The Baltic resilience to China’s "Divide and Rule"

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The Baltic resilience to China's “Divide and Rule”

Una Aleksandra Berzina-Cerenkova

Head of Riga Stradins University China Studies Centre

Head of the Asia Programme

Latvian Institute of International Affairs

(21 Pils street, LV-1050, Riga, Republic of Latvia)

Abstract

The article examines the interactions of the Baltic states of Estonia, Latvia and Lithuania with China in the Belt and Road Initiative (BRI) format. First, it explores three most widespread criticisms of the Chinese BRI approach, namely: 1. The risk of Beijing becoming legitimating factor for strains on democracy, freedom and the rule of law; 2. Support towards the Chinese interpretation of values and tolerance of censorship; 3. Debt arising from infrastructure loans. Further, the article tries to establish to what extent did the Baltic states remain resilient to them, offering possible explanations to the Baltic cases along three lines - systemic resilience, discursive resilience, and financial resilience. The article concludes that BRI is taking different shapes in different regions, and that local political culture along with wider supra-national organizations determines the range and response to BRI, therefore, national institutional frameworks in combination with overwatch from supranational standard-enforcing institutions are the leading factors of countries ' resilience to risks stemming from BRI. Methodologically, the Renamed to “17+1” after the accession of Greece. article employs qualitative approaches to data, including discourse analysis, document analysis and historic analysis. The primary sources include documents, agreements and statements of officials from China, the Baltic states, Italy, and the EU, as well as secondary sources including research publications, media reports, and mutually comparable national data.

The key words: Belt and Road, China, Baltic states, resilience, institutions.

Берзиня-Черенкова У.О.

Стійкість Балтії до принципу “розділяй і володарюй” у Китаї. - Стаття.

Анотація

У статті розглядається взаємодія країн Балтії - Естонії, Латвії та Литви - з Китаєм у форматі Ініціативи “Один пояс, один шлях” (BRI). При дослідженні застосовано якісні підходи до даних, включаючи аналіз дискурсу, аналіз документів та історичний аналіз. До первинних джерел належать документи, угоди та заяви чиновників з Китаю, країн Балтії, Італії та ЄС, а також вторинні джерела, включаючи наукові публікації, повідомлення у ЗМІ та взаємопорівнювальні національні показники. Авторкою охарактеризовано три найпоширеніші критичні підходи до BRI, а саме: 1) ризик того, що Пекін стане легітимуючим фактором напруження у сфері забезпечення демократії, свободи та верховенства права; 2) підтримка китайської інтерпретації цінностей та терпимості до цензури; 3) заборгованість за кредитами на інфраструктуру. Далі у статті встановлюється, наскільки країни Балтії залишалися стійкими до цих факторів, пропонуються можливі пояснення балтійських випадків за трьома напрямками: системна стійкість, дискурсивна стійкість та фінансова стійкість. У статті робиться висновок про те, що BRI набуває різних форм у різних регіонах, і що місцева політична культура, поряд із більш широкими наднаціональними організаціями, визначає діапазон та реакцію на BRI. Тому національні інституційні рамки у поєднанні з контролем з боку наднаціональних установ, що забезпечують додержання стандартів, є провідними факторами стійкості країн до ризиків, пов'язаних з BRI. Підсумовуючи, авторка зазначає, що уряди, які вирішили підтримувати системно, дискурсивно та фінансово або, навпаки, демонструють неприхильне ставлення до Китаю, роблять це на основі власних політичних програм, продиктованих раніше існуючими внутрішніми установками, а не прямим тиском зі сторони Китаю. Тому, врешті-решт, ключ до стійкості перебуває у руках самих державних суб'єктів.

Ключові слова: “Один пояс, один шлях”, Китай, країни Балтії, стійкість, інститути.

Берзиня-Черенкова У.А. Устойчивость Балтии к принципу “разделяй и властвуй” в Китае. - Статья.

