EU reportedly set to probe Chinese-funded Budapest-Belgrade rail link

By bne IntelliNews February 20, 2017

Hungary will face a European Commission probe into its alleged failure to hold an open tender for a high-speed Chinese rail link between Budapest and Belgrade, according to media reports.

The HUF472bn (€1.5bn), railway stretch is a major element in China's “One Belt, One Road” initiative, which aims to create a 21st Century version of the ancient “Silk Road” trading route by linking the Greek port of Piraeus to Western Europe, via Budapest. The EU executive's Competition Commission (DG) probe could put Europe and China "at loggerheads", the Financial Times suggests. 

According to plans agreed in November, freight trains as long as 740 metres will travel at speeds of up to 160 km/h along the rail link starting in 2018. Passenger journey times between the Hungarian and Serbian capitals will meanwhile drop from eight hours to just three.

Hungary, Serbia and China are all stakeholders in the project, which would be 85% financed from a 20-year loan provided by the Asian country. The Hungarian-Chinese inter-governmental agreement on the project was signed last November. 

European officials claim that DG suspects the Hungarian government of failing to offer the project for open tender, as is required for large transport projects under EU law. As an EU candidate country, Serbia is not subject to the same stipulations as Hungary. 

Hungary already has several transparency related disputes with the commission. A senior Hungarian government official will visit Brussels on February 21 to discuss the expansion of Hungary's nuclear power plant in Paks.

The commisison closed a public procurement probe into a 2014 deal by which Budapest handed the €12bn project to Russia without a tender late last year. It is yet to rule on an investigation into whether the project violates EU regulations on state support. 

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