China In Eurasia

BANJA LUKA, Bosnia-Herzegovina -- Faced with growing economic pressure over looming debt payments and a lack of foreign investment, Bosnian Serb leader Milorad Dodik is seeking a financial lifeline from China.

His administration in Republika Srpska -- Bosnia-Herzegovina's predominantly Serbian entity -- has recently inked new construction deals with Chinese companies, forged closer links between Dodik's ruling Alliance of Independent Social Democrats (SNSD) party and China, and in April sent Prime Minister Radovan Viskovic to Beijing to meet with local companies and court investment.

"We are too small to be able to influence the development of any world policies and events, but at this moment we are looking for friends and partners who can help in commercial, economic, financial, and any other area," Bosko Jugovic, the mayor of Pale in Republika Srpska, told RFE/RL's Balkan Service after being part of a SNSD delegation that welcomed visiting Chinese trade officials to Sarajevo in late April.

Analysts say the warming ties between Republika Srpska and China -- which were formalized through a cooperation agreement in 2016 -- are part of a wider political play by Dodik as he grapples with a struggling financial outlook and deteriorating relations with the West over his calls for the Serbian entity to secede from Bosnia and eventually form a union with neighboring Serbia.

In particular, Dodik is hoping to borrow from Chinese financial institutions and get China to accept bonds leveraged by Republika Srpska so that it can meet a series of debt payments to Western lenders that start coming due this summer.

Dodik said in late March that Chinese institutions had agreed to accept the bonds as financial guarantees that they will be repaid for any loans, but many economic analysts are still unsure about the Bosnian Serb leader's plan, which they say lacks bargaining power and could lead to unfavorable terms.

"Securing a loan from China is one thing, but the question is under what conditions," Velizar Antic, an independent political analyst from Banja Luka, told RFE/RL. "It's about when and how those loans will be repaid [and] what happens if Republika Srpska can't repay them."

Balancing Finance And Politics

Once a favorite of the West, Dodik -- who has been a key figure in Bosnian politics for 30 years -- is no stranger to playing his warm ties with Beijing and Moscow off Europe and the United States.

When he was elected president of Republika Srpska in 2022 after finishing his tenure as the Serbian representative of Bosnia's tripartite presidency, he vowed to forge ahead with his close relations with the Kremlin and said that any sanctions or cuts to European Union funding would only force him to take up offers of investment from China.

The nationalist politician appears to have made good on that pledge, announcing recently that he plans to visit Russian President Vladimir Putin in Moscow on May 23 despite international condemnation over Russia's unprovoked, full-scale invasion of Ukraine and Western calls to isolate the Kremlin.

"When I go to Putin there are no requests. He just says, 'What is it I can help with?' Whatever I discussed with him, I've never been cheated on it. I don't know what else to base trust upon, if not that," Dodik told The Guardian newspaper in 2021. "With [Chinese leader] Xi Jinping, he also says, ‘if there is anything I can help with, I am there.'"

How this will translate into Dodik's current efforts to meet Republika Srpska's looming debt payments remains to be seen.

Republika Srpska's Finance Ministry did not respond to RFE/RL's requests for comment about its debt payments and potential Chinese loans.

Looking ahead, a 200 million-euro ($217 million) installment for bonds sold on the Vienna Stock Exchange five years ago is due in June and the Republika Srpska -- which has a population of 1.3 million people -- will need to repay more than 500 million euros ($544 million) that it borrowed from various financial institutions by the end of 2023.

According to Bosnia's Finance and Treasury Ministry, the external debt of Republika Srpska currently exceeds 2.1 billion euros ($2.29 billion).

During his trip to Beijing in April, Viskovic reportedly held talks with three Chinese lending institutions. The outcome of those talks is unknown, but Republika Srpska said that Chinese representatives would continue negotiations in Banja Luka, the entity's de facto capital.

Several commentators have noted that the lack of specifics about ongoing talks with the Chinese side highlight that Bosnian Serb officials may not be satisfied with the terms they have been offered.

Igor Crnadak, vice president of the opposition Party of Democratic Progress, told RFE/RL that governing officials have not been clear on the repayment schedule for its debt or about any talks with Chinese institutions, adding that his party was planning to call for a special parliamentary session to get information regarding the entity's finances.

"The situation is quite serious, especially considering the clauses in the contracts, which state that the holders of those bonds can enter into ownership of companies where the government has a majority stake, if the debt is not repaid," Crnadak said.

Leaning More On Moscow, Beijing

The financial pressure Republika Srpska is facing is in part due to allegations of misspending and corruption that have followed successive governments, but also because of Dodik's dramatic falling out with the West, which has limited his funding options.

