Welcome to the 14th issue of the #CEEasia Briefing.
In this issue, we dissect the following topics:
- Slovakia adopted a new Security Strategy
- European countries support declaration against arbitrary detentions
- Chinese vaccines take hold in Europe
- South Korea invests in Hungary
- Poland pushes for air bubble with India
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Slovakia adopts a new security strategy
What’s going on? Over the year, Slovak politics has gone through major changes as the SMER party was not able to defend its position in the parliamentary election in 2020 and a new coalition government was formed. The political change had a major impact not only on domestic policy, but also on foreign and security policy, as shows the newly approved Security Strategy that addresses the growing Chinese presence in Slovakia, its stretching influence in the world, and the security risks associated with it.
Going Deeper… Besides the spread of Chinese propaganda and the increasing use of disinformation, Slovak it is necessary to pay attention to the issues of corrosive capital and Chinese investment projects. Although the Security Strategy represents a radical change in the right direction when compared to the rather naive approach of the previous government led by SMER, only time will show whether Slovakia will be able to deal with the risks effectively. The government has just adopted a new law on screening of investments, however, it still will have to address other security challenges.
This means… Since the Security Strategy addresses the seriousness of the Chinese “challenge”, now it is crucial that a public debate on China is initiated in Slovakia. Without it, it is difficult to identify, understand and evaluate the potential risks and introduce solutions to them. Cooperation with other EU members and coordination of the negotiation positions and policies is equally important, it is thus essential to get involved in the discussion with all the European allies and in the formulation of a common EU policy towards China, and simultaneously try to find a position that corresponds to the Slovak interests.
CHOICE: China in the Slovak Security Strategy: A Step in the Right Direction?
CHOICE: New FDI Screening Law: Not What Slovakia Needs, But What it Deserves
EURACTIV: Ako uchopiť Čínu v novej bezpečnostnej stratégii Slovenska?
EU supports declarations against arbitrary detentions
What’s going on? On 15 February, on Canada’s initiative, 58 states & the EU endorsed Declaration Against Arbitrary Detention in State-To-State Relations. The declaration is largely seen as a reaction to China’s use of arbitrary detentions in politics. Notable cases of “hostage diplomacy” include the detention of Canadian nationals Michael Kovrig and Michael Spavor in China following the arrest of Meng Wanzhou, Huawei CFO, in Canada pending an extradition hearing to the USA.
Going deeper… In Europe, 36 countries (including several micronations) endorsed the declaration. Absentees include Hungary, Belarus, Moldova, Russia, Armenia, Azerbaijan, and several non-EU countries of Western Balkans, i.e. countries which either have close relations to China or own domestic problems with human rights breaches and arbitrary detentions. The only non-EU country in the Western Balkans which endorsed the declaration was Albania.
Among the micronations, Vatican’s absence is also worthy of note as under Pope Francis the Holy See has been striving to improve relations with China.
China’s vaccine diplomacy: Sinopharm approved in Hungary & Serbia
What’s going on? Following the inclusion of the Russian Sputnik V vaccine in its mass immunization program, Serbia became the first country in Europe to approve the use of the Chinese Sinopharm vaccine. President Alexander Vučić criticized the EU’s failure to provide vaccines for its neighbors whilst praising China for the shipment of one million doses. Hungary also approved the use of the Sinopharm vaccine, becoming the first EU country to do so despite the fact that the vaccine has not been authorized by the European Medicines Agency (EMA). The country has received its first shipment of 550, 000 doses.
Going deeper… Despite the fact that Serbia and Albania are the only two Western Balkan countries to have started their vaccination campaigns, Serbia quickly surpassed the EU’s vaccination rate, mostly using the Sinopharm vaccine. Hungary’s Sinopharm approval was based on a decree issued by the government that calls for the approval of any vaccine that has been administered to at least one million people in three countries, with at least one being an EU or EU candidate country.
This means… In light of the ongoing delays to the EU’s vaccine rollout, others may decide to follow a similar route. Indeed, the remaining Western Balkan countries have been negotiating deals with both China and Russia. Even EU member states are increasingly looking eastward, with Slovakia, Croatia, and Czechia considering purchasing the Sputnik V vaccine. Germany’s Federal Minister of Health Jens Spahn also called for the use of Chinese and Russian vaccines if they are authorized by the EMA. This follows the argument that as long as the vaccines are deemed effective, political differences should be put aside. On the other hand, the EU’s approval of the vaccines would represent geopolitical victories for China and Russia, both of which are criticized for using vaccine diplomacy to strengthen their spheres of influence, with Chinese vaccine exports significantly exceeding the number of doses administered domestically.
