When Donald Trump entered office last year there was speculation that his “America First” foreign policy would corrode Transatlantic relations, and drive Europe and China towards closer cooperation. The 2017 Davos World Economic Forum, which occurred in the days leading up to Trump’s inauguration, was perhaps the high watermark of this sentiment. Xi Jinping, the first Chinese leader to address the annual gathering of global elites, delivered a keynote speech strongly defending free trade, economic globalization and an open international economic system (despite China’s own long record of quasi-mercantilist policies). European elites expressed hope that closer EU-China ties would prop up existing international institutions as they anticipated U.S. foreign policy taking a nationalistic turn. For example, in a January 2017 China Daily op-ed, Fraser Cameron, director of the EU-Asia Centre and a former European Union (EU) diplomat, argued that Europe and China should “make common cause to save the multilateral system from opposing forces in the US.”

As predicted, the first year and a half of the Trump administration saw a Transatlantic rift develop over differences on trade, Iran, and climate change. Nevertheless, U.S.-EU divergence has not driven Europe and China towards closer cooperation as some anticipated. Why not? To begin with, economically advanced European countries such as Germany share U.S. concerns that core elements of China’s trade and industrial policies (IP theft, technology substitution, lack of investment transparency, and insufficient market reciprocity) are economic threats. A more specific impediment to closer China-EU ties is China’s deepening engagement with Central and Eastern European (CEE) countries. This is because China’s expanding presence in CEE states such as Greece, Hungary and Czechoslovakia has deepened a growing East-West divide within the EU itself. On the one hand, CEE states have had mixed reactions to China’s increasing economic involvement in their countries. Initial excitement over trade and investment opportunities, particularly through China’s sprawling transcontinental infrastructure development program—the Belt and Road Initiative (BRI), has been tempered by shortfalls in pledged investment and concerns over Chinese behavior such as opacity and a pattern of attaching political caveats to investments. By contrast, Western Europe’s response has been largely negative. Misgivings about Beijing’s objectives on Europe’s Eastern flank run deep in Brussels, Berlin and Paris.

No element of China’s push into Europe has unnerved the EU more than the 16+1 initiative. Overseen by Premier Li Keqiang, the 16+1 platform convenes an annual summit between China and sixteen Central and Eastern European (CEE) countries. While CEE countries have seized on 16+1 as an opportunity to engage with China; Germany, France, and the EU see the initiative as a Chinese effort to divide Europe for Beijing’s own purposes. For example, an EU diplomat told Nikkei Asian Review that if the initiative is allowed to proceed unchecked it will “split the continent” and preclude the EU from adopting a unified stance towards China.

The “China Plus Many” Model

The 16+1 initiative’s stated goal is to enhance and expand investment, transportation, financial, scientific, educational and cultural cooperation between China and CEE countries. China has prioritized three areas of economic cooperation: infrastructure development, high-technology and green technology. Most of the 16+1 countries are EU members—Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, but the grouping also includes five non-EU states in the Western Balkans: Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia. The most recent 16+1 summit occurred last month in Sofia, Bulgaria where China and its European partners pledged to deepen diplomatic and economic cooperation.

Although it is unique in the European context, the 16+1 initiative accords with contemporary patterns of Chinese foreign policymaking, wherein Beijing eschews formal alliances in favor of an omnidirectional web of “strategic partnerships.” China analyst Peter Wood has made a valiant attempt at cataloguing the nomenclature Beijing uses to denote its varying tiers of bilateral relationships. These range from terms applied to warm relations that are akin to de facto ententes, e.g Russia is classified as a “Comprehensive Collaborative Strategic Partner” and Pakistan as an “All-Weather Strategic Cooperative Partner.” Other phrases indicate more circumscribed cooperation, for example, Belarus, Iran, France and a host of other countries are “Comprehensive Strategic Partners.” Nevertheless, apart from close friends such as Pakistan or Russia, the labels China attaches to its various foreign partners are rather nebulous, and do not always reflect the actual state of relations. For example, Zimbabwe, a country with which China has a long history of close ties is merely a “Friendly Cooperative Partner”; whereas India, a neighbor with which China has significant differences is a “Strategic Cooperative Partner.” One of the main mechanisms that China uses to seal its myriad partnerships, particularly with small and middle powers, is multilateral fora, which often take the form of “China plus many”. In addition to the 16+1 summit, Chinese and African leaders have since 2006 convened at the triannual Forum on China Africa Cooperation (FOCAC). The Belt and Road Forum (BARF) brings BRI participant countries’ leaders to Beijing for meetings with China’s leaders.