Since 2017 Dodik has been banned from traveling to the United States or accessing assets under its jurisdiction after he defied Bosnia's Constitutional Court by staging a referendum on the celebration of Republika Srpska Day, marking the date in 1992 when Bosnian Serbs declared their own state.

Separatist ambitions among ethnic Serbs sparked Bosnia's devastating 1992-95 war, which killed more than 100,000 people, displaced millions, and shattered much of the country.

A U.S.-brokered peace agreement ended the war and created the predominantly Serb and Bosniak-Croat entities that make up the Federation of Bosnia-Herzegovina. Bosnia's three-member presidency is held by representatives of those three main ethnic groups.

Dodik's pro-Russian stance is well-known, but the turn toward Beijing has coincided with China's own close relationship with Serbia -- who is Republika Srpska's main ally and largest trading partner -- and the prospect of securing Chinese loans and investment with fewer strings attached than Western options.

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In February, a consortium of Chinese companies sealed a 175 million-euro ($190 million) loan deal with Republika Srpska for the construction of part of a northern highway connecting the region with Serbia.

Viskovic provided few details about the bid and loan at the time of the announcement, saying only that China Overseas Engineering Group was chosen because it was the most favorable bidder after the European Bank for Reconstruction and Development withdrew its support, saying the project was not vital. Beyond that, Viskovic said the 15-year loan will have a three-year grace period for repayment.

In August 2022, another highway construction deal was signed with China State Construction Engineering to build a separate 33-kilometer-long section of the same highway in northern Bosnia.

Following the announcement of the 302 million-euro ($328 million) agreement, Dodik touted the contract as a win for his strategy of courting Chinese capital in the face of Western pressure.

"This shows that Republika Srpska has an alternative and cannot be blackmailed by some from the West who try to influence political attitudes and political solutions by banning banks from investing money," he said.

Written by Reid Standish in Prague based on reporting by Goran Katic and Milorad Milojevic of RFE/RL's Balkan Service in Bosnia-Herzegovina

As China continues to reopen its economy and reinvigorate its diplomatic dealings around the world after three years of strict COVID-19 restrictions, Beijing has its sights set on Central Asia, analysts and officials say.

As trade and commerce links between Beijing and the five countries in Central Asia continue to rebound from the shutdowns caused by the pandemic, Chinese leader Xi Jinping will hold Beijing’s first in-person summit with Central Asian leaders on May 18-19 in Xi’an.

China will use the summit to try to build on the major progress it has made recently by establishing visa-free travel deals with several regional governments.

A new draft law between Kazakhstan and China that allows passport holders of the countries to stay in the other country for 30 days has been approved by Astana and is expected be signed into force later this month at the summit in Xi'an.* The move comes after Uzbekistan approved two weeks of visa-free travel for Chinese tourists and with Kyrgyzstan currently in talks for its own visa-free regime with Beijing that it hopes will boost its economy through increased cross-border trade, investment, and tourism.

“We’ve discussed visa issues for our citizens, including for truck drivers [and] also about the introduction of a visa-free regime,” Kyrgyz Foreign Minister Jeenbek Kulubaev told the country’s parliament on May 3 while discussing a recent meeting with his Chinese counterpart, Qin Gang. “Now our side has to do the work…but in general, China is ready to discuss and is open to dialogue.”

The current push in Central Asia comes as China looks to breathe new life into its multibillion dollar Belt and Road Initiative (BRI) foreign-policy project and attempt to normalize the situation in its western Xinjiang Province, which borders Kazakhstan, Kyrgyzstan, and Tajikistan. China views Central Asia as integral to its long-term economic strategy for Eurasia and experts say Beijing is looking to send a symbolic message to the region as its domestic economy gathers steam again since its reopening.

“China's image and its trade relationship took a hit during the pandemic when Beijing closed its borders [with Central Asia],” Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, told RFE/RL. “The assumption here is that this can bring economic benefits, but it’s also a clear message that China is open for business and that Central Asia is open to China.”

A New Chapter

Beyond the rigid COVID-restrictions in China during the pandemic that led to a major drop in cross-border trade, Xinjiang saw stricter border controls come into effect ahead of a multiyear repression campaign launched by Beijing against Uyghurs and other Muslim minorities in the western province such as ethnic Kazakhs and Kyrgyz.

That expansive campaign in Xinjiang -- which included detention camps and prisons as well as forced labor and birth control, among other abuses -- led to what a 2022 UN report called “serious human-rights violations” and recognized as genocide by several Western parliaments.

