgs.org/publication/chinas-bri-and-europesresponse/ > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E to be economically, fiscally, environmentally, and socially sustainable in the long term. It needs to be comprehensive, covering transport links, digital networks, energy flows, and people-to-people networks. Finally, connectivity needs to be rules-based and transparent.” In other words, sustainability is relatively slower than imaginative Chinese-funded projects, but may be greener and less likely to spin out of control.

Sustainability concerns not only the environment but also “financial sustainability—a way to avoid “debt traps” in Europe (which would threaten the entire EU as member-states may eventually refund their debts with EU funds).9 It should be comprehensive enough to avoid the case-based approach of BRI, which is sometimes hard to follow. It should also be transparent and rules-based, i.e. the European Union would not welcome bilateral dealings and favored companies neither on the providing, nor on the receiving end of transactions. All these are seemingly designed to rectify the things that had often been criticized in BRI. (A comparison of key features of the BRI and the strategy are below in figures.) There is, however, an embedded controversy in the European Union’s goals: they feel that some of the Chinese practices are not safe enough, though they understand that the Chinese way might be tempting. So they come out with an original plan that safeguards against the criticized Chinese traits but which are not tempting or welcoming enough. It may well be that the connectivity strategy, careful to avoid the loopholes of the BRI, might not be tempting enough to replace the scope of the BRI. Belt and Road Initiative

EU–Asia Connectivity Strategy

Scope

ever more inclusive

limited, key regions

Ambitions

being attractive

being safe

Financing

cooperative

cooperative

Business

bilateral

multilateral

Sustainability

welcome

indispensable

Transparency

cumbersome

European standards

Quality

local and Chinese standards

stronger European standards

Comprehensiveness

not to hinder flexibility

indispensable

Procurements

fit to case

strictly rules-based

Procedure

case-based

more bureaucratic

Overall structure

new opportunities under a single framework

old and new networks and opportunities under an umbrella

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9 Keegan Elmer: EU’s connectivity plan ‘more sustainable’ than Beijing’s belt and road, European official says. South China Morning Post. 27 April 2019. <https://www.scmp.com/news/china/ diplomacy/article/3007878/eus-connectivity-plan-more-sustainable-beijings-belt-and-road > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E Figure 1.1 shows a comparison between BRI and the connectivity strategy.

However, BRI is an already existing and expanding framework, while the connectivity plan is yet to materialize in its full scale. Much depends on how China—which is not emphasised in the document—would cooperate in the project, and how eager European countries will be to join. Nationstates behind the EU structure are not united: Italy has just recently become the only G7 member to join BRI, while Germany called China a “systemic rival”.10 Germany, the economically most powerful EU memberstate, is obviously willing to play a bigger role in trade, but since the intensification of EU–American trade debates they have tended to be more cooperative in tone. A fresh German outlook was provided by Economy Minister Peter Altmaier, who called the connectivity strategy a device to “unite European and Chinese values.”11

III. How does BRI come into play?

Since its launch six years ago, the Belt and Road Initiative has emerged as a new pillar of regional integration structure in East Asia and as part of a comprehensive plan to connect the Afro-European landmass and beyond. A few months after taking up the role of president, Xi Jinping first mentioned China’s plan to launch the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, which would connect many regions mainly through infrastructure and trade. The plan seemed grandiose but quite vague and its substance was difficult to interpret. BRI was and still is loosely defined, ever changing and expanding—signified by the numerous name changes, too. Reading the very first BRI map most observers assumed the initiative involving 65 countries aspired to connect Europe with Asia.12 Currently there are 126 countries and 29 international organisations which have signed cooperation documents with China on BRI and now the initiative also encompasses, for example, the Arctic13 and Central American countries. It is true, however, that from the beginning China presented BRI as an open arrangement in which all countries were welcome to participate. Nonetheless, the projects under BRI are still primarily concentrated in Eurasia and parts of Africa. The Silk Road Economic Belt focuses on linking China to Europe through Central

7

Hans von der Burchard: EU slams China as ‘systemic rival’ as trade tensions rises. Politico. 12 March 2019. <https://www.politico.eu/article/eu-slams-china-as-systemic-rival-as-tradetension-rises/ > Accessed: 31 July 2019.

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11 Jakob Hanke: Germany seeks common ground with China amid trade war. Politico. 21 June 2019. <https://www.politico.eu/article/germany-seeks-common-ground-with-china-amid-tradewar/ > Accessed: 31 July 2019.

12 Shannon Tiezzi: China’s New Silk Road Vision Revealed. The Diplomat. 9 May 2014. <https:// thediplomat.com/2014/05/chinas-new-silk-road-vision-revealed/ > Accessed: 31 July 2019.

13 China’s Arctic Policy (中国的北极政策). Xinhuanet. 26 January 2018. <http://www.xinhuanet.com/ politics/2018-01/26/c_1122320088.htm > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E Asia and Russia, connecting China with the Middle East through Central Asia and bringing together China and Southeast Asia, South Asia and the Indian Ocean. The 21st-Century Maritime Silk Road links Chinese coastal ports with Europe through the South China Sea and the Indian Ocean, while connecting China with the South Pacific Ocean through the South China Sea. Although BRI has remained vague in some respects, under the name of the Belt and Road Initiative the economic belt and the maritime silk road have been filled with some meaning. The two Belt and Road Forums held in 2017 and 2019 have showcased the growing interest of countries in the initiative, as well as China’s global ambitions. Moreover, as one of the core elements of President Xi’s foreign policy and crucial to his ideological program the “China Dream” of reviving China’s national greatness, BRI has also been written into the constitution of the Chinese Communist Party (CCP).

The scope of BRI has been outlined in two policy documents, the “Vision and Actions on Jointly Building Silk Road Economic Belt and 21stCentury Maritime Silk Road”14 and the “Vision for Maritime Cooperation under the Belt and Road Initiative”15 issued by Chinese authorities in 2015 and 2017, respectively. The foundational 2015 document specifically defines the following five areas for cooperation: policy coordination, facilities connectivity, financial integration, unimpeded trade and people-to-people bonds. From these documents, it is clear that the BRI was not intended to simply be an infrastructure connectivity plan, but rather a comprehensive vision of Chinese policy. The aforementioned policy papers set out the goals and cooperation areas with a strong emphasis on connecting regions.16 In this context, political coordination means the coordination of the policies of national, regional, and international institutions. By investing in building and connecting physical infrastructure, new and existing networks of roads, railways, oil and gas pipelines, and optical cables would be realized, in addition to logistics centres, industrial parks, and sea ports, which would change the traditional economic exchanges between manufacturing hubs, markets, and sources of natural resources in this region covered by the BRI.17 To ensure unimpeded trade, bureaucratic barriers should be

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14 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road. National Development and Reform Commission, People’s Republic of China. March 2015. <http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html > Accessed: 31 July 2019.

15 Vision for Maritime Cooperation under the Belt and Road Initiative. Xhinhuanet. 20 June 2017. <http://www.xinhuanet.com/english/2017-06/20/c_136380414.htm > Accessed: 31 July 2019.

16 Viktor Eszterhai: The Belt and Road Initiative—The Dawn of a New International Order? In Focus—China at the dawn of the New Era. 2018/2. 42–45.< https://ajtk.hu/en/research/in-focus/ in-focus-china > Accessed: 31 July 2019.

17

Ibid.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E removed and in the long term free trade zones should be established as well. The aim of financial integration is to harmonise and jointly control financial services and the facilitate the currency swap of the regions involved. Through cooperation in research and development, tourism, scholarship opportunities, and various exchange programmes for student and researchers, the initiative aims to build and strengthen people-topeople bonds.

According to the “Visions and Actions,” the initiative is a systematic project which should be jointly built through consultation by the parties and integrate the development strategies of the countries along the Belt and Road. BRI aims to establish a new model for global governance and international cooperation, but in order to achieve its goals China is facilitating the already existing bilateral and regional cooperation mechanisms, such as the Shanghai Cooperation Organization and the ASEAN+, among others. In order to finance BRI’s goals, China has established new funds and institutions such as the Asian Infrastructure Investment Bank (AIIB), BRICS New Development Bank (NDP), the Silk Road Fund, China-ASEAN Investment Cooperation Fund, the China–Central and Eastern Europe Investment Cooperation Fund, and additionally, BRI projects can be funded by China’s state banks such as the China ExportImport Bank, China Development Bank, or the Agricultural Bank of China.

