10 - In the shadow of constructed borderlands: China’s One Belt One Road and European economic governance

Summary

Abstract

In Europe, China's One Belt One Road (OBOR) initiative primarily interacts with the institutional and physical landscape of the ‘shared neighbourhood’ between Russia and the European Union (EU). Norms and institutions in these ‘borderland’ states reflect an institutional ambiguity between the Eurasian and EU brands of market integration. In this chapter, the structures of economic governance in this region and their interaction with OBOR are examined from institutional and infrastructural perspectives. It is argued that OBOR is incompatible with current trends of European economic governance. In Ukraine and the 16+1 states, the interplay between Chinese state-controlled entities and oligarchic elites deconstructs formal norms and institutions and reinforces informal structures. Instability in the borderlands increases, while infrastructure investments extend the shadowy character of OBOR-induced practices into the future.

Keywords: regional market integration, European integration, 16+1 format, Ukraine, Eurasian Economic Union, infrastructure

Introduction

The south-eastern flank of the European Union (EU) is in disarray, both politically and economically. Since the early 1990s, country-specific processes to leave the Communist past behind have shaped the region. Over the years, the EU and the Russian Federation (Russia) have offered different visions of regional economic governance to guide these processes. Today, two regional market integration projects – the EU and the Eurasian Economic Union (EAEU) – seek to expand into the region. The states of south-eastern Europe, specifically Ukraine and Moldova, could potentially reap the benefits of cooperating within one of these blocs.

However, the premises that guide the economic governance of the blocs are mutually incompatible, and EU-Russia relations have been deteriorating for more than a decade. Nevertheless, the states in the ‘shared neighbourhood’ depend on good relations with both centres of integration efforts. Given the unstable political situation in these states in recent years, allegiances have been in flux; and the states only partially maintain the norms and institutions that derive from either bloc, mainly because volatile domestic politics and incomplete reforms have left them in an in-between state. Thus, attempts to introduce diverging concepts of economic governance have resulted in instability and ambivalence towards institutional designs.

With the announcement of China's New Silk Road, or One Belt One Road (OBOR) initiative, in 2013 and Russia's military actions in 2014, the region, and particularly Ukraine, briefly moved to the centre stage of world politics.