MapInfluenCE: Záchrana z východu? Debata o čínských vakcínach v České republice
The Diplomat: Why Serbia Embraced China’s COVID-19 Vaccine
Politico: Western Balkans go east for coronavirus vaccines
Euractiv: With China’s help, Serbia overtakes EU in vaccine rollout
South China Morning Post: In EU first, China’s Sinopharm coronavirus vaccines arrive in Hungary
South Korea to build the biggest battery factory in Hungary
What’s Going on? The South Korean company SK Innovation has announced its intention to build a battery plant in Hungary. The € 1.9 million investment is set to be the largest plant of its kind in Europe and also the largest greenfield investment within the new EU member states.
Going Deeper… This is the third battery plant in Hungary that is successfully attracting investments in this field to prevent possible economic effects of the coming changes in the automotive industry. The industry sector plays an important role in the Hungarian economy. It accounts for 3 to 4% of GDP and contributes to the country’s exports up to 20%. In Hungary, the automobile plants are mainly owned by German manufacturers, such as Mercedes-Benz, brands of the Volkswagen Group, but also by Japanese Suzuki. Another German car manufacturer, BMW, is building a plant in Debrecen, in the east of the country.
In addition… Hungary is also succeeding in attracting investors thanks to strong state support. The investment of the South Korean company is to be supported by the largest state aid in the history of Hungary, but will not be published unless an agreement is signed with the investor and the process of notification with the EU takes place. With a similar, € 1.2 billion investment from Samsung, the Hungarian government provided support of € 108 million euros.
But wait a minute! In the context of Hungarian efforts to keep an important industrial sector, it is interesting to compare the situation with Slovakia. The Slovak Republic is the largest producer of cars per capita in the world. Indeed the industry accounts for up to 50% of exports and its share in the country’s GDP is up to 13%. Compared to Hungary, it plays a more important role. Nevertheless, only one US investment in the € 100 million battery plant was announced. And while the recent investment of the VW Group in Slovakia confirmed the company’s interest in further developing its Bratislava branch, it is questionable how other manufacturers such as Peugeot or KIA will react to the situation.
Bloomberg: $2.3 Billion Battery Plant Planned for Hungary, Europe’s Largest
FinWeb Hospodárske noviny: Na Slovensku vznikne prvý závod na výrobu batérií do automobilov, za 100 miliónov eur
Poland’s push for air travel bubble with India
What’s going on? The authorities in Poland seem to be on a charm offensive in India. At the beginning of February Polish envoy to India gave an exclusive interview in which he reiterated Poland’s hope for a transport bubble between the two countries. Alongside this, Warsaw also pitched for a stop in Poland as the prime minister of India, Narendra Modi, is planning two trips to Europe this summer to Portugal and the United Kingdom.
Going deeper… Polish envoy Adam Burakowski confirmed during the interview that Poland has applied for an air travel bubble with India and is awaiting a response. The direct flight between Warsaw and New Delhi was resumed in September 2019 for the first time since 1991 with occupancy over 90% but halted due to Covid-19. The route resumed again in August for a brief period of time during which the Indian media published an interview with Poland’s undersecretary of state for Asia Marcin Przydacz focusing on the prominence of India – Poland cooperation. Indeed, the country has been often described by the Indian authorities as ”India’s gateway to Europe’’. Currently, there are still operational cargo flights to Delhi and Mumbai.
This means… Both Polish and Indian authorities appear to be keen on deepening economic cooperation between the two countries. Indeed there are around 3500 Indian students studying in Poland at local universities. Both countries’ media have also extensively covered the cooperation and the fact that Warsaw is now pitching itself to become yet another stop for Prime Minister Modi suggests that both sides are serious about the prospects of this cooperation. Such a high-level visit, as suggested by Ambassador Burakowski, would be the first one in decades. Indeed the last such visit was by then-President V.V. Giri who visited Warsaw between 16-19 June 1970.
The Hindu: As PM plans two Europe visits, Poland pitches for Warsaw stop
WION: Poland lauds India’s vaccine diplomacy, hopes for early air transport bubble
Times of India: Poland can be India’s gateway to Europe