The “Angola model” reaches Europe, finally

June 27, 2011

OK, not quite the “Angola model,” as Hungary has no oil and few minerals. But, after a few tentative infrastructural investments in the poorer parts of Eastern Europe and a recent fiasco in Poland (see News, 14 June 2011), the package approach, in which a slate of agreements on investment and credit are signed at once and which is familiar from Africa, has arrived in the European Union. On 25 June, during Premier Wen Jiabao’s visit to Budapest, Chinese and Hungarian government and corporate officials signed 12 agreements, covering among others

  • investment in railways, a citric acid and a lightbulb factory, and a European  regional support centre for telecom giant Huawei;
  • a “Central European Hungarian-Chinese Trade Logistics and Development Cooperation Zone;”
  • a China Development Bank credit line of 1 bn euro to cover these;
  • a Bank of China credit line of  1.1 bn euro to BorsodChem, a chemical company already majority-owned by a Chinese state enterprise;
  • purchase of Hungarian debt by China (which has already bought Greek and Spanish debt);
  • the establishment of cultural centres in each other’s countries (this is intriguing since China has no cultural centres overseas, apart from Confucius Institutes, which Hungary already has);
  • the setting up of a bilateral trade council (this too is interesting, since to my knowledge China only has multilateral trade bodies, such as with certain African or Pacific countries);
  • and scholarships for 150 Hungarian students to study in China.

This seems to be, as Chinese officials like to say, all-round success for Orbán Viktor, Hungary’s prime minister, who while holding the EU’s rotating presidency likes to talk about how the wind is blowing from the East and berates the IMF. The fact that anti-Communism is central for the legitimizing ideology of Orbán’s party is only ironic at first sight. In fact, both ruling parties use an increasingly hegemonic discourse of national harmony used to justify denying  autonomy to courts and media; feed a discourse of history in which ideological conflicts are erased and great national heroes are presented in a seamless succession; replace legal arguments with moral ones in justifying criminal prosecution or violations of civil rights; rhetorically exclude dissenters from the nation and automatically associate them with foreign interests; and institutionalise nationalist symbols and rituals. Orbán justified the adoption of a new constitution by saying that the old one was not “consistent with the Hungarian spirit.” The legitimacy of both governments rests upon depicting their predecessors and enemies — Communist or anti-Communist — as puppets of alien interests. As the critic Szilágyi Ákos points out, both government boast of their bravery in withstanding the pressures of international capital and international human rights organisations or media.

Indeed, there are reports of Tibetan demonstrators being assaulted by police during Wen’s visit, and other Tibetans who live in Hungary being summoned to the immigration authority without explanation. (If this is true, it could only have happened in direct cooperation with Chinese authorities, since the Hungarian government does not have information on the ethnicity of immigrants.) According to the spokesman of an opposition party, the government also banned a demonstration by Falungong members. (Both Tibetan and Falungong protest is assumed by the Chinese government to be fuelled by interests inimical to China – a view that is akin to that of Gypsy protests in Hungary.) Wresting banners away from demonstrators and using pretexts to make sure potential demonstrators are safely away from the risky sites are methods used by Chinese police, and someone has had to teach the Hungarians these methods. They will come in handy when dealing with their own dissidents.

The fact that Orbán’s party, back in 2006, campaigned against Chinese immigration — despite the fact that there are only 10 to 15 thousand Chinese in Hungary, 80% of Hungarians in surveys consistently express their opposition to their presence — does not matter either, since the Chinese government does not care very much about the fate of its private citizens abroad. On the other hand, the choice of Hungary for the first full-scale Chinese investment package in Europe, in addition to Orbán’s politics and Hungary’s dire finances, probably does have to do with the country’s role as the region’s earliest hub of post-1989 entrepreneurial migration. The new contracts will no doubt energise Hungary’s languishing Chinese businesspeople, who will try to get pieces of the pie.

To quote again from Szilágyi’s vision of a new European “barracks capitalism,” possibly beginning in Hungary: “Democracy and the rule of law will be “tightened” to the extent to which freedom of expression and assembly (…) labour rights (and) civil society hinders the withdrawal of resources, accompanied with banners bearing national slogans, from social welfare systems,” resulting in a “state that commands both labour and capital, and in which both restriction of consumption and restriction of freedom becomes morally condoned, indeed a new national, nay European, ethic.”


Lao railway contract called a hoax

May 13, 2011

On the eve of a heralded groundbreaking ceremony for the Lao section of the Pan-Asia Railway (see News, 10 March 2011), scheduled for 25 April, the head of the commercial section of the Chinese embassy in Laos, Zhang Yucheng 张玉成, told Southern Weekend 南方周末 that he has “never heard of it.” Hardly believable, since major Chinese newspapers like China Youth Daily reported on the event.

According to the article, the embassy posted on its website a disclaimer that all work on the railway is done by the Chinese Ministry of Railways’ China-Lao Railway Project Coordination Group, and no contract has been awarded to any private company. A consortium made up of the Kunming Railway Bureau, China Railway Engineering (中国中铁), Sinohydro, and Southern Carriage Group (南车集团)has been organised to establish an investment company called 中铁磨万铁路有限公司 (Chinese Railways Boten-Vientiane Ltd.). A similar company is being organised on the Lao side.

Before the dismissal of China’s previous minister of railways on charges of graft, it had been widely reported that a BOT contract for the Lao section of the Pan-Asia high-speed railway had been awarded to a previously unknown Hunan-based private company called Xiaoxiang.

In a later article, 21st Century Economic Herald, Southern Weekend’s sister publication, confirmed that the Kunming police has launched a fraud investigation into Xiaoxiang’s activities. Police say that the company pretended it had gained the contract in order to defraud subcontractors of advance payments. The China-Lao Railway Coordination Group says that Xiaoxiang approached them with a proposal for a BOT contract but was rejected.

But how can a private company without a licence for foreign contracting activity claim for months that he received a government contract of this size, and have this claim reported in major national media, without being either contradicted or investigated? Why did the Ministry of Railways wait until now with announcing who was supposed to be in charge? Xiaoxiang referred to a Lao government decree — so perhaps it did receive a contract from the Lao side, without Chinese government approval. Also, according to the 21st Century Economic Herald report, two Chinese generals were present at the launching ceremony of the company.

The Southern Weekend article’s tone suggests that exporting high-speed railways remains a priority for the Chinese government. Chinese control of the terms of a future global high-speed network, this newspaper with a liberal reputation said, is like controlling the terms of the law of the sea; it would create new rules of the game for the international economy.