A few years down the road, some BRI projects have come to fruition, but the amount of money invested into these projects vary depending on the source. According to the Chinese Ministry of Commerce, 18 the nonfinancial direct investment by Chinese enterprises had reached more than 90 billion USD by 2018, while MERICS’s data stated that 70 billion USD had been invested into BRI related projects in the first 5 years.19 It is worth noting that, although there are different projects of varying scales in the making, such as railways connecting China with Thailand, Laos, Mongolia, Kazakhstan, gas and oil pipelines through Turkmenistan and Myanmar, as well as the keystone 46 billion USD China-Pakistan Economic Corridor (CPEC), it is still not quite clear what exactly qualifies as a Belt and Road project. BRI has become a brand or buzzword in a way that every project that has “belt and road” in their names can easily get Chinese financial support. At the same time, there are projects that were launched before 2013, such as CPEC, and are now named BRI projects, while some projects are in line with

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18 MOFCOM Department of Outward Investment and Economic Cooperation Comments on China’s Outward Investment and Cooperation in the First Quarter of 2019. Ministry of Commerce, People’s Republic of China. 17 January 2019. < http://english.mofcom.gov.cn/article/zt_cv/lanmucc/201901/20190102829747.shtml > Accessed: 31 July 2019.

19 MERICS Belt and Road Tracker. Mercator Institute for China Studies. < https://www.merics.org/ en/bri-tracker > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E the aims of the BRI are not yet called so. This phenomenon as a doubleedged sword serves China’s interests and contributes to the ambiguity and flexibility of the initiative, too.

The “Belt” part of the Belt and Road Initiative so far has six land corridors that connect more than sixty countries, a number that keeps growing as more and more countries join, and each corridor serves different geopolitical and economic goals of China. The New Eurasia Land Bridge Economic Corridor (NELBEC) is a nearly 12,000km-long railway system that stretches from Lianyungang in China’s Jiangsu province through Alashankou in Xinjiang to Rotterdam in the Netherlands, and which is already operational albeit in need of modernisation to increase the speed of transportation. Rail transportation through NELBEC lacks economic rationale in terms of time, price, and transportable weight over sea freight, but it definitely contributes to the development of Western Chinese territories.20 The China-Pakistan Economic Corridor, comprising highways, pipelines, several energy projects, and the Chinese-operated Gwadar port, is the most developed of the six BRI corridors and a significant test for the plan. The project was launched on April 20, 2015 when Chinese President Xi Jinping and Pakistani Prime Minister Nawaz Sharif signed 51 agreements and a memorandum of understanding. Since then, twenty out of 43 projects were confirmed to have been completed or are under fulfilment. The main goal of CPEC is both to transform Pakistan’s economy—by modernizing and improving its road, rail, air, and energy transportation systems—and to connect the Pakistani ports of Gwadar and Karachi with China’s Xinjiang province and beyond by overland routes between 2014 and 2030.21 As a result of the project, 60,000 jobs have been created and it is expected to benefit millions of families when completed. Besides the many positive effects of CPEC projects, it has posed many challenges for the country as well, mainly from economic, environmental, and security aspects.22 The concept of the Bangladesh-China-India-Myanmar Economic Corridor dates back before the announcement of BRI, to 1999, and plans to connect Kunming, the capital of China’s Yunnan province, and Kolkata in India. The region is rich in natural resources, in need of FDI, and

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20 Judit Szilágyi: The Belt and Road Initiative: China’s Grand Strategy to Become a Superpower. In: Dilemmas and Challenges of the Chinese Economy in the 21st Century. Economic Policy Effects of the Belt and Road Initiative, edited by Csaba Moldicz. Budapest Business School University of Applied Sciences, Budapest, 2018. 31–34.

21 Shayan Rauf: China–Pakistan Economic Corridor (CPEC). Encyclopædia Britannica. 4 August 2017. <https://www.britannica.com/topic/China-Pakistan-Economic-Corridor > Accessed: 31 July 2019.

22 Asif Amin: Belt and Road Initiative five years later. China Daily. 10 August 2018. < http://www. chinadaily.com.cn/a/201808/10/WS5b6d46f5a310add14f38525f.html > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E located at the meeting point of the three markets of China, Southeast Asia, and South Asia. Even though the project seems completely rational economically, it has been slow due to political, environmental, and social concerns such as demographic and ethnic tensions.23 Through the China-Central and West Asia Economic Corridor China covers most infrastructure investment needs for the region in exchange for natural resources and access to markets. Further analysis about the relations between China and Central and West Asia will be provided in chapters V and VI. The China-Mongolia-Russia Economic Corridor seems to be the most straightforward, as the countries have well-established political relations and intertwining economic interests to facilitate cross border cooperation. Through this economic corridor China can promote its northeastern region’s modernisation and reach Europe via train in the shortest time. Russia’s interest lies in modernisation of the Siberian areas’ infrastructure, while Mongolia is in need of transportation infrastructure development, since 90% of its exports—mainly raw materials and agricultural products—go to China.

The China-Indochina Peninsula Economic Corridor primarily covers the Greater Mekong Subregion from China’s Pearl River Delta along the Nanchong-Guang’an Expressway and the Nanning-Guangzhou highspeed railway to Hanoi and Singapore. This land corridor’s importance for China is manifold as, besides establishing and enhancing economic relations with its neighbours, it boosts cooperation with the ASEAN countries and provides access for China to the strategically important South China Sea, which is also the key element of the 21st-Century Maritime Silk Road.

The “Road” part of BRI is the 21st-Century Maritime Silk Road (MSR), aimed at boosting infrastructure connectivity throughout Southeast Asia, Oceania, the Indian Ocean, and East Africa. MSR projects have prospects for developing regional blue economy and contribute to securing key supply chains for China. MSR is also crucial because freight continues to be the key in terms of volume and unbeatable in price. The MSR projects have primarily been concentrated in the coastal states of the IndoPacific region, particularly port-development projects such as Kyaukpyu in Myanmar, Iran’s Chabahar port, the aforementioned Gwadar port, and Sri Lanka’s Hambantota International Port.

Besides the many positive aspects of the BRI, numerous analysts have argued that China’s military objectives are manifested in the new initiative, and it is also could lead to the so-called Chinese debt trap, with 23

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Szilágyi, 37.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E Sri Lanka being the prime example.24 The small and developing country is located at the epicentre of the MSR in the Indian Ocean, and has been eagerly engaging in the commercial and economic aspects of the project. For small countries like Sri Lanka the gigantic new trade corridor serves as an economic opportunity to advance development and boost domestic, cross-border, and maritime connectivity. It is also clear why the small country is important for China: Sri Lanka is abundantly rich in oil and gas, as well as in fisheries and seabed minerals. The most significant aspects for China, however, are the strategic supervision of its harbours and shipping lanes.25 Hambantota’s maritime port, also known as the Magampura Mahinda Rajapaksa Port, was one such infrastructural project. The port was leased to China Merchant Port Holdings Limited (CM Port) for 99 years for 1.12 billion USD in 201726 and the estimated construction cost of phase one of the project was 306 million USD, of which 85 percent was funded by the EXIM Bank of China with an interest rate of 6.3 percent.27 It has become the most frequently cited example of how BRI can go wrong, because when Sri Lanka could not meet its debt commitments, it had no choice but hand over the port to Chinese control.

However, data shows that the country’s ballooning debt reimbursement obligations go beyond the debt owed to China. The loan repayments for Hambantota do not amount to a large portion of Sri Lanka’s foreign debt servicing payments, which is estimated 55 billion USD. It means debt repayments for the loans obtained for the above mentioned port amount to only around 9 percent of the country’s total annual foreign debt payments.28 While the part that BRI projects played in this turn of events is evident, the economic reason why Sri Lanka leased out the port to China was mostly due to a change in its foreign debt composition and structural instability of its economy, such as an intensive reduction of trade and the rise of protectionism.29 Certainly, it is essential for the BRI partner country’s leaders to consider if a project or part of a project is

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24 Michael J. Green: China’s Maritime Silk Road: Strategic and Economic Implications for the IndoPacific Region. Center for Strategic and International Studies. 2 April 2018. <https://www.csis.org/ analysis/chinas-maritime-silk-road > Accessed: 31 July 2019.