Аннотация

В статье рассматривается взаимодействие стран Балтии - Эстонии, Латвии и Литвы - с Китаем в формате Инициативы “Один пояс, один путь” (BRI). При исследовании применены качественные подходы к данным, включая анализ дискурса, анализ документов и исторический анализ. К первичным источникам относятся документы, соглашения и заявления чиновников из Китая, стран Балтии, Италии и ЕС, а также вторичные источники, включая научные публикации, сообщения в СМИ и взаимносравниваемые национальные показатели. Автором охарактеризованы три наиболее распространенные критические подходы к BRI, а именно: 1) риск того, что Пекин станет легитимирующим фактором напряженности в сфере обеспечения демократии, свободы и верховенства права; 2) поддержка китайской интерпретации ценностей и терпимости к цензуре; 3) задолженность по кредитам на инфраструктуру. Далее в статье устанавливается, насколько страны Балтии оставались устойчивыми к этим факторам, предлагаются возможные объяснения балтийских случаев по трем направлениям: системная устойчивость, дискурсивная устойчивость и финансовая устойчивость. В статье делается вывод о том, что BRI принимает различные формы в разных регионах, и местная политическая культура, наряду с более широкими наднациональными организациями, определяет диапазон и реакцию на BRI. Поэтому национальные институциональные рамки в сочетании с контролем со стороны наднациональных учреждений, обеспечивающих соблюдение стандартов, являются ведущими факторами устойчивости стран к рискам, связанным с BRI. Подытоживая, автор отмечает, что правительства, решившие поддерживать системно, дискурсивно и финансово или, наоборот, демонстрирующие неблагосклонное отношение к Китаю, делают это на основании собственных политических программ, продиктованных ранее существующими внутренними установками, а не прямым давлением со стороны Китая. Поэтому, в конце концов, ключ к устойчивости находится в руках самих государственных субъектов.

Ключевые слова: “Один пояс, один путь”, Китай, страны Балтии, устойчивость, институты.

Introduction

baltic china initiative

China's engagement in the Baltic region first became visible after 2012, as the then-Premier Li Keqiang announced the “Twelve Measures for Promoting Friendly Cooperation with Central and Eastern European Countries”. Uneasy with being named “Eastern European”, the three Baltic States - Lithuania, Latvia, and Estonia - agreed, however, to join the cooperation with China through a new format of exchanges: “Cooperation between China and Central and Eastern European Countries”¹. The cooperation vectors proposed by China included economy, education, cooperation on provincial and municipal levels, and people-to-people ties, such as tourism and education. The platform immediately caused concern in Brussels due to the fact that 11 original members of the format - Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia - were also member-states of the European Union.

The criticisms coming from the EU towards China only strengthened after all of the format members, including the Baltic states, joined the Belt and Road Initiative in 2016. The concerns of the EU amounted to several risks a more present China was posing to the countries of the platform - Beijing as a legitimating factor for strains on democracy; increased presence of the Chinese interpretation of values; and debt arising from infrastructure loans.

By 2018, the “16+1” format (called the “17+1” format after the accession of Greece in 2019) and BRI had not brought significant economic gains to the EU members that were taking part in the cooperation, and views that the profile of “16+1” might be lowered by China were voiced by policy analysts (Poggetti &Weidenfeld, 2018). Opinions arose that BRI will not last in Europe due to the lack of success stories and unmet expectations. Also, the year coincided with naming China as a threat in National Security reports of, first, Lithuania, then followed by Estonia and Latvia. Even though the Baltic states are still members of BRI, they have, however, expressed reservations regarding the “17+1” format (Baltics snub China's Eastern Europe summit, 2021), which heavily overlaps with BRI in Europe, and Lithuanian Minister of Foreign Affairs has explicitly raised questions as to the usefulness of “17+1” for Lithuania and Europe (Lithuania mulls leaving China's 17+1 forum, expanding links with Taiwan, 2021). Given that BRI in the Baltics heavily hinges on providing Belarus access to the Baltic sea, and the strict Baltic position against A. Lukashenko in the aftermath of August 2020 post-election protests (Sytas, 2020) makes such cooperation impossible, there are grounds to believe that the regional importance of BRI will continue to decrease.

