CHINESE IN BIH: Economic interest and (or) strategic positioning in the region?
Although there is little concrete evidence of malignant Chinese influence, Chinese affairs in BiH prove that Chinese economic investments are intertwined with politics, and their non-transparency encourages the already widespread corruption in the country, analysis and research show. Thus, Chinese companies have become one of the favorite business partners of Milorad Dodik and his associates, and the Chinese currently have practically no competition on large construction sites in this entity. On the other hand, the authorities meet them by approving deadlines, contracting additional works, providing natural resources, even though some Chinese companies have been proven to have cheated, to have been blacklisted, to have bribed, to operate illegally...
China's presence in Bosnia and Herzegovina, primarily economic, but also cultural and political, is in the service of the overall positioning of this world power in the region, numerous analyzes of Chinese influence in Bosnia and Herzegovina show.
Although there is little concrete evidence of malignant Chinese influence, the way in which China wants to position itself is also shown by the behavior of this country's representatives at the UN.
At the time when the High Representative for BiH Christian Schmidt was being discussed, China joined Russia, and these two countries proposed to the UN Security Council a resolution that would take away the Bonn powers of the High Representative and limit Christian Schmidt's mandate until July 31. in 2022. The Security Council rejected this resolution.
In addition, Chinese officials have never denied the untrue claims of the President of Bosnia and Herzegovina. entity Republika Srpska Milorad Dodik that this country, along with Russia, voted against the appointment of Christian Schmidt. Let us remind you that the UN Security Council discussed his appointment at the end of June 2021, but it was not voted on at all.
Let's also say that a few years earlier, when the UN Security Council resolution condemning the genocide in Srebrenica was defeated by the Russian vote "against", China was - restrained.
Apart from economic, an important segment of Chinese positioning in BiH is also cultural influence. Chinese organizations and cultural institutions cooperate with Bosnia and Herzegovina. organizations and institutions through holding Chinese language courses, student exchanges, visits, donations... This type of cooperation is more visible in BiH. entity Republika Srpska.
Analysts and researchers have warned about the danger of Chinese influence, which for now is mainly manifested in the economic sphere, as we have already written about.
The American ambassador to Bosnia and Herzegovina, Michael Murphy, also spoke about Chinese influence in Bosnia and Herzegovina last year.
"I will work on countermeasures against Russia and China that threaten our common interests and the future of Bosnia and Herzegovina," Ambassador Murphy said, among other things.
However, Chinese influence, in contrast to Russian influence, will be characterized by few officials in Bosnia and Herzegovina, from both entities, as bad or malignant. The reasons for this are, as expected, of an economic nature, because China has become one of BiH's favorite partners. authorities, at all levels.
PUBLIC MONEY, SECRET CONTRACTS
Chinese investments in the countries of the European Union are decreasing from year to year, and stricter investment verification rules are being introduced for Chinese companies, European media reported. At the same time, in BiH, investments and loans from China have been growing significantly since 2019.
According to certain data, about three billion dollars have been invested in BiH from China - investments worth 610 million dollars from 2019 to 2021, and 2.44 billion Chinese loans from 2010 to 2022.
In particular, it should be emphasized that Chinese loans are disputed because, quite often, in case of inability to pay, even state infrastructure becomes the property of Chinese creditors. In addition, non-transparency is the main characteristic of a large number of Chinese investments, either through direct investments or through loans.
"A lot of what China does, especially in developing countries, but also in more developed parts of Europe, is based primarily on China's economic power, using investments and loans through entities connected to China. You see that China exerts a lot of influence over countries, not necessarily to trap them in debt, which is often talked about, but simply through non-transparent agreements, with conditions that are not available to the public, and corruption goes along with all of that," he previously told AJB David Shullman, one of the American experts on East Asia.
However, Chinese loans come with lower borrowing costs and easier conditions, but let's repeat, their lack of transparency opens the door to corruption, for which there is a suitable ground in Bosnia and Herzegovina. Despite the dangers, Chinese loans would not be averse to the President of the Republika Srpska, Milorad Dodik, who, as Fokus wrote, conducted the largest political offensive so far in order to obtain life-saving Chinese loans, which should help him pull this entity out of financial difficulties. problems. Thus, a series of meetings were held with Chinese companies and creditors, but according to this media, those meetings were not very fruitful.