25 Priyanka Moonesinghe: Playing Both Sides of the Fence: Sri Lanka’s Approach to the BRI. South Asian Voices. 9 May 2019. <https://southasianvoices.org/both-sides-of-the-coin-sri-lankasapproach-to-bri/ > Accessed: 31 July 2019.

26

Ibid.

Koh King Kee: 斯里兰卡汉班托塔港问题的真相. Beijing Review. 29 September 2018. <http://www. beijingreview.com.cn/shishi/201809/t20180929_800143048.html > Accessed: 31 July 2019.

27

28

Moonesinghe.

Umesh Moramudali: Is Sri Lanka Really a Victim of China’s ‘Debt Trap’? The Diplomat. 14 May 2019. <https://thediplomat.com/2019/05/is-sri-lanka-really-a-victim-of-chinas-debt-trap/ > Accessed: 31 July 2019.

29

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E appropriate for the country.30 The country’s position along a specific corridor and in the emerging global connectivity networks will influence the scope and scale of the measures that each country ought to pursue.

It seems clear, however, that participating countries will need to actively engage and take deliberate actions in order to realize the potential of BRI. The Belt and Road Initiative has been taking shape in front of our eyes and it has become apparent that BRI’s pragmatically changing projects and financing could be fully viable. On the other hand, there are several challenges that emerged during the projects already in progress that will need to be addressed by both China and the partnering countries.

IV. The EU’s Connectivity Strategy When Xi Jinping announced the New Silk Road in 2013, Europeans initially welcomed the Chinese-led initiative, expecting to gain advantage from the huge infrastructural development. However, over the past five years the standpoint of many European countries has changed significantly, and many countries in the European Union started to question China’s economic and political intentions behind the initiate. These concerns have increased over the last five years even though China has made considerable efforts to promote the initiative. Beijing has tried to finetune the New Silk Road’s narrative to attract more countries to cooperate with China and to eliminate concerns expressed by the United States and numerous countries in Europe. It seems, however, that the more China has tried to find an appropriate language and stress its peaceful intentions, the more European countries have started to question the substance behind China’s narrative. Many countries view BRI as a means by which China intends to further strengthen its global influence, and as a consequence, it clearly divides the EU, splitting Member States into supporters and opponents. As a unified response to the BRI, the EU has developed its connectivity strategy for Asia in 2018, which looks like a counter-narrative to the ongoing infrastructure development with Chinese characteristics.31 Instead of categorically rejecting China’s ambitious international development initiative, the European Union is currently seeking to shape China’s strategy and provide possible

13

30 Sholto Byrnes: The Example of Sri Lanka Handing Over a Port to China Shows the Belt and Road Initiative Was Never Meant to Be a Pure Altruism. The National. 10 September 2018. <https://www. thenational.ae/opinion/comment/the-example-of-sri-lanka-handing-over-a-port-to-china-showsthe-belt-and-road-initiative-was-never-meant-to-be-pure-altruism-1.768918 > Accessed: 31 July 2019.

31 Angela Stanzel: China’s BRI and Europe’s Response. The American Institute for Contemporary German Studies. 17 January 2019. <https://www.aicgs.org/publication/chinas-bri-and-europesresponse/ > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E alternatives.32 While the U.S. government has taken a more pragmatic approach to BRI, the EU has designed a more flexible position. It emphasizes the need for the initiative to comply with European standards and principles, while also looking for areas where Chinese and European interests align. In the new EU-China: A Strategic Outlook document, the focus is to achieve a more balanced relationship with China, based on fair competition and market access, with the goal of convincing China to commit to reforms (within the framework of the WTO) of industrial subsidies and policies.33 The common strategy of the European Union could be an important step forward and a potential tool for further cooperation. But to effectively implement it, besides other requirements, there should be a joint commitment, and a willingness from both sides to create a common, workable, and effective dialogue.

On 19 September 2018, the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy, Federica Mogherini, released the EU’s strategy for a new and comprehensive approach to improve connectivity between Europe and Asia. This strategy, drawing on the EU’s experience of increasing networks within its member states and in its immediate neighbourhood, like the Western Balkans and Eastern neighbourhood, outlined a plan to improve connectivity with Asia through measures in sectors ranging from transport to the digital economy and from energy to human rights.

In presenting this strategy the EU’s leaders emphasized the fact that it has to be “economically, environmentally, and socially sustainable, and based on international rules and an open and transparent investment environment.”34 Despite the encouraging perspectives that such a strategy means for the EU and its strategic global role, Brussels’ decision to undertake this action has been motivated by the necessity of defining a more clear position vis-à-vis China’s growing importance in the broader Eurasian region and, at the same time, clarifying the European Union’s perspectives and priorities towards cooperation between Europe and Asia. In fact, since President Xi Jinping in 2013 launched the Belt and Road Initiative, which aims to facilitate exchanges between China and more than 120 countries including EU member states through new land and maritime links, the

14

32 Erik Brattberg: European Pragmatism at the Belt and Road Forum. Carnegie Endowment for International Peace. 30 April 2019. <https://carnegieendowment.org/2019/04/30/european-pragmatism-at-belt-and-road-forum-pub-79037 > Accessed: 31 July 2019.

33 Valbona Zeneli: Italy Signs on to Belt and Road Initiative: EU–China Relations at Crossroads? The Diplomat. 3 April 2019. <https://thediplomat.com/2019/04/italy-signs-on-to-belt-and-road-initiative-eu-china-relations-at-crossroads/ > Accessed: 31 July 2019.

34 Fraser Cameron: The EU’s new Connectivity Strategy is a long overdue response to China’s assertive behaviour. The Diplomat. 19 September 2018. <https://thediplomat.com/2018/09/europesanswer-to-chinas-belt-and-road/ > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E European Union recognized that, besides the incredible opportunities in terms of trade and growth, the Chinese initiative also poses deep challenges to its interests when it comes maintaining an open and rulesbased global economic system.35 While the EU’s strategy for connecting Europe and Asia marks a significant step forward a comprehensive, systematic approach to the Belt and Road Initiative, it also tries to open up avenues to cooperate with China and concentrate on common priorities.

To understand the strategic relevance of BRI and the EU’s strategy, it is worth mentioning that Europe is a prime investment destination for the Belt and Road Initiative. Though not all Chinese investments in Europe are strictly BRI-related, Chinese foreign investment here has soared from under 1 billion euros in 2008 to 35 billion euros in 2016—more than triple the amount of European money flowing in the opposite direction.36 In essence, the new connectivity strategy’s aim is to build on and expand existing EU connectivity initiatives, based on three main pillars: creating transportation links, energy and digital networks, and human connections; offering connectivity partnerships to countries in Asia and other organisations; and promoting sustainable finance through the use of diverse financial tools.37 As for the first pillar, extending the EU’s TransEuropean Transport Networks (TEN-T) and connecting it with networks in Asia is also a crucial interest of the EU. Alongside this, the EU’s digital single market will provide a blueprint for improving trade in digital services, while its Digital4Development strategy is expected to foster socio-economic development in the entire area. In Asia, the EU should promote a peaceful, secure and open ICT environment, while addressing cybersecurity threats and protecting human rights and freedoms online, including personal data.38 With regard to the energy issue, the example of liberalisation of the European energy market will be pivotal for Asian countries and will help them to focus on market-driven transformation towards clean energy while promoting regional energy connectivity platforms. Finally, given the emphasis the Joint Communication puts on people’s benefits and rights, the promotion of human exchanges and mobility, for example in education, research, innovation, culture and tourism, will be the added value of this new connectivity strategy.

35

15

Alessia Amighini (ed.): China’s Belt and Road: A Game Changer? ISPI, Novi Ligure, 2017.

Erik Brattberg – Etienne Soula: Europe’s Emerging Approach to China’s Belt and Road Initiative.

Carnegie Endowment for International Peace. 19 October 2018. <https://carnegieendowment. org/2018/10/19/europe-s-emerging-approach-to-china-s-belt-and-road-initiative-pub-77536 > Accessed: 31 July 2019.