As the high wave of Baltic expectations and involvement with China seems to have passed, the Baltic experience serves as a valuable case of research into China's BRI strategies and provides novel research material of relation-modelling vis-a-vis China. We maintain that BRI is taking different shapes in different regions, and that local political culture along with wider supranational institutional frameworks shapes the cooperation along the Belt and Road. Therefore, in order to avoid “divide and rule” outcomes, the Organization for Security and Co-operation in Europe needs to work with the BRI members to increase the resilience of the local democratic institutions and to model China's approaches. To illustrate the argument on local agency, the example of the Baltic states and Latvia in particular is offered here.

Methodology

Methodologically, the article employs qualitative approaches to data, including discourse analysis, document analysis and historic analysis. The primary sources include documents, agreements and statements of officials from China, the Baltic states, Italy, and the EU, as well as secondary sources including research publications, media reports, and mutually comparable national data. This article draws on findings from a research project investigating the implications of China's Belt and Road Initiative for the OSCE conducted by the OSCE Network of Think Tanks and Academic Institutions and funded by the German Federal Ministry of Foreign Affairs. The article is a part of international collaborative project `China's Belt and Road Initiative: Implications for the OSCE', implemented by a team of international scholars, including this article's author. The project objectives include: mapping the presence of China and its manifestation across Central Asia, the South Caucasus, the Western CIS, and the Western Balkans over time, in particular since the inception of BRI; identifying the implications that this presence has had in terms of economic, environmental, social, political and military security of the OSCE region; compiling and presenting a research report to inform OSCE institutions and participating state governments (China's Belt and Road Initiative: Implications for the OSCE). As an output of the joint research project, this article adopts its general methodological approach towards the complex nature of the implications of China's presence and activities in the OSCE region, and the acknowledgement of the difficulties of formulating and implementing an OSCE response. Yet it also views the “China challenge” as an opportunity for the OSCE response (Wolff, 2021).

1. China and the Baltic states: history of interaction and expectations

In comparison to the other “17+1” and BRI counterparts, the Baltic states historically have the least experience with the PRC.

Annexed by the Soviet Union in 1945, Latvia, Lithuania, and Estonia were deprived of national foreign policy and did not possess even the limited sovereignty that Socialist states like Bulgaria, Romania, Czechoslovakia, Hungary, Poland, and Albania exercised when they established diplomatic ties with the PRC in 1949 (FM attends reception to mark 70 years of diplomatic ties with 7 CEE countries, 2019). The Baltic region was only marginally involved in the Sino-Soviet friendship of the 1950s, and the little ties that had emerged were severed during the Sino-Soviet split of the 1960s and 70s. A Chinese diaspora never developed in the Baltics.

The lack of historical contacts meant that the Baltics were latecomers to the Chinese market and the “17+1” was perceived as an instrument to get in on the economic opportunities - Eurasian transit, Chinese FDI, and market access - making up for the late start.

Through diplomatic effort, Lithuania, Latvia and Estonia made their immediate priority clear: the region needs to further diversify its logistic sector to make up for the steady decrease in freight flows via the port and railway infrastructure. Unlike the “Visegrad four”, the Baltic states did not put industrial revitalization on the cooperation agenda, and, unlike the Balkan states, both the Baltics and Visegrad did not see the need for Chinese investment in large- scale non-automated or semi-automated production facilities as unemployment rates in these regions have been declining, reaching 6,5% and 4,1%, respectively in the 3^rd quarter of 2019 (Unemployment Rate, Europe, 2019).

