China’s Belt and Road Initiative (BRI) is often seen as a rival to the European Union’s (EU) take on connectivity. This has to do with the fact that China’s approach to infrastructure lending and engagement in other countries does not have the EU political value component. Poorly governed and non-transparent projects are eligible as long as they subscribe to the narrative of BRI. The motives of China’s infrastructure lending are criticised as driven by the will to increase political and security influence, especially in its neighbouring Central Asia, and for such drivers good governance is not a requirement.
However, next to the strategic logic and security logic there is a component of the BRI that is under risk if the loan recipient is poorly governed – namely, the investment logic. As long as this logic does not directly clash with China’s “national interests”, China will not be prone to disrupt the involvement of actors that actually contribute to a better investment environment. This provides an opportunity for the EU to actively engage and shape China’s activities in Central Asia.
In order to achieve that, the EU needs to stress that good governance in Central Asia is key to China because it increases the chances of successful returns on investment. According to D.Dollar (2019), the Central Bank of China “is giving $50 million to the IMF as a grant for training officials in Belt and Road recipient countries on debt sustainability analysis.” This means that China is willing to learn from the West when it comes to money lending management because down the line, forgiving debts or obtaining assets of low liquidity can make China’s leadership look bad domestically. Therefore, China would not impede EU investments in good governance promotion in Central Asian countries. Admittedly, this argument does not automatically mean that China has an interest in combatting corruption in the region since certain levels of corruption are bad for society, but do not necessarily endanger investment.
This is a chance for the EU to work towards better governance in Central Asia by persuading China that the European experience in institution-building benefits not just the societies of the Central Asian countries, but also China’s chances for higher returns from long-term investment and, ultimately, from the broader Eurasian connectivity. The EU needs to lend its expertise to China through the implementation of existing programmes such as the Regional Cooperation Instrument which promote the rule of law and good governance in Central Asian countries. These programmes could be widened to include all sectors involved in BRI projects, starting from legal support with contract terms negotiation, to cost assessment, to institutional oversight. In order to avoid harsh reactions from China, the EU memberstates that have joined the BRI could be included in such exchanges. As the mounting external debt to China is causing worries in Kyrgyzstan and Tajikistan, it is likely that the Central Asian countries would agree to accept such expertise coming from the EU.
There is one problem, however. Securing China’s Western border has been named to be another leading motivation behind China’s engagement in Central Asia through the Belt and Road Initiative. This can be observed in China’s army drills in Kyrgyzstan and the reported Chinese military facility in Tajikistan, among others. Security logic becoming the main reason for China’s engagement in Central Asia would undermine the need for good governance, and the return on investment for BRI projects would become secondary.
To conclude one can say that the leading motive of EU’s engagement in Central Asia is to increase Eurasian connectivity and to build ties with the region. Furthermore, the EU aims to create a better operating environment for EU investors in the region and better conditions for the transit of goods. The motivation behind China’s involvement, on the other hand, more likely centres around strategic logic, security cooperation and investment protection. Still, common ground can be found between the EU and China in promoting good governance and financial responsibility in the region. China will support the EU’s engagement in Central Asia because it is a way to guarantee a smoother operating environment for the BRI. The EU, in turn, can benefit from China’s involvement in infrastructure building in Central Asia because, if managed properly, BRI could contribute to EU-Asia connectivity. As the involved countries come to terms with the risks brought about by the BRI, this is the right time for the EU to be proactive.
SEnECA blog contribution by Dr. Una Aleksandra Bērziņa-Čerenkova, Head of the New Silk Road Programme, Latvian Institute of International Affairs