36

37 EU steps up its strategy for connecting Europe and Asia. European Commission. 19 September 2018. <http://europa.eu/rapid/press-release_IP-18-5803_en.htm > Accessed: 31 July 2019.

38 Digital4Development: mainstreaming digital technologies and services into EU Development Policy. SWD(2017) 157. European Commission. 2 May 2017. <https://ec.europa.eu/europeaid/sites/ devco/files/swd-digital4development_part1_v3.pdf > Accessed: 31 July 2019.

H-1093 Budapest, 2 Czuczor Street | +3620 310 8776 | ajtk@ajtk.hu | www.ajtk.hu

A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E The second pillar of the EU’s strategy focuses on developing strong bilateral and global sustainable connectivity by building new bilateral, regional and international partnerships that are sustainable, open, inclusive and rules-based, while strengthening existing ones.39 While extending the European experience in regional cooperation to Asia will create a cooperative environment based on the EU’s sustainable and rulesbased connectivity model, the relationship with China could be reinforced by strengthening the 2015 EU-China Connectivity Platform, which aims to ensure that BRI is an open platform which adheres to market rules and international norms. This plan will help both parties to create synergies and address differing points of view. At a regional level, the EU is able to draw on its experience of contributing to the enhanced connectivity and integration of various cooperation structures, for example in the Baltic and Black Seas, as well as with ASEAN and as part of the ASEM process.40 At the international level, cooperation has a central role in determining the legal framework and concrete forms that connectivity takes. For this reason, getting the Asian countries to accept the international standards on connectivity-related matters, such as the fight against climate change and environmental degradation, the promotion of open market access, free and fair trade and interoperability of networks, will ensure greater harmonisation and cooperation with the EU’s strategic partners.

Lastly, as reported by the Joint Communication, the EU will have the obligation to engage with international organisations in determining the legal frameworks and concrete forms of connectivity, for example to set international standards. The World Trade Organisation, the International Energy Agency, the International Maritime Organisation and United Nations bodies are just a few examples where the EU is working and will continue to work for sustainable and fair global practices.41 Finally, the last pillar explains that the implementation, and the eventual success of the strategy will depend on the envisaged increased funding allocated to Asia-Europe connectivity as part of the EU’s investment framework for external action, in addition to private investments.42 In this sense, the EU is expected to pool financial resources from international financial institutions, multilateral development banks other than the private sector, to ensure sustainable domestic and international finance

16

39 Bart Gaens: ASEM and the Asia–Europe Connectivity Agenda. ISPI Online. 16 October 2018. <https://www.ispionline.it/it/pubblicazione/asem-and-asia-europe-connectivity-agenda-21420 > Accessed: 31 July 2019.

40

EU steps up its strategy for connecting Europe and Asia. European Commission.

Flaminia Marturilli: Connettività Europa – Asia: l’UE intensifica la sua strategia. European Affairs.

21 September 2019. <http://www.europeanaffairs.it/blog/2018/09/21/connettivita-europa-asia-lue-intensifica-la-sua-strategia/ > Accessed: 31 July 2019.

41

42

Gaens, 2018.

H-1093 Budapest, 2 Czuczor Street | +3620 310 8776 | ajtk@ajtk.hu | www.ajtk.hu

A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E for connectivity, while guaranteeing transparency and a level playing field for businesses. Yet, it is still uncertain how much funding for such connectivity projects the EU will allocate in its 2021-2027 budget. For instance, the European Fund for Strategic Investments is seeking to invest 500 billion euros in projects by 2020, while the European External Action Service is expected to guarantee 60 billion euros toward investments in connectivity over the next seven years with the expectation that this will help mobilize additional funding from multilateral development banks and private financial institutions.43 However, the proposed EU budget will need to be approved by the European Council and the European Parliament, but whatever amount will be ultimately allocated, it will probably fall short the 1.3 trillion euros a year estimates say will be needed for infrastructure investment in Asia.44 In order for the EU to be successful in its normative ambitions, it will need to allocate sufficient funding that can attract private-sector investments, leverage unique European strengths in areas such as the digital sector, and communicate better its new approach to connectivity to states in Eurasia. Moreover, in order to make the strategy more concrete and implementable, the next step is to develop regional-level strategy documents that can allow for the fleshing out of more details and better differentiation between diverse regions such as Central Asia and Southeast Asia.

The EU’s connectivity strategy should not be considered a rival of BRI but rather a complementary tool, a sincere base of engagement with China rather than an attempt to isolate it. The new strategy not only offers a European alternative to BRI, but also opens up avenues to cooperate with China and find synergies. At the same time, it emphasizes the importance of commonly agreed, rules-based cooperation. From the EU’s perspective, the initiative is potentially positive as long as it adheres to market rules of the European Union as well as to international requirements and standards. As Mogherini observed, “only if we engage together with China, we can make our interests, our goals and our vision on connectivity converge.”45 At the moment Europe is a major destination for the Belt and Road Initiative’s investments and, while this flow is mainly directed to Western Europe, there has been a growth in BRI-

17

43 The European way to connectivity – a new strategy on how to better connect Europe and Asia.

European Union External Action. 20 September 2018. <https://eeas.europa.eu/headquarters/ headquarters-homepage/50792/european-way-connectivity-%E2%80%93-new-strategy-howbetter-connect-europe-and-asia_en > Accessed: 31 July 2019.

44

Brattberg–Soula.

Speech by HR/VP Mogherini at the plenary session of the European Parliament on the state of the EU–China relations. European External Action Service. 11 September 2018. <https://eeas.europa. eu/headquarters/headquarters-homepage/50337/speech-hrvp-mogherini-plenary-sessioneuropean-parliament-state-eu-china-relations_en > Accessed: 31 July 2019.

45

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E related activities in Central, Eastern, and Southern Europe, including the Western Balkans. In fact, the need for infrastructure in Central and Eastern Europe is larger and their available financing options more limited. A clear example of this is the Chinese financing of a railway between Budapest and Belgrade that, despite the slow progress, is expected to become an important transportation and energy hub for BRI. A very important concern (and, according to the authors, one of the most important challenges as well) that the European Union would like to emphasize through its strategy is that investments need to ensure market efficiency and be fiscally viable. The phrase “fiscally viable” refers to the question of sustainability of the astronomical investments in the framework of the BRI, many of them funded through loans. The EU stated that the investments should be created in a way that the partners protect the countries from taking on a significant, unsustainable burden, taking into consideration the fact that financing and investing in regional infrastructure projects through loans risks exposing already vulnerable economies to potentially unsustainable debt levels and fiscal instability.

For this reason, high standards of transparency in the tendering and procurement procedures, good governance in connectivity projects, as well as investment-screening mechanism are considered to be crucial.46 In this regard, the EU’s initiative is an attempt to deal with these normative flaws by establishing a normative framework and rulebook for connectivity projects, with a strong emphasis on sustainability, secure open tenders, and respect for the rules-based international system.

The example of the Piraeus port is paradigmatic in this sense. In fact, today Chinese investors control almost the whole of the biggest port of Greece—which represent China’s main gateway to Europe—due to the inability of the Greek government to pay back its debts. This episode got almost unnoticed at the EU level and now Greece could find itself in a diplomatic dispute with its largest foreign investor at a time when the country is in desperate need of foreign investment.47 While China has been accused of conducting “debt-trap diplomacy” through stringent loan-repayment conditions, the EU’s Connectivity Strategy promotes multilateral arrangements that take debt sustainability into account, and involves both public and private funding mechanisms.48

18

46 Julian Chan: Europe’s Challenge to China. The Diplomat. 26 October 2018. <https://thediplomat. com/2018/10/europes-challenge-to-china/ > Accessed: 31 July 2019.

47 Joanna Kakissis: Chinese Firms Now Hold Stakes in over a Dozen European Ports. National Public Radio. 9 October 2018. <https://www.npr.org/2018/10/09/642587456/chinese-firms-now-holdstakes-in-over-a-dozen-european-ports > Accessed: 31 July 2019.

48

Brattberg–Soula.