Although China's interest in all of this is, for now, primarily economic, there are opinions that their economic investments are closely intertwined with politics. A number of examples have shown that the Chinese have special conditions when signing contracts. Similar to loans, they often ask that concluded multi-million dollar contracts not be disclosed to the public.
Failure to publish the details of concluded contracts often plays into the hands of Bosnia and Herzegovina. politicians, institutions, companies. Namely, the analyzes showed that it is precisely because of the secrecy of Chinese investments that they encourage the already widespread corruption in the region, including Bosnia and Herzegovina. In addition to non-transparency, let us remind you that Chinese projects in Bosnia and Herzegovina are characterized by controversies, suspicions of corruption and favoritism, delays, protests by activists, failed projects...
CHINESE COMPANIES FAVORITE BUSINESS PARTNERS OF THE AUTHORITIES IN RS
Chinese companies have become one of the favorite business partners of Milorad Dodik and his associates. Chinese companies, CAPITAL colleagues calculated, are currently engaged in energy and infrastructure projects in the RS worth more than 1.6 billion marks. At the moment, they have practically no competition on the large state construction sites in this entity, but this should only be the beginning because their plans are much bigger.
Chinese companies are engaged in several projects in the RS - they are building the Dabar and Bistrica hydroelectric plants, the Banja Luka - Prijedor and Brčko - Bijelina highways, and the hospital in Doboj. These projects are worth over one billion marks, and new ones are also being prepared.
Thus, the Buk Bijela hydroelectric power plant, which should be the largest in this entity, will be built by one of the three Chinese companies that are alone in the race for this project worth 250 million euros.
The lowest offer worth 248 million euros was submitted by Dongfang Electric Corporation, the offer of Power China is 263 million euros, while the offer of Energy China is one million more expensive and amounts to 264 million euros.
Entity authorities are meeting Chinese companies, and this is shown by the hospital construction project in Doboj. The Ministry of Health and Social Protection of the RS awarded the contract to a consortium of Chinese companies consisting of Shanxi Construction Investment Group and China Sinopharm International Corporation.
The contract was initialed in March 2019, and the deadline for building and equipping the hospital was 36 months according to the turnkey model. Due to the pandemic, and later the Russian aggression against Ukraine, authorities in the RS postponed the deadline for the completion of the hospital until September of this year, and then with a new decision of the Government of the RS, it was extended until the end of March next year.
In addition, the construction of an intensive care unit and numerous other works that were not foreseen in the basic contract were subsequently agreed with the Chinese. This means that the construction of the hospital, whose contracted price of around 103.5 million KM has already been the subject of numerous criticisms, will now exceed 120 million KM. It is a kind of compensation, because according to CAPITAL's knowledge, the Chinese partner for the construction of the hospital asked for more money, justifying it with inflation.
How natural resources are given to foreign companies is shown by the quarry in Berkovići. As reported by Fokus, the Chinese manage the quarry in Berkovići, and at the same time they invested only about nine million marks in BiH in five years.
Although the Kremnica Business Company received from the Government of the Republic of Srpska a concession for the exploitation of architectural-building stone in the area of the municipality of Berkovići in 2012 as a company owned by Bosnia and Herzegovina. citizens, already in 2014 the Chinese partner Han Chenglian and Hongkong Panjing Mining Shares Limited entered the company's ownership structure as the majority owner. Then the concession for the exploitation field of chert stone, with an area of 14.8 hectares, passes into the hands of the Chinese.
The Chinese owners export almost all the stone, or stone blocks, to China for the market there. In this way, they will be able to work for the next 30 years, as long as the right to the concession is valid. We are talking about the export of about 5,400 m3 blocks per year or 600 containers.
