Hungary to classify $2 billion railroad reconstruction deal with China
Under the shadow of the omnibus bill seeking to repress transgender rights in Hungary, Deputy Prime Minister Zsolt Semjén submitted another legislative proposal aimed at classifying Hungary's agreement with China about the modernization of the Budapest-Belgrade railway. The reconstruction will cost $2.078 billion, and it will be jointly financed by Hungary and the Chinese Eximbank with the Hungarian state paying 15% upfront and 85% loaned by China.
The Hungarian side of the project will be carried out by business interests of Lőrinc Mészáros, a close friend of Hungarian Prime Minister Viktor Orbán, and it is considered a project of "overriding public interest."
The bill would also classify all documents related to the project for a term of ten years, as access to their contents would "threaten Hungary's ability to pursue its foreign policy and trade interests without undue external influence."
The project has been in the making for years: China, Serbia, and Hungary signed a memorandum of understanding on upgrading the rail route in December 2014, emphasizing that it will serve as “a corridor between China and Europe.” It was clear from the start that as with other projects of the Belt and Road Initiative (BRI for short), the construction was to be financed with Chinese loans, and Chinese companies were expected to do the majority of the work.
Nevertheless, the project is peculiar for a number of reasons.
- It is shaping up to be the first major Chinese railway project within the European Union, a market as of yet untouched by emerging Chinese railway companies.
- At an expected cost of 750 billion forints (2.3 billion euros), it is also the single most expensive infrastructure project ever to be undertaken by Hungary, even as the country has been spending billions of euros of EU structural and cohesion funds on public works in recent years.
- And while the costs are extraordinary, the potential benefits appear to be meager: traffic between Budapest and Belgrade is scarce, the modernized rail route will have no connections to the European mainlines, and the government’s publicly stated reasons for the modernization do not make economic sense.
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