Although the cooperation in both BRI and “17+1” has yielded modest results and no significant Chinese presence has transpired in the Baltics (Berzina-Cerenkova, 2018), still, the three countries became involved in the controversy surrounding Chinese interests in the region along three perspectives. From a systemic perspective, China could become a legitimizing factor for strains on democracy and freedoms. From a discursive perspective, China could use the Baltics as a testing ground for a China-centric values discourse. Finally, from a financial perspective, the risk of entanglement through debt arose as China capitalized on infrastructure financing.

2. Baltic systemic resilience to the risk of Beijing becoming legitimating factor for strains on democracy, freedom and the rule of law

By labelling China “a systemic rival promoting alternative models of governance” (EU-China - A strategic outlook, 2019) in the 2019 High Representative of the Union for Foreign Affairs and Security Policy Joint Communication to the European Parliament, the European Council and the Council, the fears were voiced that China would use its partnerships in Europe to legitimate democratic backsliding. Furthermore, it is argued that the BRI is highly consistent with the Chinese conception of the rule of law and may help further enhance it (Che, 2021).

Indeed, among the members of the China-CEE cooperation framework, a disturbing trend can be established - the NGO “Freedom House” has removed Hungary from the list of democracies and labelled it a “transitional/hybrid regime” in its “Nations in Transit 2020” report - the same category that accommodated Serbia and Montenegro, also China-CEE partners, a year earlier - whereas Poland has been taken out of the Consolidated Democracies category becoming a Semi-Consolidated Democracy (A snapshot of Chinese government influence, 2020). The report speaks of “China's corrosive influence in the region”, naming technology transfers, emerging investments, infrastructure developments, elite co-optation, and media manipulation tools of such influence, and points out that China has employed these tools in most members of China-CEE cooperation, including influence campaigns in the local media in the Baltic states (A snapshot of Chinese government influence, 2020).

The trend does not stop with the original members of China- CEE grouping - the newcomer to the “17+1” and BRI member - Greece - is ranked 65^th in the 2020 World Press Freedom Index. Malta, a signatory of BRI Memorandum of Understanding since late 2018 (China, Malta sign MoU for B&R cooperation, 2018), stands even lower - it is ranked 81^st, which is the second lowest EU score after Hungary - and sliding (Index details. Data of press freedom ranking 2020).

However, the Baltic states along with Slovenia are at the top of “Nations in Transit” 2020 score sheets when compared to the rankings of various members of BRI and “17+1” and steadily in the “Consolidated Democracies” category. The Baltics also enjoy the highest Press Freedom Indexes among all European BRI and “17+1” countries, with Estonia ranked 14^th, Latvia - 22^nd, and Lithuania - 28^th. The Rule of Law Index 2020 points to similar conclusions, ranking countries based on accountability, just laws, open government and accessible and impartial dispute resolution. Estonia holds the 10^th position globally (Estonia Overall Score, 2020), higher than any other BRI or “17+1” country (Latvia and Lithuania were not included in the WJP 2020 Report). What accounts for such internal differences within the BRI and “17+1” partnerships, and, if such striking differences persist, can China's influence really be the only factor causing democratic backsliding?

Regardless of engagement with China, governments and populations of the three Baltic states have been and remain explicitly Euro-optimistic and strongly rooted in the values of the Euro- Atlantic community. According to Eurobarameter Spring 2019 report, Lithuania is the most Euro-optimistic country in the EU, with 72% of population trusting the EU, whereas Estonia is the 3^rd, with 60%. Latvia is somewhat lower, with 51%, but still on the optimistic side of the spectrum (Trust in the European Union, national results and evolutions). Participation in BRI and “17+1” has not led to deliberations on an “alternative/parallel model” in the government, media, and society. In other words, the Baltics possess high systemic resilience to China's influence.

There are three distinct characteristics of the Baltic political culture that could account for the systemic resilience - anti-authoritarian sentiment, Euro-optimism and pro-Atlanticism. Below, the antiauthoritarian sentiment is analysed in connection to the domestic historical background, Euro-optimism is tied to the administrative structure of the Soviet period, and the Atlantic reliance is explained as determined by the current geopolitical situation.

