The European Union is reportedly investigating a landmark Chinese rail project that aims to connect Serbia’s capital Belgrade with Budapest in Hungary as part of Beijing’s ambitious Belt and Road trade initiative.
The European Union is reportedly investigating a landmark Chinese rail project that aims to connect Serbia’s capital Belgrade with Budapest in Hungary as part of Beijing’s ambitious Belt and Road trade initiative.
The Financial Times said on Monday that the EU was assessing the financial viability of the US$2.89bn railway project and investigating whether it had violated EU procurement laws that require public tenders for large transport projects.
“The commission services are assessing the compliance of the project with EU law. The dialogue with the national authorities is ongoing,” a European Commission spokeswoman told the Financial Times (paywall).
Upgrading the 350-kilometre Budapest-Belgrade railway into high-speed rail link is expected to shorten travel time between the two capitals from eight hours to just three.
Showcase for China’s new Silk Road plan
The Belgrade-Budapest rail upgrade is considered a showcase project in Europe to China’s Belt and Road initiative – first proposed by Chinese President Xi Jinping 2013 – that aims to increase trade through infrastructure investments in countries along the ancient Silk Road from Asia to Europe and Africa.
The rail connection is also part of so called Land Sea Express Route which opened last month and runs from Hungary through Serbia and Macedonia to the Chinese-owned port of Piraeus in Greece.
Brussel’s probe focuses on Hungary which is an EU member state and the first country in Europe to sign up to China’s Belt and Road initiative.
The contract for the US$1.8bn Hungarian part of the planned railway was reportedly signed in China’s meeting with Central and Eastern European countries in Latvia last November but appears to have not been made public.
According to the Financial Times, a treaty between Hungary and China names state-owned China Railway International Corporation and the Export-Import Bank of China as the project’s contractor and financier while Hungarian State Railway should implement it.
Hungary could be punished with fines if the investigation finds that EU procurement laws were infringed, the report said, adding that the probe could strain ties between Brussels and Beijing.
READ MORE: EU probe threatens landmark China-Hungary rail project
