Romania is closing the door to public tenders for Chinese companies

In 2012, China was received with wide open arms in Central and Eastern Europe, as it put forth its 16+1 mechanism, which was later expanded to the 17+1 with the addition of Greece. Almost 10 years later, what was probably China’s biggest disappointment in Europe paradoxically happened right in these 17 countries. Almost all of them have signed memoranda of understanding with the United States targeting Huawei’s access to their 5G networks or joined Washington’s Clean Network initiative – a kind of containment maneuver aimed at Huawei and other Chinese tech companies.

These Central and Eastern European (CEE) countries were supposed to be China’s gateway to Europe; instead they have become its biggest headache. What happened to the 17+1 mechanism, which just hosted its eighth high-level summit on February 9?

It is very hard to define the 17+1 mechanism, just as it is hard to define the BRI. China has never clearly articulated its purpose, preferring loose concepts that can easily be promoted. The undefined and shifting nature of the mechanism led to numerous perspectives about its purpose. For the United States, the 17+1 mechanism is China’s tool to create a sphere of influence in Europe by using soft and hard power; for the European Union, the 17+1 is a mechanism whose ultimate goal is to divide the Union. For the CEE region, however, it is just an annual summit featuring a plethora of unfulfilled promises and projects.

When it was proposed, almost 10 years ago, the then-16+1 mechanism was received with a lot of enthusiasm and hope. A big power wanted to inject money in the CEE region: to build infrastructure, to revive old factories, to invest in people and local projects that couldn’t find Western investors. Or, at least, that was the narrative. Amid the enthusiasm, a race began among CEE countries to become “China’s gateway to Europe.” But as the years went by and promises remained just words, the finish line never came into sight. Many decided that it was just a marathon to nowhere.

How did this happen? To be blunt, China failed in juggling expectations and achievements. All the appealing promises and proposals and the bombastic headlines of the first years of the 16+1’s life came back to haunt Beijing when most CEE countries failed to see consistent investment. Instead of infrastructure, they received forums; instead of factories they received exchange programs; and instead of exports they received summer camps. On those metrics, the 17+1 might still be active, but it’s not what CEE countries were hoping for. And this is how the 17+1 mechanism has transformed into a zombie mechanism.

This is the background in which the minister of transport, Cătălin Drulă, rolled out his proposal to ban Chinese companies from taking part in infrastructure public tenders, because, according to him, “it’s time to make a strategic choice. Romania’s strategic choice in the last year has been quite clear, if we look at [building the reactors at] Cernavodă, if we look at the discussions about 5G. And then, in the interest of the geo-strategic options of this continent that is on a trans-Atlantic security axis, we have to make some choices that are made in other states of the European Union and choose European companies”. In defending the proposal, the government has argued that it has consulted and has support from the EU, through the Communication from the European Commission no. 5494/2019. According to news reports, the memorandum was also motivated by the argument that Chinese companies distort the tenders through dumping prices made possible by state aid, but as of now, no Chinese company has yet signed a contract for a major infrastructure contract in Romania.

While the government’s argument is based on the idea that Chinese companies offer prices that are too low and prolong the implementation of a project when they appeal, Cătălin Drulă is also among the few Romanian politicians who have publicly expressed more critical positions regarding China. According to him, Romania should stand by its allies, the US, NATO and the EU, and distance itself from China. He is one of the most vocal critics of Huawei in Romania. Last summer, he asserted that “the Romanian state has a clear geo-strategic orientation towards a partnership with America, the North-Atlantic and European security partnership, and in all these security areas there is the decision not to build these 5G networks on the technology of a company controlled by the Chinese government. It is a simple issue not to entrust a key part of your country’s economic infrastructure to a government which has interests fundamentally different from the Western world. We have an orientation towards America and have made a commitment not to build this network with Chinese technology, there are other alternatives”. Back then, he also warned about the danger posed by “China’s investment offensive in other strategic fields”, such as the construction of highways or by participating in train tenders.

While Cătălin Drulă’s position regarding China is very clear, the government’s stance may be, in the end, different. Firstly, when asked by reporters, the Romanian Prime Minister, Florin Cîțu, didn’t seem to know much about the memorandum that aims to ban Chinese companies from tenders and denied the news. The same day, the deputy prime minister, from the same party as Drulă, confirmed the existence of this memorandum. Secondly, although Florin Cîțu said that Romania should keep a distance from China, last year, the former PNL minister of transport was very keen to promote a small infrastructure project won by a Chinese company to build the Zalău ring road — the first road building project won by a Chinese company in Romania. Lastly, as a right-wing party, PNL may be uncomfortable from banning certain companies from public tenders (when it terminated CGN’s involvement in the Cernavoda Nuclear Power Plant last year, the PNL government invoked its opposition to state aid).

While all the action of the government over the past two years, from Huawei to Cernavoda and infrastructure projects, give the appearance of concern regarding China and a lively debate about the future of Romania-China relations, this is not the case. For the moment, these actions are more motivated by domestic politics, than confronting geopolitical or national security threats, as China is placed in opposition with the EU and the US, which are Romania’s fundamental relations. By taking action against Huawei and CGN’s involvement in Cernavoda, the PNL government wanted to signal to Washington and to Romanian voters its commitment for the transatlantic alliance and Romania’s strategic partnership with the US, especially in opposition to PSD’s more China-friendly approach.

Photo Credits: A completed section of the A3 motorway in Romania, in 2010 (Flickr/Iraul06); The A3 motorway in Romania under construction in 2008 (Wikimedia Commons/Inginer cfdp)

China, China-Europe, China-Romania, Romania

Andreea Brinza

Andreea Brinza is a researcher and the Vice President of RISAP. Her interests are related to the geopolitics, geostrategy and geoeconomics of the Asia-Pacific region and especially China. Her research focuses on the Belt and Road Initiative.