The Baltic history of authoritarianism in the interwar period is perceived with unease, as it can be seen as an ultimate facilitator of the Soviet occupation. All three Baltic states experienced a period of home-grown authoritarianism: the first authoritarian coup took place in 1926 in Lithuania under Antanas Smetona. The coup of Konstantin Pдts in Estonia on March 12, 1934 begun the so-called “silent era”, and was closely followed by the coup of Karlis Ulmanis in Latvia on May 15, 1934. Although from a nostalgic perspective the authoritarian times in the Baltic are perceived as the years of economic growth, none of these regimes were efficient in the face of the Soviet occupation in 1940. The efficiency of resistance and the difference it would have made is still debated today, as the fate of the Baltics had already been pre-decided in the secret supplementary protocols of the 1939 Molotov-Ribbentrop Pact, which stated: “In the event of territorial-political reorganization of the districts making up the Baltic states (Finland, Estonia, Latvia, Lithuania), the northern border of Lithuania is simultaneously the border of the spheres of interest of Germany and the USSR” (Secret Supplementary Protocols of the Molotov-Ribbentrop Non-Aggression Pact, 1939). Still, the three Baltic authoritarian governments made the controversial decision to succumb to the Soviet ultimatum and allow Soviet troops into the Baltic states as troops of a friendly nation without military resistance - in stark contrast with the resistance of the democratic Finland under president Kyцsti Kallio. It is the lack of military resistance that gives ground to claims that the Baltics joined the Soviet Union voluntarily and therefore were not occupied - and the fact that such a historical decision was singlehandedly made by a dictator is bitterly perceived among the Baltic societies, producing a certain safety-net against sympathies towards authoritarianism.

The Baltic Euro-optimism largely stems from the fact that the public opinion of the Baltic states does not hold any nostalgia towards the Soviet era. The status of Soviet Socialist Republics meant lack of political agency and autonomy, as well as the perception of Soviet power as the occupying, foreign force among the local populations, even more so after the crackdown on the National communists in the late 1950s. In addition to the identity and political factors, stands the economical consideration. Economic situation in the Baltics has improved considerably since the fall of the Soviet Union, especially after their accession to the EU: “Latvia's GDP grew by 33% between 2004 and 2007, growth reaching as much as 12% in 2006” (Petijums par ekonomisko un socialo situaciju Baltijas valstis - Latvija, 2013). National economic growth was hindered during the financial crisis, but the EU proved useful yet again - during the economic hardship, the common labour market provided a much-needed exit strategy for hundreds of thousands of Baltic inhabitants.

The situation was different in the ex-satellite states. For example, in Hungary, just two years before joining China's new initiatives, a staggering 72% respondents claimed that “most Hungarians are actually worse off now economically than they were under communism” (Wike, 2010), the highest rates among all post-Socialist countries, according to Pew Research Center. A decade later, albeit significantly lower, the number still stands at 31% - higher than Poland, Lithuania, and Czech Republic (Latvia and Estonia were not included in the report) (Wike et al., 2019). Admittedly, Poland also scores high on EU satisfaction and “economic satisfaction in comparison with communism era” charts, therefore, the argument of Baltic exceptional Euro-optimism has its limitations.

Lastly, the Baltic states demonstrate a strong Atlantic reliance due to a complicated political and historic relationship with Russia. The example of Russian politics today and the authoritarian system under Vladimir Putin strikes a negative chord with the populations in the Baltics. The populations are keeping themselves up to date on the Kremlin rhetoric, because due to historical reasons the inhabitants of the Baltic states of all ethnic backgrounds, especially in the middle-age group, have a certain command of the Russian language, and Russian politics rank high on the agenda of the local media outlets. The authoritarian government in Russia is associated with the Russian revisionist approach, which in turn is perceived as a threat to Baltic sovereignty, leading Latvia, Lithuania and Estonia to conclude that there is no alternative to NATO and its principles, as it serves as a guarantor of the countries' statehood.

