The EU and China: Geo-economic Agendas Compared

 November 22, 2015

The wave of blowback terrorism currently sweeping Western European capitals is likely to obscure a major event due to take place on November 24th and 25th in China: I am referring to the annual meeting of the leaders of 16 Central and Eastern European countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia) with the Chinese leadership in Suzhou. Following immediately after this weekend’s ASEAN summit in Malaysia, the meeting provides an extremely useful glimpse of China’s geo-economic agenda from the Balkans to Poland and Hungary.

An even more useful exercise, however, would be to compare the EU’s geo-economic agenda, with that of China and Russia in our parts of Europe.

The leading exponent of the West’s geo-economic agenda has to be considered Pascal Lorot, the founder of geo-economics. In the 1990s he published a booklet, suggestively titled “La conquête de l’Est”. The book contains the main tenets of the West’s economic expansion in the ex-Soviet bloc states from Central and Eastern Europe. Although NATO expansion has preceded that of the European Union, the main actors of the West’s geo-economic agenda in the region are the global corporations headquartered in France, the US or other participating Western countries.

While financial transfers from the EU to new member states from Central and Eastern Europe have diminished significantly over the years, having contributed only marginally to upgrading their infrastructure to EU standards, Western global corporations have taken over even the water supply or gas distribution in countries like Romania.

The results of the economic penetration in the area are, in some cases, nothing short of disastrous. Thus, companies like Vivendi or Gaz de France have succeeded in imposing to consumers at least ten tariff increases for water and gas in the last four years alone, contributing heavily to further impoverishing Romania’s population whose income levels, however, were already well below the EU average. To top it all off, Brussels is about to stunt Romania’s economic growth by imposing an EC-backed premier, unelected and undesired by the locals.

Moreover, throughout the region, Western global corporations have systematically deprived all the governments of much needed taxation income via transfer pricing and other accounting gimmicks.

Sure enough, there are a few success stories of Western economic expansion in the region, like that of German, American and French auto-makers in countries like Hungary, Slovakia, the Czech Republic and Romania, but these are the exception rather than the rule.

At the time of their EU accession in 2007, citizens of predominantly Orthodox countries like Romania and Bulgaria were hoping that this would put an end to their countries’ economic plight. The ensuing cultural shock suffered during the latest drive of Western expansionism has instead reopened old wounds. The 1204 ransacking of Constantinople by the crusaders is still alive in the collective memory of the Balkans. On that occasion, Western military “assistance” morphed into full-blown pillage and plunder, followed by the occupation of the Byzantine capital.

By contrast, since 2012 when the first China-CEE meeting took place in Warsaw, China has proven more willing than the EU to invest heavily in these countries’ infrastructure and manufacturing sector. In 2013, the first direct rail link between southwest China and the Polish city of Lodz was inaugurated, greatly facilitating two-way trade between the two countries. Nowadays, it takes only 15 days by rail for Chinese goods to reach Poland, or for Polish agricultural products to reach China. The upgrade of Baltic countries’ ports with Chinese investment is also underway, not to mention the upgrade of the port facilities in Piraeus, Greece by Cosco.

To date, the most ambitious Chinese infrastructure project in the region is the building of a very fast rail link between Piraeus and Hungary, connecting Athens and Skopje with Budapest via Belgrade. Not very far behind are the Russians, who are planning to build a gas pipeline from the Balkans to Central Europe along the same route. The Russians have also agreed to finance, to the tune of a few billion euros, the upgrade and construction of nuclear reactors in Hungary in spite of vehement EU protests.

The leaders of Central and Eastern European countries are now in a position to choose from the two geo-economic agendas the one that best suits the needs of their economies. As matters now stand, it seems that the West has largely exhausted its economic growth potential and is instead trying to exploit – colonial-style – the resources or populations of the new member states accepted after 2004. With its large cash reserves and “win-win” economic philosophy, China looks set to capitalize on local disenchantment with the EU by expanding steadily into this region.