H-1093 Budapest, 2 Czuczor Street | +3620 310 8776 | ajtk@ajtk.hu | www.ajtk.hu

A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E In conclusion, the EU’s connectivity strategy will give Asian and European states a much clearer idea of the basis on which the EU wishes to engage with them, and what they can expect. The new approach can be interpreted as the European Union’s way of establishing stronger networks and strengthening partnerships for sustainable connectivity, across all sectors and based on respect for common rules. Through its new strategy, the EU aims to tackle challenges and take advantage of opportunities to the benefit of people in Europe and in Asia as well.49 The official reaction from China to the EU’s new initiative has also been mostly positive and the fact that the new strategy received unanimous support from European leaders is remarkable and sends an unmistakable message about the EU’s global ambitions and intentions.50

V. Outlooks for EU-China Synergies in Central Asia along the BRI It is safe to assert that today, Russia and China are the key external actors in the post-Soviet Central Asia. At the same time, when it comes to assessing the role of external actors in this region, it is also necessary to shed light on further, but more distant actors such as the European Union (EU) for instance. Despite the fact that the latter has not become a major player in Central Asia, a number of interests still interlink the two regions. Bearing in mind that Central Asia is an indispensable part of China’s Belt and Road Initiative and the EU has just reinforced its strategic approach towards Central Asia by adopting its new Central Asia strategy in 2019, it is timely to provide a comparative analysis of Chinese and EU interests towards Central Asia, and to highlight the possible synergies between their approaches.

By looking through historical lenses, one can see that the landlocked but geostrategically valuable Central Asia is often assessed in the framework of competing external powers. In line with this, Central Asia has traditionally been portrayed as a key territory which British and Russian Empires sought to control during the 19th century. This rivalry has often been referred as the Great Game.51 Over time, the Russian Empire gained the upper hand in the competition, and subsequently, Central Asia, today consisting of the territory of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, became integrated into the Soviet Union.

After the dissolution of the Soviet Union, the aforementioned states of the 49

19

EU steps up its strategy for connecting Europe and Asia. European Commission.

Foreign Ministry Spokesperson Geng Shuang’s Regular Press Conference on September 20.

Ministry of Foreign Affairs, People’s Republic of China. 20 September 2018. <https://www.fmprc.gov. cn/mfa_eng/xwfw_665399/s2510_665401/t1597236.shtml > Accessed: 31 July 2019.

50

51 For more detailed information on the concept of the Great Game, see for example Peter Hopkirk: The Great Game. On Secret Service in High Asia. Oxford University Press, Oxford, 2001.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E ex-Soviet periphery appeared as independent actors in the international arena. In the almost three decades that have passed since the breakup of the Soviet Union, the notion of the Great Game can be reconceptualised, since global and regional actors have revitalised their interests in Central Asia, and, accordingly, started to pay increasing attention to the region.52 Although nowadays, the main question does not revolve around military control over the region, as it did in the 19th century, but around gaining influence in security, political, and economic terms.

First of all, we have to underline that China and the EU have considerably different positions when it comes to comparing their relations with the postSoviet Central Asia. While China is in the direct neighbourhood of Central Asia, with strong economic interests in the region, while the EU remains a remote partner with different tools for interacting with region, and is thus able to engage with the it in a less direct way. In security terms, Central Asian states are involved in the Russia-led Collective Security Treaty Organization and the China-led Shanghai Cooperation Organization. This geopolitical reality leaves limited room for Central Asian states for interacting with the Euro-Atlantic community with regard to security cooperation. In economic terms, China is the most important source of foreign investment for Central Asian states, leaving other actors, such as EU member states, far behind.53 In addition to that, China is already the most important trade partner for four out of the five post-Soviet Central Asian states.54 Through BRI, China has placed its focus on the development of economic and trade relations, as well as infrastructure development throughout Central Asia, while the EU can instead be pioneering in providing assistance with certain programmes, such as border management, countering drug trafficking, environmental issues, water management, and in its overall normative contribution to the development of the region in terms of rule of law, democratisation, good governance, and human rights.55 Furthermore, in the eyes of the Central Asian states, the EU can be identified as an important component in the diversification of their foreign policies, as improving ties with the EU can help them to counterbalance the influence exerted by China and Russia in the region.

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52 Stephen Blank: Whither the New Great Game in Central Asia? Journal of Eurasian Studies.

2012/July. 147–160.

53 Marlene Laruelle: Introduction. China’s Belt and Road Initiative. Quo Vadis? In: China’s Belt and Road Initiative and Its Impact in Central Asia, edited by Marlene Laruelle. The George Washington University, Washington D.C., 2018. xii.

54 Mridvika Sahajpal – Steven Blockmans: The New EU Strategy on Central Asia – Collateral Benefit?

Centre for European Policy Studies. 21 June 2019. <https://www.ceps.eu/the-new-eu-strategy-oncentral-asia/ > Accessed: 31 July 2019.

55 Jos Boonstra – Riccardo Panella: Three Reasons Why the EU Matters to Central Asia. Voices on Central Asia. 13 March 2018. <https://voicesoncentralasia.org/three-reasons-why-the-eumatters-to-central-asia/ > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E In light of the above, it is also an interesting to look at how the notion of connectivity has become a major driver beyond the China–Central Asia– EU relations. While in the EU’s Central Asia strategy issued in 200756 the term “connectivity” was still non-existent, in the renewed 2019 strategy the same term is included 25 times.57 Although the goals of the two EU strategies are largely similar, their comparison reflects on the changes in the global discourse on Asia–Europe relations. China with the BRI has undoubtedly played a key role in inserting the term “connectivity” into mainstream discourse, and to some extent this could have an agendasetting effect on other actors, such as the EU. With regard to BRI, the EU takes a rather cautious and evasive stance in the above-mentioned strategic documents. As articulated in its new Central Asia strategy The EU and Central Asia: New Opportunities for a Stronger Partnership, the EU confirms that BRI plays an important role in addressing issues in Central Asia, but the document does not stipulate any concrete guidelines on the possible cooperation with China along BRI in Central Asia,58 even if one of the major drivers behind the renewal of EU’s Central Asia strategy was based on the consideration that the EU should provide some sort of response to BRI.59 It is worth adding that the European Commission’s strategic document Connecting Europe and Asia - Building blocks for an EU Strategy does not even touch upon BRI, and largely avoids specifics where the document mentions China.60 Despite the fact that the EU and China have different approaches towards Central Asia, there are a number of areas where they do share goals. Firstly, both the EU and China are interested in infrastructure development, in the improvement of connectivity and transportation links, and in boosting trade relations with Central Asia. Central Asia’s increasing trade engagement with both China and the European Union can help to further integrate the landlocked and still relatively isolated region in the global economy. However, it is inevitable that the region should not only become a transit channel for goods, but rather a well-functioning

21

56 The EU and Central Asia: Strategy for a New Partnership. European External Service Action. 31 May 2007. <https://eeas.europa.eu/sites/eeas/files/st_10113_2007_init_en.pdf > Accessed: 31 July 2019.

57 The EU and Central Asia: New Opportunities for a Stronger Partnership, JOIN(2019) 9.

European External Service Action. 15 May 2019. <https://eeas.europa.eu/sites/eeas/files/ joint_communication_-_the_eu_and_central_asia_-_new_opportunities_for_a_stronger_ partnership.pdf > Accessed: 31 July 2019.

58

Ibid.

Martin Russell: The EU’s new Central Asia strategy. European Parliamentary Research Service.

2019/January. <http://www.europarl.europa.eu/RegData/etudes/BRIE/2019/633162/EPRS_ BRI(2019)633162_EN.pdf > Accessed: 31 July 2019.