In Central Asia, the crackdown became a flashpoint for activism due to family connections, particularly between Kazakhs and Xinjiang’s ethnic Kazakhs, with several former detainees publishing testimonies after fleeing China for the Central Asian country.

The Kazakh government and its Central Asian peers have since silenced most forms of activism about Xinjiang, with only a select few relatives of those missing in Xinjiang still willing to protest in the face of continued repression.

Central Asian governments now have their sights set on reaping the economic rewards of a reopened China and increasing trade links with neighboring Xinjiang.

“This will dramatically increase the flexibility of Kazakh business and its ability to provide not only local, but also the Central Asian, Eurasian, and Chinese markets with the necessary goods. This will also provide more investment opportunities,” Adil Kaukenov, an expert at the state-run Kazakhstan Institute for Strategic Studies in Astana wrote on April 13 when legislation for the visa-free deal was approved.

Xinjiang’s importance is underlined by the fact that the province alone accounts for 40 percent of total Chinese-Kazakh trade, according to Kazakh government statistics.

As a whole, China’s economic footprint in Central Asia is growing despite the pandemic-caused setbacks. By the end of 2020, total Chinese investment in the region reached $40 billion, a figure that grew to $70 billion by the end of 2022.

Kazakhstan continues to account for a leading percentage of Chinese capital in the region. In addition to being a leading site of investment, Chinese-Kazakh trade grew by 33 percent year-on-year in 2022 to set a new record of $24 billion -- and local officials are seeking to increase it further.

During a March visit, Kazakh President Qasym-Zhomart Toqaev welcomed Xinjiang Communist Party Secretary Ma Xingrui and a visiting trade delegation to Astana, where the countries signed $565 million worth of new contracts.

Astana also continues to position itself to capitalize as a key transit point for ferrying goods overland between China and Europe, as Kazakhstan aims to fill the void left as shipping companies look to bypass Russia -- which had been the main transit route -- due to sanction risks caused by its full-scale invasion of Ukraine more than a year ago.

Kazakhstan and other countries like Azerbaijan, Georgia, and Turkey are trying to boost investment and interest in the Middle Corridor -- also known as the Trans-Caspian International Transport Route -- a transit route under the guise of the BRI that links East Asia and Europe via Central Asia and the Caucasus.

“In principle, China’s relationship with Central Asia hasn’t changed a lot,” said Pantucci, who is the author of Sinostan: China’s Inadvertent Empire. “It’s seen as integral to Xinjiang’s security and development and it’s clearly a region where Xi and the Chinese government are comfortable and continue to cultivate better ties.”

A Milestone Summit

The focus on boosting regional infrastructure and connectivity will follow Beijing as it holds the high-profile summit with Central Asian leaders in Xi’an, which will be chaired by Xi. It marks the first time since the collapse of the Soviet Union that a Chinese leader will host all five Central Asian heads of state.

Chinese officials have already said the summit will showcase burgeoning trade between Beijing and the region, with Chinese Foreign Ministry spokesman Wang Wenbin telling reporters on May 8 that it will be a milestone that heralds “a new era of cooperation.” He added that an “important political document” is due to be signed that will “draw a new blueprint for China-Central Asia relations.”

Wang did not go into detail about the agenda, but the summit will be closely watched as Central Asia navigates the political and economic fallout from the Russian invasion of Ukraine, Haiyun Ma, a professor at Frostburg State University who studies Beijing's relations with Russia and Central and South Asian countries, told RFE/RL.

Ma said the direct economic benefits from measures like the new visa-free deals are still unclear, but they are an important symbol for Beijing’s growing sway and the regional reordering under way as China grows its ties with Moscow but continues to pursue its interests in Central Asia, where Russia has traditionally guarded its influence.

The war in Ukraine has proved awkward for Central Asians as they looked to forge new long-term economic relationships with other countries, leverage concessions from Moscow because of its weakened status, and distance themselves from the Kremlin politically.

Despite Moscow’s diminished stature, however, it continues to be a key player in the region.

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It’s continued influence was on full display as all five Central Asian leaders hurriedly came to Moscow for the May 9 Victory Day, which many analysts viewed as a result of Kremlin pressure.

With that in mind, Ma added that Beijing will use the summit to reassure the region’s countries that it supports their political independence and will take new steps towards creating “a China-centered economic circle” in Eurasia.

“This is basically a two-birds, one-stone strategy: to weaken Russian influence [and] to further integrate Central Asia more closely with China and its other [projects] in the region,” Ma said.

CORRECTION: A previous version of this story incorrectly stated the status of the draft law.

Written and reported by Reid Standish in Prague with additional reporting by RFE/RL’s Kazakh and Kyrgyz services.