These three factors combined play the role of a vaccine towards authoritarian, anti-EU, and anti-NATO rhetoric, both home-grown and introduced.

In the countries where democratic backsliding and decreasing rule of law is reported, a different set of domestic reasons and historic perceptions prevails, making Chinese corrosive influence only one piece of the puzzle. Based on the consistency of the Baltic position vis-a-vis the Euro-Atlantic system since the restoration of independence in 1991, the intensification of economic ties with Beijing is not likely to serve as a legitimating factor for strains on democracy in Lithuania, Latvia, or Estonia. The relationship with China is perceived as an instrument of business diversification and is secondary to security relationships across the Trans-Atlantic community, exemplified by the decision of the Lithuanian President G. Nauseda against granting Chinese investors majority in Klaipeda port in 2019 amid security concerns (Jakucionis, 2019).

3. Baltic discursive resilience to the Chinese interpretation of values

The previous chapter covered the situation surrounding democracy and the rule of law from domestic perspectives of countries involved in China's multilateral formats of cooperation. This chapter shall focus on the situation surrounding discursive support towards China's interpretation and wording of values in the Baltic states.

The core political values of the EU are clearly defined as democracy, human rights and the rule of law - in accordance with the core principles and universal values of the UN. China agrees with these values as it positions itself rhetorically as an enthusiast of the UN-based multilateral system. In practice, however, the value perceptions on the European and the Chinese side differ.

Up to the Xi Jinping era, the position of China was perceived as a defensive one, mostly centred around denying the accusations made by the European side. The turn towards agenda-setting in PRC-EU relations can be best seen from the 2014 China's Policy Paper on the EU. It openly states that the situation does not satisfy China: the two sides have disagreements and frictions on issues of value such as human rights as well as economic and trade issues. China believes that these issues should be properly handled through dialogue in the spirit of equality and mutual respect and encourages the EU to move in the same direction”. But on top of the traditional disagreement China begins to proactively shape the wording and the values of cooperation, proposing “partnership for peace, growth, reform and civilization” (China's Policy Paper on the EU, 2014).

The shift towards a more assertive outward value agenda had domestic roots. Even though aspects of the traditional Chinese culture, usually associated with Confucianism, but containing Legalist, Buddhist and Taoist thought as well, had been subtly introduced into Chinese political discourse during the decade long rule of Hu Jintao, Chinese values are playing a far more visible role in the messages of China's paramount leader Xi Jinping. In the most important speeches delivered by his predecessor Hu Jintao, e.g. Hu Jintao's Report at 17th Party Congress, traditional allusions and keywords shaped in a classical linguistic manner had only been visible for those willing to trace their origins. In the official publications of Xi Jinping's speeches and reports, in contrary, every traditional quote is put in parentheses and provided with an explanation, stating the meaning in contemporary Chinese, introducing the author and even contextualizing the current use (e.g. Xi Jinping talks about governing the country and managing politics, 2014). This suggests the importance that is given to the solidification of the Chinese nation through traditional values (or, shall we say, post-traditional values, since not all heritage has been included and not all of the included heritage is contextualized properly). Being a mere test run in Jiang Zemin and Hu Jintao's time, it is becoming a unified narrative in the years of Xi's rule, shaping into an eclectic homegrown value message, containing traditional, Socialist and post-traditional values, and being presented as a unique characteristic as well as an achievement of the “Chinese way”.

Appearing in close connection with the Chinese values discourse, is the promotion of the “civilizational” attribution of China, stressing that China is a civilization comparable to that of the whole Europe, rather than just a “nation” that could be perceived at the level of some European states. The extension of the post-traditional political discourse into the domain of the international affairs and using it to advocate for the perception of a nation as a separate civilization is a unique trait of the People's Republic of China.

