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Bosnia-Herzegovina External Relations Briefing: Overview of the Relations Between People’S Republic of China and Bosnia and Herzegovina in 2020 Zvonimir Stopić

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Bosnia-Herzegovina External Relations Briefing: Overview of the Relations Between People’S Republic of China and Bosnia and Herzegovina in 2020 Zvonimir Stopić ISSN: 2560-1601 Vol. 34, No. 4 (BH) November 2020 Bosnia-Herzegovina external relations briefing: Overview of the relations between People’s Republic of China and Bosnia and Herzegovina in 2020 Zvonimir Stopić 1052 Budapest Petőfi Sándor utca 11. +36 1 5858 690 Kiadó: Kína-KKE Intézet Nonprofit Kft. [email protected] Szerkesztésért felelős személy: CHen Xin Kiadásért felelős személy: Huang Ping china-cee.eu 2017/01 Overview of the relations between People’s Republic of China and Bosnia and Herzegovina in 2020 In April 2020, Bosnia and Herzegovina and People’s Republic of China celebrated the 25th anniversary of the establishment of diplomatic relations. Generally speaking, the relations between the two countries in past quarter of century has been smooth and without major incidents. Despite of the issues that exist in Bosnia and Herzegovina’s institutional and political system, China and Bosnia and Herzegovina did manage to find a way to push through several large infrastructure and energy projects, upon which further development of relations can be based. Currently, the explosion of SARS-CoV-2 coronavirus slowed down most initiatives that were launched before the pandemics. However, despite of these difficulties, China and Bosnia and Herzegovina do plan to continue to develop cooperation within the “China+17” framework and the “One Belt One Road” initiative. Bosnia and Herzegovina and People’s Republic of China established diplomatic relations at the ambassadorial level in April 1995, at the time war in Bosnia and Herzegovina still was not brought to its conclusion. At that moment, the two countries wowed to respect each other’s sovereignty and territorial integrity, and agreed to make effort in furthering joint development and cooperation. Although during the first fifteen years obvious results of the cooperation between the two countries could not be observed, that period was used by Bosnia and Herzegovina and China to make enough contacts to conclude several agreements which created foundations for further cooperation. In 2000, China and Bosnia and Herzegovina signed the Agreement on Trade and Economic Cooperation, and in 2002 an agreement on investment protection. Significant moment in pushing the cooperation between the two countries forward occurred in May 2010 in Beijing, when Bosnia and Herzegovina’s President of Council of Ministers Nikola Špirić reached an agreement with Chinese Prime Minister Wen Jiabao on several assistance models for Bosnia and Herzegovina and on Bosnia and Herzegovina’s removals of many administrative barriers which were seen as obstacles for further cooperation. The “China + 17” framework and the “Belt and Road Initiative”, launched in 2012 and 2013, respectively, opened new possibilities for cooperation. These two initiatives created a much needed momentum for financing and implementation of several large energy and infrastructure 1 projects across Bosnia and Herzegovina, some ow which are currently in different stages of construction. The 300 MW Stanari Thermal Power Plant, situated not far from Banja Luka, was the flagship project of cooperation between China and Bosnia and Herzegovina. The € 350 out of € 550 million needed for completion of the Stanari Thermal Power Plant project, owned by the Vuk Hamović’s United Kingdom based EFT group, was funded by China Development Bank (CBD). The chosen contractor, the China’s Dongfang Eclectic Corporation, successfully completed the project in 2016. After the competition of the Stanari Thermal Power Plant, the EFT group concluded yet another energy project with the Chinese, this time over the hydroelectric power plant situated on the river of Neretva. More precisely, the EFT group signed an agreement with the Chinese company Sinohydro Corporation Limited in December 2019 for designing, delivery and construction of the 35 MW Hydroelectric Power Plant Ulog, which will have a 53 meter high dam and a 2.7 km long exit tunnel. The preparatory work for the constructions began this summer. Another similar large energy project is currently being undertaken in the city of Tuzla: the construction of the 450 MW thermal power generator “Block 7” of Tuzla’s thermal power plant, owned by Elektroprivreda of Bosnia and Herzegovina. Although the first agreement was signed in 2014, nothing was initially done for a few years because of the reassessments of economical feasibility of the project. Finally, a new financial agreement was reached with China ExIm Bank in November 2017, which opened a