59

60 Connecting Europe and Asia – Building blocks for an EU Strategy. European External Service Action. 19 September 2018. <https://eeas.europa.eu/sites/eeas/files/joint_communication_-_ connecting_europe_and_asia_-_building_blocks_for_an_eu_strategy_2018-09-19.pdf > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E economic corridor, financed with fair conditions, and governed by transparent management, which assume sustainable benefits in the long run for the Central Asian states. With regard to the synergies between EU and Chinese interests in Central Asia, it is also worth shedding light on the mutually beneficial role of the already-existing infrastructure in the framework of BRI. As highlighted by recent studies, cargo from EU reached China via Kazakhstan in a record twelve days, which proves that BRI can facilitate bidirectional trade flow between EU and China by passing along Central Asian land routes.61 Abundant Central Asian oil and natural gas reserves are also of pivotal interest for both parties, and Turkmenistan is an especially important player in both the EU and China’s energy security endeavours. The latter is China’s top natural gas source, while the EU has long aspired to gain direct access to Turkmen gas through the potential Trans-Caspian Pipeline, without Russia as a middleman. In short, it can be said that Central Asia–EU energy relations have long been at the centre of interest, but the commercial realities and Russia’s dominant role in regional energy geopolitics have prevented these ties from improving significantly. By contrast, China could not only become a major export destination for Central Asian gas, but also a financier of related infrastructure projects.62 According to one approach, China can be viewed from the EU’s perspective as an important counterbalance to Russia in the field of energy policy in Central Asia, where Russia used to have a hegemonic position over the pricing and the transportation of energy resources. Still, it remains to be seen whether in the framework of BRI China would be investing in energy infrastructure projects that would improve energy-based connectivity along the EU–Central Asia–China axis, which could serve the interest of all the parties involved.

Although it is less directly related to the BRI framework itself, it is still worth adding that maintaining regional security and eradicating terrorism and extremism is a common interest of the EU and China in Central Asia. During the 90s, when the foundations of the Shanghai Cooperation Organization were laid down, one of China’s main goals was to cooperate with Russia and Central Asian states in improving the security environment and combatting the three evils: terrorism, extremism, and separatism.63 Fighting international terrorism was already included in the EU’s Central 61

22

Sahajpal–Blockmans.

Catherine Putz: Turkmenistan and Gazprom Settle 5-Year Gas Deal. The Diplomat. 4 July 2019. <https://thediplomat.com/2019/07/turkmenistan-and-gazprom-settle-5-year-gas-deal/ > Accessed: 31 July 2019.

62

63 Stephen Aris: The Shanghai Cooperation Organisation: ‘Tackling the Three Evils.’ A Regional Response to Non-Traditional Security Challenges or an Anti-Western Bloc? Europe–Asia Studies.

2019/May. 457–482.

H-1093 Budapest, 2 Czuczor Street | +3620 310 8776 | ajtk@ajtk.hu | www.ajtk.hu

A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E Asia strategy after 2007, but in the new strategy this has become an even more accentuated element.64 Taking into consideration that, in the past couple of years, terror attacks committed by Central Asian citizens or those of Central Asian origin also spilled over to Europe,65 one can draw the conclusion that tackling terrorism and extremism in Central Asia has emerged as a common interest for the EU and China, and the coinciding interests along these issues can possibly improve trust and create further grounds for cooperation and partnership in other fields as well.

VI. The Missing but Most Needed Synergies Between the EU’s and China’s Foreign Policy in the Middle East in the Context of the Belt and Road Initiative Geographically, the Middle East is an “in-betweener”: it is either the epicentre, or a hub of global political, economic, and trade relations between Europe, Africa and Asia. On the other hand, security threats emanating from the Middle East and Africa affect both Europe and Asia, although not in the same way. While Europe and the MENA (Middle East and North Africa) regions are part of a single security complex and this would require a very pragmatic political attitude and intensive bilateral trade relations, the EU tends to apply a value-based conditionality towards the countries of the MENA region which might contradict its priorities and interests. The EU’s constant ineffectiveness, combined with the political, economic and military assertiveness in the region by the US and Russia, alongside with China’s economic assertiveness, puts the EU in a very difficult position if it wants to be an important actor in the region. While the EU is directly affected by its neighbourhood as a whole, China has the comfort to choose its partners or build buffers between the source of the threats and itself. This difference in proximity could be one reason why the EU and China apply two very different approaches toward the Middle East, besides the different importance rendered to this region by the EU and China in the terms of economics and trade.

In addition to geopolitics, we need to understand the fundamental differences between the EU, which is basically a political and economic community based on post-World War II principles, and China, which is an economic power operated by a unitary central command which executes the Communist Party’s grand strategy related to post-Cold War principles. The EU as a foreign policy actor exists only since 2010 when

23

64 The EU and Central Asia: New Opportunities for a Stronger Partnership. European External Service Action.

65 Dana E. Abizaid: Tackling the Roots of Uzbek Terror. Terrorism Monitor. 2018/April. 5–7. <https:// jamestown.org/wp-content/uploads/2018/04/Terrorism-Monitor-April-23-2018.pdf?x41057 > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E its External Action Service (EEAS) was formed, but the latter’s mandate is very limited. On the other hand, the EU Member States have been divided on many issues related to the Middle East. EU Member States reacted slightly differently or at least not simultaneously to the events of the Arab Spring and the subsequent civil wars in Libya, Syria, and Yemen.

While the EU as a whole has a principled position on the Israel-Palestine peace process, some member states tend to block certain measures against Israel as it is a strategic economic partner for Hungary and other CEE countries.66 Another example related to the peace process is the different attitudes of EU member states expressed towards the US vision labelled as “the deal of the century.” Most of the EU still applies a valuebased approach towards the MENA, which is based on the confrontation between Western democratic values and local realities in the MENA region. This approach is severely ineffective and counterproductive with regards to the EU’s peace-building strategies. While both the current US, Russian, and Chinese political administrations pursue pragmatic strategies towards the MENA region, the EU failed to recognize its anachronistic position. An example in question is the EEAS’ Special Representative for the Middle East Peace Process (MEPP),67 who has very limited resources, but most importantly, she promotes principles based on international law, but she is ignoring facts on the ground.

If we examine China’s position on the issues highlighted above, we find that it applies neutrality in most conflicts and disputes, or at least it does not apply conditionality in its trade and economic dealings.

This might bear its fruits in the medium to long term. From China’s perspective, the Middle East is critically important in the Belt and Road Initiative as the region occupies a strategic position at the intersection of the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, the two main components of the Belt and Road Initiative.68 While China’s daily export to Europe, worth USD 1 billion, travels through the Indian Ocean, the Red Sea and the Suez Canal, Europe’s oil supplies also arrive through the same passageway, and therefore the Middle East has the same strategic importance for China and Europe. China is also the world’s largest oil importer and will double its purchases

24

66 Alexander Fulbright: PA blasts Hungary, Romania and Czechs for blocking EU censure of US embassy move. The Times of Israel. 12 May 2018. <https://www.timesofisrael.com/pa-blasts-hungary-romaniaand-czechs-for-blocking-eu-censure-of-us-embassy-move/ > Accessed: 31 July 2019.

67 Council Decision (CFSP) 2018/1248 of 18 September 2018 appointing the European Union Special Representative for the Middle East Peace Process. Official Journal of the European Union. 19 September 2019. 9–13.

68 Maha S. Kamel: China’s Belt and Road Initiative: Implications for the Middle East. Cambridge Review of International Affairs. 2018/1. 76–95.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E in the Middle East in the next decade.69 Trying to distance itself from the traditional US strategy of taking sides in Middle Eastern geopolitical conflicts, and playing on its political advantage as a “developing country” that does not have an imperialist history, China is portraying itself as a neutral, impartial, and non-interventionist partner to the Middle East.70 Middle Eastern countries on the other hand have found enormous complementarity between their economic and political objectives and BRI, and have unanimously endorsed the initiative, either by formally signing MOUs with China or by voicing support in their public speeches.

As the MENA region is the least regionally integrated part of the world, most of its countries’ economic and trade activities are conducted with other regions of the globe. Thirty years ago, Europe was definitely the most important region: the MENA conducted half of its trade activities with Europe. By today, the US as slightly lost its importance, while trade with Europe dramatically declined and China filled the gap created in the last couple decades in Euro-MENA trade.71 This trend clearly shows the fact that geopolitical changes in the MENA have a more direct effect on EU-MENA relations and political shocks (such as the Arab uprisings) create uncertainties to which EU countries might react slowly, often not responding adequately.

The figure is slightly different if we examine foreign direct investment (FDI) in the region. European countries such as Italy, the UK, and France alone invest much more in any given sector of the economy of the MENA than China. In fact, China’s FDI in the region is solely concentrated in the oil and gas industries, while European countries invest a lot in non-oil sectors as well.72 In 2018, the total value of China’s global investments and construction contracts actually fell by USD 100 billion. Just about every region saw a significant decline in Chinese investment or construction projects except for one: the MENA.73 Of the 2018 MENA total FDI, nearly three-quarters was targeted at Egypt, the United Arab Emirates, and Saudi Arabia. Other significant places of China’s investments in the region are Israel (USD 12 billion), Kuwait (USD 10 billion), and Qatar (USD 7 billion), according to data analysed by AEI’s China Global Investment Tracker for 69

Ibid.