The formula of “China plus many” has advantages and disadvantages. On the one hand, it allows China’s leaders, whose time is very limited, to engage with a host of small states’ leaders they might not otherwise have the opportunity to interact with. These multilateral mechanisms also provide a channel for China to pressure smaller states to respect it’s narrowly defined parochial or “core interests,” e.g. its stances on Taiwan or Tibet. However, one weakness of these multilateral frameworks is they are less likely than institutionalized bilateral alliances (e.g. the U.S.-ROK alliance) or multilateral security cooperation regimes (e.g NATO) to engender genuine strategic collaboration. This may not be a problem for Beijing now, but as China’s interests become more global in scope, it may become an issue in the future.

Quid Pro Quo?

In deepening cooperation with China, CEE countries are primarily motivated by economic factors. Many struggling European countries have turned to China as a source of investment, not as a first choice, but as a last resort. For example, while Germany and Greece’s other European creditors imposed austerity measures on Athens beginning in 2010, China bankrolled the Port of Piraeus, now the Mediterranean’s busiest port. It did not take long for China to seek to translate its growing economic clout in Greece, and elsewhere, into political influence. In 2016, Greece, along with Hungary and Croatia—two other significant recipients of Chinese funding, watered down an EU statement on the South China Sea to remove criticism of China’s militarization of the disputed waters. In February 2017, Hungary refused to sign (precluding the EU from signing as a bloc) a letter rebuking China for torture of human-rights lawyers. In 2017, Greece blocked an EU statement at the United Nations that criticized China’s human-rights record.

Given this apparent quid pro quo, it is tempting to see the relationship between China and CEE countries as purely transactional. However, there are potential strategic rationale for CEE states to strengthen economic and political linkages with China. Improving ties with China gives these small and medium states, which have historically been sandwiched between Russia and Germany, greater strategic and economic flexibility. For countries such as Greece, the Czech Republic or Bulgaria, China’s mixed status as a global economic powerhouse that remains a secondary actor in Europe, which cannot (yet) match Germany’s economic clout or Russia’s military might, may be attractive. For example, when Xi Jinping visited Prague in 2016, Czech President Milos Zeman said that seeking stronger ties with China was a corrective to the previous government, which he described as “very submissive” to the EU.

Divided Europe

China’s engagement with Central and Eastern Europe should be examined within the broader context of its strategy towards Europe. In recent testimony before the U.S. China Economic and Security Review Commission, Thorsten Benner and Thomas Wright, contend that China’s objectives towards Europe are threefold. The first objective is garnering support from EU members on policy issues that are salient to China, such as Taiwan and the South China Sea. The second aim is to erode Western Unity, both inside Europe and between the United States and Europe. The final goal is vaguer and more normative, but per Benner and Wright, it can best be approximated as “making the world safe for China’s autocratic model,” which necessitates demonstrating that China’s political and economic systems are seen as a “viable alternative to liberal democracies.” Clearly, China’s outreach to Eastern and Central Europe helps achieve all three of these goals. The refusal of Greece, Hungary and Croatia to sign on to EU statements on the South China Sea or China’s human-rights record demonstrates that Beijing has made some progress towards its goal of (per Benner and Wright) “a stable—but pliant and fragmented” EU.

A China Double Standard?

