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Questions about a Chinese contract to build a multi-million-dollar sewerage system in a Serbian city have raised concerns among activists, who say it’s a microcosm of how Belgrade treats Chinese entities.
The project in the Serbian town of Kragujevac was awarded without a tender or public procurement, raising questions about transparency and corruption regarding the way Chinese companies and the Serbian government operate in the country.
Construction of a new 360-kilometer sewer network in Kragujevac, Central Serbia, began in November last year, and was contracted directly by the Ministry of Infrastructure, and then the project was awarded to the Chinese Road and Bridge Corporation (CRBC). an international construction company based in Beijing. This company won the project without participating in a tendering process.
The project is part of a wider Serbo-Chinese venture called “Clean Serbia”, which the Serbian government initiated in 2021 in 65 cities and municipalities, and this initiative is worth $ 3.6 billion.
The purpose of this initiative is to modernize, repair, and in some cases, build water management systems nationwide, in order to have better drinking water, combat pollution, and expand access to more modern water networks. black, which according to Government statistics, over a third of Serb families do not have access to.
But as local officials in Kragujevac say their city needs a new sewerage system in order to tackle long-standing sewage and pollution problems, opposition assembly members are raising concerns about transparency and lack of information about the offer and how CRBC acquired this project.
“I have not received any answer except that the Chinese company is the main contractor,” Verolub Stevanovic, an assembly member in the Kragujevac Municipal Assembly, who has previously been the mayor of the city, told Radio Free Europe.
“Certainly the city’s sewage problems must be solved, but first [ne duhet të dimë] what is the real cost of this and what are the terms of this loan ”.
In addition to corruption concerns, the direct agreement between CRBC and the Serbian Government – but also the lack of a tendering process for other companies to submit their bids – coincides with a broader model in which activists and oversight groups say it’s the way Serbian officials work with Chinese businesses.
“It is basically a reflection of the weakness of the representatives of our state, who uncritically accept such agreements,” Nemanja Nenadic, director in Transparency International in Serbia, told Radio Free Europe.
“One side of the equation is what a foreign partner requires to reach an agreement, and the other side is whether the Serbian side is willing to accept them. [ato kërkesa]”.
Beijing and Belgrade
Beijing has close relations with Serbian President Aleksandar Vucic, and in the last two decades has steadily deepened relations with Serbia and across the Balkans.
Since then, Belgrade’s ties with China have expanded into many sectors, including trade, defense, technology, and EDUCATIONas millions of dollars from China have entered Serbia under the banner of the Belt and Road initiative – China’s global infrastructure initiative – but also through bilateral agreements.
Also, Serbia is increasingly following foreign policy looking east, such as the state of China and Russia. Belgrade also looks west to the European Union, which is not only a major partner and high-level investor through the European Investment Bank, but also plays a vital role in setting the standards of the business and the workers involved in the projects.
In addition to loans and investments through the European Investment Bank, the EU also provides grants to Serbia and other Balkan countries for infrastructure and modernization projects, making the European bloc ‘s offers one of the most favorable currently available.
However, Chinese investment in Serbia has expanded rapidly and sparked controversy, as Beijing-backed companies have benefited from tax exemptions, been allowed to circumvent labor laws, and have had other exemptions. Similarly, environmental damage caused by a Chinese-owned copper mine near the Serbian town of Bor has sparked concerns and protests about environmental pollution.
A study by the Center for the Study of Democracy, a Bulgaria-based organization, published in September 2021, said that China’s growing economic influence in Central and Eastern Europe over the past decade has coincided with declining legal standards and governing the entire region, while Serbia, in this study, is singled out as a prime example of this.
Questions in Kragujevac
Concerns are being raised about the procurement process for the construction of a sewerage system and wastewater treatment plant in Kragujevac.
While it is known that the Chinese company CRBC will lead the project, few other details are known or have been publicly stated, especially which other local or international companies will be included as subcontractors in this lucrative deal.
According to Serbian Foreign Minister Tomislav Momirovic, Serbian companies will represent “not less than 49 percent” of the total subcontractors in the “Clean Serbia” initiative.
But, because there was no tendering process, this information is difficult to verify.
According to the comments that the Office of the Mayor of Kragujevac sent to Radio Free Europe via email, the cities “that are part of the ‘Clean Serbia’ project have no financial obligations, except for providing land where the plants and other projects will be built.” .
The cost issue is also still unclear, although a bill expected to be submitted to the Serbian Parliament confirms one of the loan agreements for the project, citing a $ 232m loan to be provided by the Chinese Export and Insurance Corporation. Credits. This corporation is a large Chinese state-owned enterprise, which is under the management of the Ministry of Finance of China.
The mayor of Kragujevac also told Radio Free Europe that $ 217m had been provided by Serbia to build three wastewater treatment plants, in addition to the sewerage system project.
CRBC did not respond to RFE / RL questions about how it would select subcontractors and what it would do to ensure that European standards and regulations are adhered to during the implementation of this project.
The ministry added that EU standards regarding wastewater treatment, as well as local laws on planning and construction, as well as environmental protection, have been respected in the process of designing this project.
A well-known model
The “Clean Serbia” initiative is not the first example of Sino-Serbian cooperation in infrastructure and water treatment. According to Nenadic from Transpareny International, this means that it coincides with a typical model of circumventing existing rules and regulations.
For projects similar to the one in Kragujevac, the Serbian Ministry of Construction, Transport and Infrastructure signed two agreements with the China Machinery Engineering Corporation (CMEC) in January 2020. The projects are related to wastewater treatment, and these projects were awarded to this Chinese corporation without tender or public procurement process.
During the signing of the contract, both the Serbian and Chinese sides stressed that EU standards will be respected and many block regulations have been modeled and incorporated into existing Serbian legislation, such as the Law on Public Procurement, which requires that there must be a bidder and there must be a tendering process for all projects.
But Nenadic emphasizes that these articles of the law are not being respected now, which could be a signal that future projects will bypass other rules, despite public statements that they will be respected.
“It is possible that they will claim that some of the EU standards will be respected,” Nenadic said. “However, what is quite clear is that the rules are almost identical to those of the EU, and the same are not being respected.”REL
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