EU inspecting Chinese Belgrade-Budapest railway construction project – Has the European procurement law been honored?

The European Union is inspecting the plan of the construction of a high-speed Belgrade-Budapest railway within the Chinese railway project “One Belt, One Road”, due to potential failure to adhere to the European regulations, the Financial Times writes.

European officials stated for FT that the financial viability of the USD 2.89 billion railway was being investigated, as well as whether the EU laws, which prescribe that public tenders need to be called for big transportation projects, were being violated.

– The commission services are assessing the compliance of the project with EU law. The dialogue with the national authorities is ongoing – said a European Commission spokeswoman.

The 350 km high-speed railway, which is to connect the capitals of Serbia and Hungary, is part of the USD 900 billion project of the Chinese president aiming to build the infrastructure and connect China to Europe, the Middle East and Africa.

The investigation is directed at Hungary predominantly, as the country needs to adhere to the European procurement laws strictly as an EU member, whereas Serbia, as a candidate, is subject to looser rules, as FT says. Failure to honor the European laws on tender may be punished by fines and proceeding to reverse infringements.

– If it turns out that the Hungarians have awarded a public works contract of a particular dimension without tender they will of course have infringed EU legislation – said a senior EU official.

No contract has been published for the Hungarian part of the railway so far, but last year’s agreement between Hungary and China envisions that the companies picked by the two governments need to cooperate on developing the project.

The Hungarian government announced last Friday that it had signed agreements with China, including the annex explaining the manner in which the project had been brought in line with the EU laws, following consultation with Brussels. The Chinese state media wrote that the agreement on the construction of the Belgrade-Budapest high-speed railway had been signed during the summit of China and 16 CEE countries held in Latvia in November 2016.

Another reason why the high-speed railway, which would shorten the time needed to travel between the capitals of Serbia and Hungary from eight to three hours, is very important is that it would be a part of the express land-sea line connecting China with the Greek Port of Piraeus, which has been bought by the Chinese. Beijing agreed the construction of the route with Hungary, Serbia and Macedonia in 2014.

Works to begin in May

Deputy Prime Minister and Minister of Construction, Transport and Infrastructure Zorana Mihajlovic stated on February 21 that the works on the modernization of the Belgrade-Budapest railway in Serbia would begin in May.

When asked by the press whether the project had slowed down due to EU’s investigation, Mihajlovic said that Serbia had fulfilled all its obligations and more.

She added that the investigation pertained to Hungary, but that she believed that potential problems thereof would be solved.

– We are communicating with EC and the European Commissioner for Transport Violeta Bulc and we are considering what Serbia should do. This is a question of the EU members and their relation to Hungary and whether they’re honoring the European public procurement law. What I know is that Hungary has prepared the way of realizing this through a joint company which is being founded, which they will present to EU, thereby honoring the procedures they are being asked to adhere to – Mihajlovic said.

EUROPEAN COMMISSION Bruxelles

Belgrade Budapest railway

One Belt One Road

European Commission

infrastructural projects

Ministry of Construction Transport and Infrastructure

Zorana Mihajlovic

Violeta Bulc