Dear reader,

In this newsletter: the burgeoning China-Europe railway trade, a spat over support for the Beijing Olympics in Czechia, vocal opposition to a planned defense agreement with Washington in Slovakia, and Taiwan’s growing investment plans in the region.

Railway freight transport between China and Europe is undergoing an unprecedented boom. Spurred on by the sea shipping disruptions, more and more trains are embarking on the land journey across Eurasia. According to China's railway operator, 15,000 trains were dispatched last year, a year-on-year growth of 22 percent.

With the first connections appearing a decade ago, rail transport has become a formidable industry. Its rapid growth has created a competitive environment in Eastern Europe, with countries competing for the position of the logistical hub. So far, Poland has managed to stay well ahead, with some 80 to 90 percent of the transit traffic passing through its border with Belarus. However, the increasing traffic and the insufficient capacity of the Malaszewicze hub have created a significant bottleneck, exacerbating pre-existing supply chain issues.

The bottleneck is the direct impetus for finding alternative connections, especially through Lithuania to Kaliningrad or through Ukraine to Hungary and to Slovakia. Both Bratislava and Budapest have endeavored to garner a larger share of transit volume, with very limited results thus far. However, Hungary might yet gain the upper hand with an investment into an East-West Gate, a new intermodal terminal with a capacity of one million TEUs (standard shipping containers) a year.

Still, railway connections are not unaffected by the troubled geopolitics in the region. During the recent tensions at the border with Belarus, Warsaw warned that it might halt the railway transit. Trains on the Kaliningrad route have been reported as no longer stopping in Lithuania after the escalation of the Sino-Lithuanian diplomatic spat. Ukraine, on the other hand, recently stopped the transit to Poland due to disagreements over truck permits for Ukraine. With supply chain and shipping disruptions expected to continue, the developments on the Eurasian land route are a thing to follow.

  • Beijing Olympics divide Czech foreign policymakers. The 2022 Winter Olympic Games seem to shed light on the lack of unity in terms of pursuing a coherent Czech foreign policy towards China. In December 2021, the Czech Ambassador to China Vladimír Tomšík expressed support to the Olympics in an interview for Beijing Daily, mentioning acting on behalf of the Czech President Miloš Zeman. On the other hand, the new Czech government, led by Prime Minister Petr Fiala, has yet to announce its position on the Olympics. Overall, the new Foreign Minister Jan Lipavský appointed by Pirates is anticipated to toughen policy towards China, potentially shifting more attention toward the human rights situation in the country. To this end, the government program revealed last week puts forward the plan to conduct a review of ties with China. Consequently, Lipavský called on the Ambassador to refrain from providing further comments regarding this situation. Given the variety of attitudes toward China among Czech political representatives, this may turn to be the first but not last point of friction between the new government and the President who was previously reluctant to appoint Lipavský to the minister post. Importantly, the Czech political representatives have not been invited to participate in the Olympic ceremonies by the Czech Olympic Committee, arguing with the COVID-19 related restrictions. As a result, this effectively precludes the Czech government from issuing a diplomatic boycott in line with a number of countries, such as the US, UK, Canada and Australia. Meanwhile, EU member states, with the notable exception of Lithuania and Estonia, have not joined the boycott. A common EU position is scheduled to be debated soon, initiated by the French presidency.

  • The military agreement between Bratislava and Washington is creating an unexpected commotion. In mid-December, the Slovak foreign and defense ministers presented the draft defense cooperation agreement with the US, submitting it to the standard interdepartmental review procedure. The move was met with expected opposition from the chief opposition parties SMER-SD and HLAS-SD, with each voicing concerns over the supposed impact of the agreement on the sovereignty of the Slovak Republic. In fact, the representatives of both opposition parties presided over tightening of ties in the US when in government before 2020, including a multi-billion sale of US F-16 fighters. While they are now clearly instrumentalizing the issue in domestic politics, another unexpected player joined the fray - the office of the general prosecutor. Maroš Žilinka came out in opposition to the agreement, citing 35 issues to be brought up in the interdepartmental review process. The main concerns raised by Žilinka touch upon the impact on sovereignty but also concern the issues of the potential hosting of nuclear weapons or impact on local communities of increased military presence. The involvement of Žilinka is unprecedented but nonetheless fits into a pattern of controversial moves since his assuming office last year. In the context of the recent development, Žilinka's planned visit to Russia, where he is to attend the celebration of the anniversary of the establishment of Russia’s general prosecutor's office, also raised eyebrows. The fate of the defense agreement is now unclear. Prime Minister Eduard Heger criticized “conspiracies” surrounding the agreement, and reiterated his support for its approval. In the meantime, the issue has become a mainstay for disinformation efforts in Slovakia, the bulk of which are traditionally friendly to anti-US and pro-Kremlin narratives.

  • Taiwan steps up investment plans in Central and Eastern Europe. Taiwan’s National Development Council announced a plan to establish a fund devoted to investment in Central and Eastern European countries. According to preliminary estimates, the fund is expected to amount to $200 million which should primarily flow to several high-tech sectors, namely laser technology, semiconductors, and biotech. This strategy is in line with priority areas for cooperation with the region previously proclaimed by Taiwan. With the COVID-19 pandemic exposing the vulnerability of supply chains and related chips shortages, Taiwan may be prone to outsource some segments of productions to Europe, which the CEE region would be quite keen on hosting. Nevertheless, concrete steps and conditions for cooperation remain unspecified. Due to the complex nature of semiconductor supply chains, it is likely that the investment would encompass multiple EU member states rather than flowing to a single country. Furthermore, one of the intended areas of cooperation is talent development. In fact, this may relate to the November 2021 announcement to establish working groups within Lithuania, Slovakia, and the Czech Republic to provide scholarships for students from these European countries to study semiconductors in Taiwan. Lithuania, which has recently become a chief champion of closer ties with Taipei, is likely to be a leading recipient of Taiwan’s financial assistance. In the context of China's ramped up pressure against the Baltic country, Taiwan’s deputy foreign minister mentioned that “It’s time for us to help with [Lithuania’s] difficulties.” Taiwanese activities may partially mitigate the impacts of China’s coercion tactics on Lithuania. Otherwise, an insufficient reaction to China’s behavior may prevent other countries from following the suit and also set a precedent for similar diplomatic tensions in the future.
  • Our analyst Filip Šebok commented for Euronews that “on China, [the new Czech Foreign Minister] Lipavský will champion a tougher approach as he has been one of the most consistently outspoken politicians on this issue during his time in parliament" (read here). 

  • “By showing the potential costs, Beijing is also signaling to other CEE nations that they should not follow Vilnius’ example,” argues Filip in a 9dashline opinion poll (read here).

  • “It seems unlikely to expect China to behave less assertively in the international arena in 2022 than it did last year,” pointed out MapInfluenCE’s leader Ivana Karásková in an opinion poll for CEIAS (read here).

  • Our Polish analyst Alicja Bachulska analyzes the developments in China-CEE relations in the previous year and contemplates their meaning for 2022 in her article for CHOICE (read here).

Best regards


Filip Šebok
Project Manager of MapInfluenCE


www.mapinfluence.eu
www.amo.cz

Newsletter editor: Filip Šebok

Contributions from: Filip Šebok, Veronika Blablová

@MapInfluenCE and #MapInfluenCE

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