China's Growing Influence in the Western Balkans Amidst EU Inaction

The geopolitical landscape of Europe is increasingly competitive, especially in regions like the Western Balkans, which includes Montenegro, North Macedonia, Kosovo, Albania, Bosnia and Herzegovina, and Serbia. Unlike the ongoing military conflict in Ukraine, the struggle for influence in the Western Balkans is primarily economic, with major powers vying for dominance through financial investments.

A recent analysis from the Vienna Institute for International Economic Studies (WIIW) highlights a significant shift in the balance of power, indicating that China's influence is on the rise while that of the European Union (EU) is waning. Since 2008, the EU has invested approximately EUR25 billion in infrastructure projects across the Western Balkans through its banks and private investors. In contrast, China has pledged up to EUR17 billion as part of its Belt and Road Initiative, overtaking the EU's influence in Serbia.

Despite the EU still being the primary lender in the region, according to WIIW researcher Branimir Jovanovic, China is rapidly closing the gap. Many regional governments prefer to borrow from European institutions; however, they often turn to China for funding due to the flexibility and fewer conditions associated with Chinese loans, even though these tend to be more expensive and shorter-term.

From 2007 to 2023, the EU provided about EUR13 billion in grants to the Western Balkans, while China contributed merely EUR350 million from 2000 to 2021. The EU's financial assistance, particularly through the Instrument for Pre-Accession Assistance (IPA) for candidate countries and the Western Balkans Economic and Investment Plan (WBIP), averaged 2.4% of the region's economic output annually, considerably more than China's financial engagement.

Despite being the leading financial supporter, the EU's bureaucratic processes have led to slow project implementation. Jovanovic notes that many EU-funded projects face significant delays, allowing China to expand its foothold by providing quicker funding options. He suggests that Europe must streamline its funding mechanisms and adopt a broader perspective, considering both geopolitical and geo-economic factors, rather than focusing solely on potential EU expansion.

China's increasing presence in the Western Balkans brings several concerns. Geopolitically, it enhances Beijing's influence near EU borders, while economically, it often requires the involvement of Chinese companies and labor in local projects. This reliance raises issues related to corruption, project quality, labor rights violations, and environmental impacts, as highlighted by Jovanovic.