There are also many projects that were never realized. The best example is the never built thermal power plant Gacko 2, which was supposed to replace the existing thermal power plant. As Inforadar wrote, in December 2017 in Banja Luka, a ceremonial signing of the General Agreement on the Gacko 2 thermal power plant construction project was held, which was concluded by the RS Government with representatives of China Machinery Engineering Corporation and Emerging Markets Power Fund.
In July 2018, the formation of a joint venture for the construction of a new thermal power plant in Gack was agreed with representatives of the Chinese Polifono Group. The estimated value of the investment amounts to more than one billion marks. Given that nothing concrete has yet been done on the construction of the thermal power plant, many call this project phantom, although the construction has not officially and formally been abandoned.
Thus, information was recently published that Chinese companies are again interested in building a thermal power plant. In support of this thesis is the fact that Elektroprivreda RS recently founded the company Termoelektrana Gacko, development and investment, whose task is to prepare project documentation and secure an environmental permit.
As expected, environmental activists are indignant, pointing out that the whole project does not make sense, especially if you take into account the obligations that BiH has taken in the form of the gradual shutdown of thermal power plants.
Environmental activists also complained about the announced construction of the Ulog hydroelectric power plant. In this case too, the Government of Republika Srpska has repeatedly amnestied the breaking of construction deadlines, and annexes to the original concession contract were made, and the concession term was extended from 30 to 50 years.
By the way, the concession for 30 years for construction was given to the company EFT, whose owner is Vuk Hamović, the largest electricity trader in the region, while the Chinese Sinohydro was selected as the contractor, known for bribing officials in government and illegal business, which brought this company into the black. list of the World Bank, Inforadar wrote.
One of the projects that some believe will never be realized is the project of building a tunnel through Trebević, which should connect Eastern Sarajevo and Pale by traffic. The mayor of East Sarajevo, Ljubiša Ćosić, announced that the project should cost around 200 million euros. Certain preliminary preliminary studies have already been done, and the entire project was started in a non-transparent manner.
As Inforadar pointed out in his article, the Chinese company Sinohydro is favored by its domestic partner, although, let's say once again, it is known that Sinohydro has a bad reputation in the world, and the African Development Bank (AfDB) has blacklisted and banned this company. their participation in all the projects they finance.
Chinese companies are no stranger to cheating. The official documentation from the FBiH Highway showed that, once again, the company Sinohydro Corporation Limited, along with the Powerchina Roadbridge Group and China Gezhouba Group, cheated during the construction of certain sections of the highway, that is, when applying for tenders for the construction of certain sections of the highway in the territory of the Federation of BiH. All these companies, Fokus wrote, have long been known for corruption scandals, fraud and non-fulfillment of contracts on a global level.
Two Chinese companies were engaged in the construction of the Počitelj bridge on the Počitelj-Zvirovići subdivision. The companies Sinohydro Corporation Limited and Powerchina Roadbridge Group violated the contract in such a way that the work on the span construction of the bridge was not performed by them, but by a subcontractor, namely the company Hering from Široki Brijeg, which should not have happened under any circumstances. Therefore, they are disqualified for a period of two years.
As for the China Gezhouba Group company, it was disqualified because it submitted false documents during the tender application for the construction of the Medakovo-Ozimica section as well as the Prenj tunnel.
When we talk about Elektroprivreda BiH in the context of doing business with the Chinese, the first project that stands out is the (non)construction of Block 7 in the Tuzla Thermal Power Plant. The project has been pending for 17 years, and during that period only preparatory work was carried out on the site planned for the construction of Block 7. This investment has so far cost the citizens 233 million KM, and the new FBiH Government and the relevant ministry have no answer to the question of whether continue this project.
They are also non-transparent when it comes to works worth 29.7 million KM on the revitalization of block 6 of the Tuzla TPP, which were entrusted to the Bosnian-Chinese consortium consisting of ITC from Zenica, and the Chinese companies Donfang Electric International Corporation and Dongfang Boiler.
Portal Tačno.net writes that Elektroprivreda BiH continuously refuses to offer answers to the question of why the works are delayed, and the question arises as to how the delay in the implementation of this project will affect the overall business of this state-owned company, which, according to its half-yearly reports, records a loss of almost 25 million KM.