fresh way for the completion of the project. The China Gezhouba Group Co., chosen to be the main contractor, will began with construction after the preparatory construction, which began in November 2019, is completed. As the executive director for Capital Investment of Elektroprivreda Senad Salkić stated in June 2020, local companies have until that moment already completed more than 80 % of agreed preparatory work. Although SARS-CoV-2 coronavirus pandemics will no doubt affect the continuation of the construction of Tuzla’s “Block 7”, all is currently being done so that the Gezhouba Group Co. can safely continue with work. The thermal power plant Tuzla “Block 7” project, worth $ 810 million in total is one of the largest investments in Bosnia and Herzegovina so far. Along with the projects in Stanari, Ulog and Tuzla, another energy project, the Dabar Hydroelectric Power Plant project, worth about € 215 million, recently also became a part of China and Bosnia and Herzegovina’s cooperation. In May 2020, after a one-year long bidding process, it was announced that the China Gezhouba Group Co. has also become the main contractor for the construction of Dabar Hydroelectric Power Plant, owned by the Elektroprivreda of Republika Srpska. After the construction is completed, the plant will generate 249 million kWh of electricity a year. Besides 2 the energy projects, China and Bosnia and Herzegovina also reached an agreement on construction of the “Banja Luka - Prijedor highway”, about 40 kilometers long. This project, valued around € 297 million, as it was agreed in late 2018, should be completed by the China Shandong International and Technical Cooperation by the year 2023. However, until now, construction still hadn’t begun, mostly because the preparation of technical documentation took more time than preciously estimated. Due to the demands of the citizens, part of the route had to be adjusted, which required several changes to be done in the project documentation. Recently, the SARS-CoV-2 coronavirus pandemics created new reasons for the postponement. Currently, the project is one year falling behind schedule. One thing that can be noticed so far is that out of five major projects that were completed or are currently being undertaken in Bosnia and Herzegovina, mentioned in this briefing, only the “Block 7” of the thermal power plant in Tuzla is not tied directly to Republika Srpska. This indicates that Republika Srpska had more success in developing a working model of cooperation with China and is at the moment observably more focused on establishing stronger relations with China. Besides cooperation on large projects, Republika Srpska is trying to strengthen cooperation on the cultural level as well. The only sinology department in Bosnia and Herzegovina, where students can become proficient in Chinese language, educate themselves to become teachers of Chinese language, and gain valuable knowledge which can help them in making various connections with China on many different levels belongs to East Sarajevo in Republika Srpska. Further more, by opening of a second Bosnia and Herzegovina’s Confucius institute in Banja Luka, Republika Srpska managed to create another channel of communication with China, equalizing itself with Sarajevo, which is a home to a Confucius institute since April 2015. Since its establishment in January 2018, Banja Luka’s Confucius institute aims to position itself to be more economically oriented, and hopes it can help the academic community, politicians, investors and general public of Republika Srpska to get better acquainted with politics, economy, culture and laws of the People’s Republic of China. Conclusion Currently, the relations between China and Bosnia and Herzegovina rely on large energy and infrastructure projects, which are often financed by China and for which Chinese companies are chosen to be major contractors. All of these projects are important for general development of Bosnia and Herzegovina and play a significant role in improvement of social conditions of Bosnia and Herzegovina’s population. The power plant in Stanari, for example, created around 3 900 permanent jobs alone, which is a significant amount from the perspectives of both the Republika Srpska and Bosnia and Herzegovina. Although the year 2020, due to the economic difficulties caused by the SARS-CoV-2 coronavirus pandemics, did create issues in realization of several projects, both China and Bosnia and Herzegovina hope that in the long run all the difficulties will be overcome and that all of the projects will be completed as close within the agreed timeframe as possible. Looking at Bosnia and Herzegovina as a whole, the entity of Republika Srpska currently benefits the most from the cooperation with China, which today is the result of the continuous long-term investment in education and people-to-people connections. 4 .
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