Is the EU reaping what it sowed in the Belt and Road?

In an interview with the web magazine Formiche, former Italian government minister and China expert Michele Geraci said he is not surprised with the negative report of the European Chamber of Commerce on China’s Belt and Road. “I am not surprised that European firms find it hard to profit from the Belt and Road. The European Union has been very critical against the Silk Road; [then EU Commission] President Juncker himself was openly critical, before his own country Luxembourg signed [an MOU] after we did. What’s that? First they shout from the rooftops that they don’t like the BRI, and then they complain that they can’t do business with it?

“Let us not forget that the EU has characterized China as a ‘strategic enemy.’ Then, they should not be surprised if it is not easy to do business. I would have used different language: There are both challenges and opportunities in working with China, as with every other country. That does not seem to me to be very productive language for supporting European companies. They should not wonder about skepticism on a common European foreign policy.”

After signing the memorandum of understanding with visiting Chinese President Xi Jinping last March, Italy is often cited in Chinese media as an example of a country that joined the BRI, which has resulted in a strong increase of interest by Chinese firms in the Italian market. However, since there has been a regime change in Rome, they could not find an interface and this was a lost opportunity, Geraci said.

Nonetheless, some results have been achieved, such as the agreement signed in Beijing yesterday to increase commercial flight frequency between Italy and China from 49 a week currently to 108, and again to 136 next summer, and 164 in 2021. Geraci wrote on Facebook: “This is a great result of our work, and it is not thanks to the current government.”

The European Chamber of Commerce in China, based in Beijing, complains in its report about alleged discriminative practices of China against European companies in Belt and Road projects, which are dominated by investors and construction companies of the Chinese. Only 15% of European companies polled by the Chamber have said they applied for a role in such projects. “If the EU fails to play an active and competitive role, there is a real danger that it could eventually become little more than a peripheral market tacked on to the end of Eurasia,” the Chamber of Commerce said. Opaque procurement processes and the dominance of giant state-owned Chinese companies mean European companies get only “crumbs from the table,” the report charges.

The report however also mentions that the grand connectivity strategy of the EU, decided past autumn, has not yielded any concrete steps, including marketing efforts, to bring the capabilities and know-how of European companies more into the picture. The European Union should move to force Chinese companies that access the EU procurement market to operate under the same restrictions that EU companies do in China, the report recommends.

Also BusinessEurope, representing federations from 35 countries, charged China with being the most restrictive of the EU’s major trading partners — with numerous barriers to investment, strict requirements for joint ventures and its procurement market closed to EU firms. “The EU must reconsider its modus operandi towards China and put more emphasis on reciprocity and conditionality, and speak with one voice on China,” said BusinessEurope.

In a strategic paper titled “The World Order Urgently Needs New Principles To Ensure World Peace”, the Chairwoman of the International Schiller Institute, Helga Zepp-LaRouche, urged the EU to reconsider its stances on the BRI: “The principles on which the world order urgently needs to be built are the common aims of mankind. The liberal establishment in Europe and the U.S.A. would do well to rethink the premises of its own profit-oriented system and to cooperate with the New Silk Road program in the economic development of Southwest Asia and Africa. The European Chamber of Commerce and Industry in Beijing fears that Europe will only become an insignificant caboose of a market at the end of Eurasia if it does not play a competitive role against the New Silk Road. The exact opposite is true: Europe can only have a perspective if it gives up geopolitics and actively cooperates with Russia, China and the U.S.A. on the basis of principles for a more human world order,” she said.

*Courtesy of Executive Intelligence Review News Service.