70

Ibid.

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71 Nasser Saidi – Aathira Prasad: Background Note: Trends in trade and investment policies in the MENA region. Organisation for Economic Co-operation and Development. https://www.oecd.org/ mena/competitiveness/WGTI2018-Trends-Trade-Investment-Policies-MENA-Nasser-Saidi.pdf > Accessed: 31 July 2019.

72 Federico Carril Caccia – Juliette Milgram Baleix – Jordi Paniagua: FDI in the MENA Region: Factors that Hinder or Favour Investments in the Region. IEMed. Mediterranean Yearbook 2018. 285.

73 Afshin Molavi: China’s Global Investments Are Declining Everywhere Except for One Region.

Foreign Policy. 16 May 2019. <https://foreignpolicy.com/2019/05/16/chinas-global-investmentsare-declining-everywhere-except-for-one-region/ >Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E the years 2005-2018. However, it should be noted that most of China’s projects in the region involve construction rather than investment.74 The purpose of this short and very limited critical assessment of the EU’s and China’s attitude towards the MENA region was to show how the EU as a single foreign policy actor is still struggling to give adequate responses to current issues, while China is the rising power in the region. Although it would be early to conclude that China fulfils its foreign policy goals with its MENA activities, it is safe to assume that China proceeds in the right direction if it wants to enhance its security alongside with the diversification of its markets and investments globally, which is an aim of BRI. At the same time, we might briefly assume that the EU has failed so far to enhance its security by failing to address the challenges in its neighbourhood. Moreover, the EU is about to lose some of its markets and numerous investment opportunities thanks to its principled attitude. Clearly, the EU is at crossroads: it needs to challenge its own foreign policy assumptions if it wants to at least uphold its traditional position in the region.

The missing synergies between the EU and China’s MENA foreign policies mean that the two actors will compete if things (especially the EU’s principled policies and rhetoric) remain the same in the long run.

This should be an imperative for the EU to change its attitude both towards MENA governments and China, or in a triangular cooperation which would benefit all sides. By establishing innovative cooperation formats, the EU and China could potentially fill the current US void in the Middle East, assist the region in becoming more stable and secure, and improve EU-China relations in the long term.75 Although the Silk Road Economic Belt would be a more transformative and probably more lucrative success of EU-China cooperation, cooperation on the Maritime Silk Road and especially in the MENA region would guarantee a safer world for everyone which in exchange would provide more opportunities for the EU, the MENA, and China to prosper.

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VII. Utilizing the potential in the V4 group for EU-Asia connectivity When it comes to intercontinental economic and infrastructural connectivity, not to mention people-to-people relations, the whole is truly more than the sum of its parts. This fact does not overwrite the importance of the different sub-units of the “whole”, which, in our case, 74

Ibid.

Julia Gurol: Rivals or Partners? Interdependencies between the EU and China in the Middle East.

Center for Applied Research in Partnership with the Orient. 10 October 2018. 22. <https://carpo-bonn. org/wp-content/uploads/2018/10/carpo_study_05_2018_Gurol.pdf > Accessed: 31 July 2019.

75

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E is connectivity in the Eurasian supercontinent and the part we propose to give greater attention to in the future is the Visegrad Cooperation (V4).

Greater economic interdependence between the Western and Eastern regions of Eurasia has become a goal to pursue both in the People’s Republic of China, manifested in BRI. and in the EU, albeit the latter does not have such an ambitious “initiative” backed by billions of euros worth of yuan funds. The two economic giants’ plans for furthering economic interactions seem to be unaligned at the moment, but both sides affirm that they are interested in cooperation on the common goal. The EU’s strategy-in-birth for EU-Asia connectivity draws from the decadeslong experience of fostering internal connectivity in both physical and regulatory dimensions, which has created a Europe which is open and easy to traverse for all its citizens.76 Asian plans envision building nodes and routes for bolder transcontinental networks, but the greater scope comes as an expense to density. China’s BRI is the prime example of this strategy, realising six main transportation corridors, but Japanese, Indian, and Korean visions also manifest this mercantile trend of export-driven economies.

The two approaches are crystalized in the Central Eastern European region which started benefiting from the EU’s infrastructure related funds in full only one and a half decades ago, which means that there’s still a lot to be done in this field, especially when it comes interconnectivity between them. Secondly, these countries are highly integrated into the European value chains and, as is the case with all relatively small and open economies, their societies’ well-being is dependent on maintaining or even raising exports to European markets, but also, to an ever greater degree, to East Asia. CEE countries therefore have a dual interest to realise and be a part of both grand transcontinental trade corridors, but also to have denser regional networks, which aid regional integration and flexible value chain creation and adaptation between these states. Realising this second interest was key in the formation of the “17+1” (formerly, the “16+1”) Cooperation, which consists of China and the 17 Central Eastern European states and the Balkans. The forum has been crucial for creating a platform for enhancing Chinese-European cooperation, but the format has been characterised as being rather a collection of bilateral relations than a truly multilateral approach.77 It is important to keep in mind that if China were interested in utilizing the “17+1” as a multilateral format, it would then have to engage with a region with wide differences in their connectivity interests (imagine, for example, 76

27

Connecting Europe and Asia – Building blocks for an EU Strategy. European External Service Action. 2.

Evangjelia Sali: 16+1 Initiative in China–EU Relations: ‘Golden Opportunity’ or ‘Divide and Rule.’ In: 16+1 Cooperation and China–EU Relationship, edited by Chen Xin and He Zhigao. Kína–KKE Intézet Nonprofit Kft., Budapest, 2018. 24–28.

77

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E the case of Latvia and Greece), in which two thirds are an EU member while the others are (hopefully) on their way toward integration, but which might take more than a decade in some cases. Therefore, we argue that, parallel to the “17+1” format, the People’s Republic of China needs to engage with a core group of CEE countries when it comes to the Eastern edge of the EU as a catalyst for deepening EU-Chinese connectivity, and none are better-suited for this role than the V4.

The highly flexible cooperation between Poland, Czechia, Slovakia, and Hungary was created by the late Hungarian prime minister József Antall together and his contemporaries to facilitate their entry into the euroatlantic alliance. The platform has been reinvigorated in recent years due to the common worldview and joint interests of the four countries vis-à-vis the European Union and the trajectory of the shared European future.78 Even though the V4 is a regional format, it has common ambitions such as bringing Eastern Partnership countries closer to the EU and completing the accession process of all of the Balkan states. The geographic location of the V4 also makes it an indispensable part of BRI: both traffic coming from through Russia and also any Southeastern corridor would (also considering economic factors) have to cross at least one of the four Visegrad states. Unlocking their potential would depend on a number of factors, but the domestic bases are there for serving a core role in BRI. Geographically Poland and Hungary can serve BRI’s interest the best, as the former is the Northeastern gateway into the industrial heartland of the EU, while the latter is the core of the Southeastern entry zone and natural hub shaped by the Carpathian Basin.

Starting with the largest and arguably the most influential member of the V4, Poland has a multi-sided approach towards BRI that is affected by several factors. First, Poland wants to be appreciated as a strategic location within the BRI network, while it is aware of the possibilities that Chinese capital investment might pose for country-specific, subregional, and regional development. Alongside the recognition of the opportunities, the Polish attitude towards BRI is still fluctuating. The signing of the strategic comprehensive partnership in June 2016 elevated Polish-Chinese relations to a higher level, but since then relations have been marked by a variety of intertwining optimistic interpretations and pessimistic visions of the so-called China threat.79

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78 Pál Péter Schmitt – Annamária Steiner-Isky: Policy-making of the Visegrad Group concerning EU Affairs. In: Central Europe and the Visegrad Cooperation. Historical and Policy Perspectives, edited

by Péter Stepper. Antall József Knowledge Centre, Budapest, 2018. 168–179.

