Xi and Putin play Frenemies in the Balkans

  • Xi and Putin are teaming up at the UN over Balkan issues
  • China is exercising increasing influence over the region through its economic sway
  • China’s influence is gradually replacing Russia’s, particularly in Serbia

Why are Xi and Putin frenemies?

Answer: The leaders are presenting a united front at the UN over issues in the Western Balkans, but Putin is losing ground to Xi in the region itself.

For years, Russia asserted itself in the Western Balkans in the hopes of reducing the region’s ties to the West, while China’s interests in the region remained predominantly economic. Recently, however, Xi and Putin have worked in partnership as China has made its influence felt economically in the region.

Xi and Putin have increasingly cooperated to counter Euro-Atlantic influence in the Western Balkans, particularly at the United Nations Security Council. Toward the end of 2021, they opposed an initiative to keep an international peacekeeping force in Bosnia and Herzegovina (B&H). Both leaders have pledged support to Milorad Dodik, president of Republika Srpska in B&H, whose threats to undermine Bosnian institutions designed to prevent ethnic conflict have been met with threatened sanctions from the EU and US. Xi and Putin also stand in opposition to UN membership for Kosovo. The strategic cooperation is likely to continue, with both leaders having invested heavily in vaccine diplomacy in the region.

However, this alliance proves less friendly than it initially appears. For Putin, the Western Balkans should fall under Russia’s sphere of influence in the “new Yalta system” at the forefront of his current foreign policy. He knows that aligning himself with Xi will protect Russia against Western retaliation. But China is asserting a more aggressive influence in the region through capital and investment, particularly in the tech sector. For the moment this suits Putin as it drives EU-US influence out of Western Balkans, but it poses a threat to Russian influence, particularly in Serbia, the country economically closest to China and historically closest to Russia.

What does Xi want?

Answer: The Western Balkans is a prime location for China’s economic expansion with its proximity to Europe, the Middle East, and Africa.

For Xi, increasing Chinese influence in the Western Balkans is a logical step in his geopolitical strategy, and it’s all about location. The region borders directly with the EU and its countries enjoy zero customs regimes with the bloc. It’s also part of China’s Belt and Road Initiative (BRI). By connecting Central and South Asia, the Middle East, Africa and Europe with dense transportation and communications networks, China is creating a fertile ground for its economic growth and giving Beijing a greater say in world politics. Xi is more interested in building a financial network in southeast Europe than in constructing military bases around the Baltic and the Black Sea, which is Putin’s intention.

Chinese commercial activities in the region are thus focused on a range of infrastructure projects: bridges, rail lines, roads, airports, telecoms, electricity, and ports. Many of these countries are not EU member states and are not susceptible to the same scrutiny that Brussels may have over regulation. Generally, they suffer greater economic depression and stand to benefit from infrastructure and employment, while those with more autocratic regimes make useful allies for Xi on matters of tech and surveillance.

Serbia, the largest of the West Balkan states, has become the most important country for China in the region and infrastructural loans there amount to more than $8 billion. The dependence on Chinese investment and the subsequent impact on regulation and legislation gives Xi sway in the region. Keeping in line with China’s policies towards Tibet and Taiwan, Xi capitalises on Serbia’s insistence on not recognising Kosovo, teaming up with Russia and opposing Western policy.

What does Putin want?

Answer: To rail against the West alongside China while retaining influence in the Western Balkans.

Putin’s approach to the Western Balkan’s is similar to Xi’s in that it aims to create political and economical dependence, along with a strong military element. The region’s geostrategic location between the Black and Mediterranean Seas, as well as its proximity to the Middle East, is also important to Putin. Similar to his strategy in the Caucus, he aims to prove that NATO, the EU, and the US are not credible partners for these states, showing Russia to be the sole guarantor of regional security.

Serbia is also a key player for Putin. Belgrade moved closer to Moscow after Kosovo’s unilateral declaration of independence and the global financial crisis. However, Serbia is where Putin stands to lose out to Xi. Chinese companies have invested more than 2 billion euro in just 16 projects in Serbia. This is influencing Serbia’s legislature as laws are amended to fit the requirements of Chinese investors. During the COVID-19 emergency, both China and Russia sent equipment, yet Serbia did not greet Russian aid with the same enthusiasm as Chinese aid. If Serbia shifts its reliance to China over Russia in future economic or other crises, it could mark an end for Russia’s traditional influence in the country.

Nonetheless, Putin will continue to cooperate with Xi on regional matters, given their common goal of reducing EU-US influence and the financial support China can provide, especially as Russia suffers the effects of sanctions from the West. For Putin, losing out to China may be worth it if it means the US loses out too. It will, however, incur an economic cost for Russia and put Putin in a weaker position, which could become a point of contention as China grows stronger, particularly if it strengthens its military presence in the region.

What is Xi doing?

Answer: Improving relations with Balkan leaders and investing large sums of money in infrastructure.

Xi has improved relations and increased ties with almost all the Western Balkan states. China’s foreign minister recently visited the region to push the BRI and its 16+1 group to promote business and investment with Central and Eastern Europe. These relationships revolve largely around investments, such as a 350 million euro loan to B&H from the China Development Bank for the construction of the Stanari coal-fired power plan, built by Chinese firm Dongfang Electric Corp..

Thus, the Western Balkans form part of China’s corridor of ties. But Xi’s moves in this part of Europe have begun to attract attention from the EU and the US. While primarily economic in nature, there are long-term strategic and foreign policy implications of China’s influence in the region.

The EU will be keeping a close eye on these developments as they potentially undermine EU unity, particularly BRI projects that do not adhere to EU tendering and construction requirements. In fact, the EU could counter Chinese influence through its own Global Gateway programme, where 30 billion euro is designated for the Western Balkans. This is potentially aimed at offering an alternative to Beijing’s huge investment initiatives.

Who is winning and what about you?

Answer: China’s large economy means Russia is struggling to compete. However, the EU and the US also retain substantial influence in the Western Balkans.

Xi and Putin have made substantial gains from their partnership in the Western Balkans. However, China’s increasing influence threatens to marginalise that of Russia, who does not offer the same economic support and infrastructural vision. Russia’s relations with China are often characterised by the countries’ economic asymmetry. Many West Balkan states would like to diversify their economic and trading partners, but Russia is just one of many prospective partners.

The financial clout of China outweighs what Putin can offer. While this is not of immediate concern to Putin, it will likely cause problems, or at the very least frustration, for him in the long term. He has already expressed concern over Chinese influence in the post-Soviet space, hinting that China should cede a greater role to Russia in the BRI, particularly in Eurasia.

In the short term, Xi and Putin will continue to counterbalance EU and US influence in the region, which still outmatches theirs in many areas. The six countries still aspire to EU accession, while Albania, North Macedonia, and Montenegro are NATO member states. Both the EU and the US will likely seek to further strengthen their partnerships with these countries in fighting Sino-Russian influence through economic and military investments of their own.

The West Balkan states stand to win and lose from this arrangement. Chinese investment in infrastructure and companies that provide employment are of great benefit to the region, while the EU’s desire to compete will likely increase investment on their part as well. Equally, the region’s dependency on the decisions of foreign superpowers makes it vulnerable. China’s sway in Serbia and its stance on Kosovo could add pressure to the normalisation process and dialogue between Belgrade and Pristina. Those in the Western Balkans who are also concerned about the region’s democratic backsliding in recent years may view the use of Chinese surveillance technology and general favouring of autocratic regimes in their countries as a threat.

Ultimately, we can understand this situation as the vying for influence of the world’s superpowers and the renewed importance of geopolitics in the 21st century.