US Secretary of State Mike Pompeo ended his tour of four Central European states on August 15 with a defence cooperation deal with Warsaw that paves the way for additional US troops to be stationed in Poland, as Washington moves some of its forces away from Germany to other states in the region. 

For the most part, however, Pompeo’s trip — that took in Czechia, Slovenia and Austria as well as Poland between August 11 and 15 — emphasised bringing Central European governments on board in the US’ diplomatic offensive against Chinese influence, specifically Chinese tech giant Huawei’s involvement in 5G networks. 

The Central, Eastern and Southeast Europe regions have been targeted by Chinese investors along with other parts of the European continent and other world regions as Beijing rolls ahead with its multi-continental Belt and Road Initiative (BRI). 

This has brought billions of euros into the region especially in areas such as energy and transport infrastructure, often where countries have struggled to get financing from other sources. For several years now, major investments have been announced with much fanfare at the annual 16+1 forum bringing together China and states from across the region.  

As the US pursues an aggressive trade war with China, however, countering Chinese influence in the region has become a priority for Washington. 

Starting his tour in the Czech Republic, Pompeo went in hard against both China and Russia. Speaking at a joint press conference with Prime Minister Andrej Babis, he commented: “I ... raised the importance of choosing the right partner for building the new reactor at Dukovany Nuclear Power Plant. Partnering with Russian and Chinese state-owned companies will, in fact, undermine the Czech Republic’s national sovereignty.”

The extent to which Prague plans to follow the US line is unclear, however. Czechia was one of the top destinations for Chinese investment in the region, and warm ties developed between President Milos Zeman’s circle and Beijing, but the relationship later soured. 

Chinese conglomerate CEFC China Energy had snapped up a diverse range of assets including Czech top-tier football club Slavia Prague, hotels and office buildings as part of a region-wide acquisition spree that ended abruptly when the company fell into financial difficulties. The debacle had political consequences in the Czech Republic, where CEFC’s connections to top politicians had previously raised concerns.

Other high-profile flops include Chinese SHS Aviation’s short-lived investment in Slovenia’s Maribor airport and the bankruptcy of Bulgarian car factory Litex Motors after it announced plans to assemble cars from China’s Great Wall brand. 

The ensuing backlash against Chinese influence in Czechia included a warning from cybersecurity agency NUKIB that Huawei posed a security threat. The government went on to sign a declaration with the US on suppliers of 5G technology including assessing them for undue foreign influence. 

At the press conference with Pompeo, Babis commented: “Concerning China, I have been criticising China because they had not invested in the Czech Republic in the way I would imagine they should.”

After Pompeo’s visit, however, Babis told daily Mlada fronta Dnes that Czechia is “a sovereign country, we treat these countries [China and Russia] quite standardly like everyone else.” He also stated that Prague didn’t intend to exclude Russia from the tender to expand Dukovany.

The US secretary of state moved on to Slovenia, where a joint statement on the security of the two countries’ 5G networks was signed. “The tide is turning against the Chinese Communist Party and its efforts to restrict freedom for all of us,” said Pompeo at a press conference alongside Slovenian Prime Minister Janez Jansa, going on to comment on the “horrible pandemic that was birthed in Wuhan, China”. 

“We … discussed the relations with China and Russia. In the relations with these two countries, we must seek and take into account the strategic interest of our civilisation which is based on values of security, freedom, the rule of law and democracy,” he added. 

The signing came shortly after Huawei said it was willing to talk with Slovenia about 5G technology security issues and to sign a non-espionage agreement with the country. Slovenia recently rolled out a 5G network with Ericsson, seen by the US as a trusted partner. 

During Pompeo’s tour of Central Europe, both Slovenia and fellow Nato member Albania signed up to the US initiative dubbed “The Clean Network” that US diplomats say is intended to protect 5G networks from Chinese influence. 

The following day in Austria, Pompeo said “telecommunications infrastructure and the risks that are presented by the Chinese Communist Party” had been discussed. “I think the whole world can plainly see now that the Chinese Communist Party is intent on using this telecommunications infrastructure for purposes that no other – no other telecom system in the world does, right? They’re using it as deeply tied to their national security apparatus, to their intelligence community, to their military forces – all the data,” he said. 

Meanwhile, Austrian Foreign Minister Alexander Schallenberg took a more cautious tone, saying: “our approach is not to ban in general one competitor, one provider, but to establish a clear list of criteria to avoid high-risk providers”, and referenced the common position within the European Union on 5G security.

The tour took in four countries with right-wing or populist leaders: former businessman Babis who has been nicknamed the “Czech Trump”, Slovenia’s Prime Minister Janez Jansa who has been seeking to emulate the illiberal democrats of Central Europe, the conservative Austrian People's Party, and the right-wing PiS-led government in Poland that has repeatedly challenged the EU on issues such as migration and judicial reform.

Other countries in the region have also taken steps against Huawei, among them Estonia, which passed amendments to its telecoms law on May 12 to make sure providers of telecoms services are screened from the point of view of national security. Huawei is seen as a potential target of the law that Estonian lawmakers dubbed “the Huawei law”, as reported by Reuters, though the law does not identify the company. 

Romania recently decided to terminal an agreement with China General Nuclear Power (CGN) on the construction of two new reactors at its Cernavoda nuclear power plant. The decision followed the memorandum on strategic nuclear cooperation signed by Romania and the US last September, the month after the US included CGN on a blacklist for allegedly trying to get nuclear technology from the US to be used for military purposes in China, though Prime Minister Ludovic Orban cited the European Union's Green Deal rather than security issues when announcing the decision to end the agreement with CGN. 

By contrast, Huawei is building a 5G network in Hungary — which has pursued an opening to the East policy under Prime Minister Vktor Orban — despite earlier US pressure on its European allies to shut out Huawei from network development. Huawei will work with the UK's Vodafone and Deutsche Telekom on the rollout of 5G services, said Minister of Foreign Affairs and Trade Peter Szijjarto in November. 

As bne IntelliNews’ Budapest correspondent wrote at the time: "With the decision to pick Huawei, the government has sent a clear message to global political and economic actors.” Meanwhile, Hungary is working with Russia to expand its Paps nuclear power plant. 

Serbia is another important destination for Chinese investment in the region. In addition to the Chinese investment in the Belgrade-Budapest high-speed railway, investments include the Zeman-Borca bridge, dubbed the Friendship Bridge, that connects two suburbs of Belgrade, and the Chinese acquisition of the Zelezara Smederevo steel mill, one of the country’s top exporters. 

And while Pompeo’s focus was on 5G networks, Chinese investments in Southeast Europe have gone considerably beyond telecoms: major investments include those in industrial assets like Zelezara Smederevo, as well as transport infrastructure and energy, in particular new coal fired power plants that international financial institutions are now unwilling to finance.