79 Patrycja Pendrakowska: Poland’s perspective on the Belt and Road Initiative. Journal of Contemporary East Asia Studies. 2018/2. 190–206.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E Poland is politically participating in the Chinese initiatives. However, the last years were marked by a lack of realization of Chinese investment in Central Europe and, in general, a wait-and-see approach prevails in current Polish politics. President Xi Jinping’s visit to Poland in June 2016 was greeted with broad optimism, which quickly cooled down after the former minister of national defense, Antoni Macierewicz, decided to block the sale of a land parcel that was meant to be the site of a BRI logistic hub in January 2017. No major infrastructural project has been realized in Poland under BRI yet, which means that, although the political will is still present in Warsaw, no significant initiative should be expected from the Polish side, but a wait-and-see approach will dominate their stance.80 Considering the above, a moderately ambitious, mutually beneficial infrastructure project, benefiting from a regional multilateral framework (such as the V4), and realized through appointed procedures, would greatly improve Polish dedication to furthering Chinese engagement with Europe.

Czechia was probably the V4 country which changed its approach to China the most in the last six years. The election of President Miloš Zeman who orchestrated a complete change, was the turning point. Czechia became a close supporter of China compared to being a former vocal critic of Beijing’s policies. President Zeman met with President Xi Jinping in Beijing in 2014, and was then the only Western leader to attend Beijing’s military parade in September 2015. (Zeman has visited China six times since his election in 2013). This strong political will is combined with a more complex reality, as a massive trade deficit surpassing 15 billion USD and negligible Chinese investments combined with unrealized promises will weigh heavily on the future of Chinese-Czech economic relations if significant change does not happen.81 Again, as with the case of Poland, we see a window of opportunity in Czechia which should be acted upon in the near future in order not to lose momentum.

Finally, Slovakia can be counted as one of the nations with the least developed relations with China in Central Europe, and also the only one without a strategic partnership framework. Though Slovakia was one of the first countries to sign the Memorandum of Understanding on BRI with China, its high-level political support has been significantly lower than in Hungary, Poland, or the Czech Republic. The most important factor

29

80 Justyna Szczudlik: Poland’s Measured Approach to Chinese Investments. In: Chinese Investment in Europe. A Country-Level Approach, edited by John Seaman, Mikko Huotari, and Miguel OteroIglesias. European Think-tank Network on China, [s.l.], 2017. 109–116.

81 Philippe Le Corre: China’s Rise as a Geoeconomic Influencer: Four European Case Studies.

Carnegie Endowment for International Peace. 15 October 2018. <https://carnegieendowment. org/2018/10/15/china-s-rise-as-geoeconomic-influencer-four-european-case-studiespub-77462 > Accessed: 31 July 2019.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E in the relative lack of interest is that Slovakia is located outside the six main economic corridors planned by the Chinese side as the backbone of BRI. At first glance, it is not expected by Slovakian experts that direct Slovak-Chinese economic relations would develop significantly, as China currently does not have a deep interest in boosting its investments in Slovakia by any significant degree.82 Despite this, Slovakia is the geographic key to the V4 and indeed the CEE region. Its mountains, the Tatras, which serve as the backbone of the country, can separate the North European plains from Hungary and the Balkans or, depending on the level of NorthSouth infrastructure, it can connect them. Currently, all major traffic between Hungary and South Poland has to move through Brno, forcing an unreasonable diversion of traffic and wasting precious time. Slovakia is therefore an important part in future EU and Chinese infrastructural connectivity as any infrastructural initiative which aims to create a truly interdependent Eurasian economic sphere needs to address the lack of North-South connectivity in the European borderlands.

As for Hungary, its relations with China have been historically good, and the country holds a unique position among the V4 as it is the recipient of the majority of Chinese foreign direct investment in the region, whilst serving as a regional hub for several Chinese companies and having the biggest Chinese population in the CEE.83 Furthermore, Hungary’s approach toward the Chinese initiative has been the most favorable among the V4, as it was to first European country to participate in BRI, emphasizing the complementary nature of its “Eastern opening policy” and BRI. Currently, Hungary still has the highest level of Chinese investment, not only among the V4 but in the entire CEE region, but Chinese capital inflows have slowed in the last few years and its expectations regarding the “17+1” have not really been met.84 It is clear that Hungary is open to deepening its strategic partnership with China, but it needs a more definite China policy and a focus on economically rational projects in order to utilize future potential of cooperation with China.

The EU has to address V4 concerns that it is “West-heavy” and does not respond to the needs of its Eastern side, and, to paraphrase the ancient saying, “all roads lead to Berlin”, which, in the case of the V4, is sadly close to the truth. China would also benefit from a trans-V4 connectivity project, serving as an alternative trade route to Northern Europe coming

30

82 Richard Q. Turcsányi – Kristína Kironská – Matej Šimalčík: Security Implications of the Belt and Road Initiative for Slovakia. In: Panorama of Global Security Environment 2017–2018. The Central European Perspective, edited by Róbert Ondrejcsák, Peter Bátor, Richard Q. Turcsányi, and Michal Mochťak. Stratpol, Bratislava, 2018. 384.

83 Ágnes Szunomár: Hungarian and Chinese Economic Relations and Opportunities under the Belt and Road Initiative. Kína–KKE Intézet Nonprofit Kft., Working Paper 2017/16. 11 December 2017.

84

Ibid.

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A N TA L L J Ó Z S E F K N OW L E D G E C E N T R E from the Balkans and avoiding Russia’s unstable Western border regions.

China also has to realize that it needs an intermediary platform to work with in Europe, between multilateral (EU) and bilateral relations. A regional approach was initiated with the “17+1” Cooperation, but as we have argued it is too diverse to be of use in the realization of concrete regional infrastructural projects, apart from providing an opportunity for the initial bilateral meetings. The CEE-China engagement needs a European core, and that can only be the V4, which has the experience and tradition necessary for stability, but it is sufficiently flexible and issuebased to remain effective. The abovementioned political and economic climates in the three V4 countries alongside Hungary mean that there is room to involve the V4 in a more comprehensive way in contributing to EU-China connectivity, but it has to be done through concrete projects, with due process, so that it can be argued for in Brussels as well. As such, the V4 could be the best pilot project to create and test the mechanism to align EU and Asian—primarily Chinese—infrastructural projects aiming to connect Eurasia in the 21st century, a common goal which is unfortunately hindered at this point by the lack of alignment between the different stakeholders.

VIII. Conclusion The are two narratives emerging on the Eurasian landmass to not only answer the call for enhanced connectivity between the two halves of the continent but also to tackle regional and global challenges of the 21st century. The BRI is an already-existing and expanding framework, whilst the EU’s connectivity plan is yet to fully unfold. Although the Belt and Road Initiative’s and the EU–Asia Connectivity Strategy’s approach are quite different in terms of scope, structure, procedures, and inclusivity, among others, they share the ambition to connect regions, markets, and people. The EU’s approach intends to establish stronger networks and strengthen partnerships for sustainable connectivity across all sectors and based on a respect for common rules in order to benefit the people in Europe and in Asia as well. BRI’s scope is far grander and still requires further clarification, but with more finished projects and more lessons learned it may deliver China’s comprehensive vision.

In the cases of the “in-betweener” regions that are the post-Soviet Central Asia and the MENA, China and the EU have considerably different positions. In Central Asia China has strong economic interests, while the EU, having been able to engage with the region in less direct way, is a remote partner. Nonetheless, both the EU and China are interested in connectivity, infrastructure, and transportation development, as well as

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A N TA L L J Ă&#x201C; Z S E F K N OW L E D G E C E N T R E in boosting trade relations with Central Asia. In the MENA region, the missing synergies between the EU and Chinaâ&#x20AC;&#x2122;s foreign policies may lead to competition, and thus a tri-party dialogue could prove to be the most beneficial in the future, especially when it comes to cooperation on the 21st Century Silk Road.

As for the role played by the core of China-CEE Cooperation, the V4 could promote better engagement between China and the EU as it is sufficiently flexible and issue-based to remain effective. Through specific projects and by observing EU regulations, the involvement of the V4 could substantially contribute to the EU-China connectivity. A mechanism to align EU and Asian, primarily Chinese, infrastructural projects aiming to connect Eurasia in the 21st century is a much-needed common objective, which is unfortunately hindered today due to the lack of alignment between the different stakeholders.

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