In response to Greece quashing EU censure of China’s human-rights violation, German Chancellor Angela Merkel averred that Europe “has to speak with China in one voice.” But does Germany practice what it preaches? As Wright and Benner perceptively note, while German officials have criticized the 16+1 initiative for diluting EU unity, they have been “less forthcoming” concerning “their own privileged bilateral relations with Beijing,” which includes annual cabinet-level, government to government consultations. Another example of Berlin’s special relationship with Beijing is leader-level engagement. Since she became Chancellor in 2005, Angela Merkel has made eleven visits to China all of which included meetings with China’s top leaders. By contrast, even Central or Eastern European leaders who prioritize engagement with China such as the Czech Republic’s Zeman can likely only hope to attain one, at best two, one-on-one meetings with Xi Jinping, during their time in office.

Heads of smaller Central and Eastern European countries simply do not enjoy the same level of access to Beijing that the leaders of major Western European countries do. While the multilateral format of 16+1 has been criticized for diluting EU unity, it is often the best means for Eastern and Central European leaders to “get in the room” with Chinese leaders, and even then, they have to settle for Premier Li Keqiang, as opposed to General Secretary Xi.

One grievance held by CEE leaders is that when they court Chinese investment they are accused of diluting EU unity or of becoming proxies for Chinese influence, but when Western European leaders interact with Beijing they are credited with acting in the best interests of their countries and the EU. A spokesperson for Czech President Zeman captured the ill-will that Europe’s China double standard has engendered with a tongue-and-cheek response to Western European criticism of Czech efforts to attract Chinese investment: “Those that have expressed such criticism offend our Western allies who collaborate extraordinarily tightly with the People’s Republic of China.” Caustic language aside, there is some truth to this remark. For example, over the past decade and a half, Western Europe has attracted vastly higher levels of Chinese investment than Central and Eastern Europe. According to the China Global Investment Tracker, from 2005 to 2018, three of the top ten destinations for Chinese foreign-direct investment destinations were Western European EU members ($73 billion to UK; $37.5 billion to Germany; $22 billion to France). With the exception of Russia, no CEE country topped ten billion in cumulative Chinese investment over the same period.

Already Divided?

As countries such as Hungary lurch towards “illiberal democracy,” European leaders will be sorely tempted to reduce, or even eliminate, flows of structural funds (subsidies) to member states that do not conform to the EU’s liberal democratic norms. This idea has started to gain traction in Berlin, which has become frustrated by the refusal of the four Visegrad Group countries—Poland, the Czech Republic, Slovakia and Hungary to take in refugees or adhere to the rulings of the EU court of justice. According to Der Spiegel, these four countries alone have received approximately 150 billion euros in EU subsidies since 2007 (around $175 billion U.S. dollars), which far outstrips the investment they have attracted from China. Michael Roth, the senior German Foreign Ministry official responsible for EU policy, has stated that member states that do not abide by EU values will see this “have an effect on the allotment of EU funds.”

Leveraging allotments of structural funds would be a powerful tool for the EU to enforce cross-bloc cohesion. However, linking provision of structural funds to CEE countries’ behavior should be done carefully, and only resorted to when an EU member state government is undermining democratic institutions such as rule of law or freedom of press. If Brussels opts to reduce or withdraw structural funds over policy differences on divisive issues such as accepting refugees, this will only deepen the EU’s East-West split. As Benner and Jan Weidenfield observe: “a majority of voters in the targeted countries (Hungary and Poland, in particular) broadly support their government’s position on restricting the number of migrants.” By contrast, per Benner and Weidenfield, linking funding to respect for rule of law and free media is a much easier sell because “the Hungarian and Polish governments will have a much harder time convincing a majority of their voters that it is worth foregoing massive EU funds in order to clamp down on free speech.” Despite their frustrations with the governments in Budapest and elsewhere in Central and Eastern Europe, Brussels and Berlin should resist the temptation to tie structural funds to disagreements over policy (no matter how normatively charged) such as the refugee issue. Doing so, will only push Central and Eastern Europe deeper into China’s embrace, and divide the EU further still.

John S. Van Oudenaren is Assistant Director at the Center for the National Interest.

Image: A worker arrives at his office in the Canary Wharf business district in London, Britain February 26, 2014. To match Special Report CHINA-INVESTMENT/EUROFX REUTERS/Eddie Keogh/File Photo