When Xi Jinping came to power in 2012 - 2013, he recognized the lack of a positive value agenda, stating that “appealing to values can be effective in maintaining social functioning and order” (How to present China's core socialist values to the global community, 2019). After an initial attempt at setting a positive value agenda with the “Chinese dream” phrase, its ambiguity and lack of distinctively Chinese discursive characteristics apparently was seen as a weakness, and the Xi Jinping administration shifted the emphasis to a set of well-defined and strictly explained Chinese home-grown political and societal values, institutionalized within the form of “China's keywords” [ФШ^Ші^] (e.g. China's keywords, 2016) - a set of clearly defined and officially explained discourse elements containing a large portion of traditional quotes and meanings, the use of which is encouraged in official communication It has to be noted that some of the mentioned elements have been introduced by Jiang Zemin, however, are increasingly being recontextualized and linked to “civilizational” properties during Xi Jinping's rule.. These keywords contain an official argumentation towards the traditional, referring to the great culture, civilization and nation of China, e.g., “the Chinese Spirit” [ФШМ^], various forms of wenming [^Щ] (due to the lack of singular/plural distinction within the Chinese grammar and a wider semantic field of the notion, can be translated as nouns “civilization”/“civilizations”/”civility”, as well as adjectives “civil”/”polite”), ''Socialism with Chinese Characteristics” [ФШ#^?±#ФХі, “the Silk Road Spirit” [&ЩЈШШЩ], “the Four Confidences” [И^ЙІа], and “the Core Socialist Values” [?±#Ф^Ф'ШМ]. The “ core socialist values” - 24 characters, most rooted in Chinese traditional political and ethical philosophy, forming 12 words now known to all of China's citizenry: prosperity, democracy, civility, harmony, freedom, equality, justice, the rule of law, patriotism, dedication, integrity and friendliness. They are further divided into three levels: the first four concern the nation, the next four are quests of the collective society, and the rest concern individual citizens (Zhou, 2018).

After the discursive background had been set, the values along with other Chinese official discursive concepts such as “community of shared destiny”, “dialogue of civilizations”, “Silk Road spirit” started to make their way into China's outward communication, as both the Central government and Chinese state media were seeking the answer to the question “how do we apply these values in international communications to build a better image for China?” (How to present China's core socialist values to the global community, 2019).

The growing discursive presence of Chinese values in outward communication has been noted and flagged outside China. The “Challenges to our values” section of the United States Strategic Approach to The People's Republic of China states, in a somewhat harsh manner: “The CCP's campaign to compel ideological conformity does not stop at China's borders. In recent years, Beijing has intervened in sovereign nations' internal affairs to engineer consent for its policies. PRC authorities have attempted to extend CCP influence over discourse and behavior around the world, with recent examples including companies and sports teams in the United States and the United Kingdom and politicians in Australia and Europe” (United States Strategic Approach to The People's Republic of China, 2020).

However, although China is reportedly trying to influence companies, sports teams, and politicians, these efforts are not enough to turn around the prevailing discourse in existing institutional settings, such as EU-China High Level Strategic Dialogue, or OSCE-China meetings. Therefore, it is unsurprising that the official PRC discursive concepts are most actively used in the multilateral and bilateral settings initiated by China itself, such as various documents of BRI and China-CEE cooperation, including the BRI Memorandum of Understanding.

Upon examining the project of the Memorandum Of Understanding Between the Government of the Republic of Latvia and the Government of the People 's Republic of China on Cooperation Within the Framework of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative, several keywords of the official Chinese political discourse are, indeed, visible in the preamble to the MoU: “Considering that China's Belt and Road Initiative is committed to upholding the Silk Road spirit of peace, cooperation, openness, inclusiveness, mutual learning and win- win cooperation while keeping such spirit enriched and upgraded, facilitating exchange and integration of goods, technology, capital and personnel through cooperation and mutual learning among countries along the Belt and Road Initiative, promoting coordinated development and common progress of the two countries in economy, society, the environment and encouraging dialogue among different civilizations” Sic - only the project of the MoU is publicly available (Protokollemuma projekts “Par Latvijas Republikas valdibas un Kinas Tautas Republikas valdibas saprasanas memorandu par sadarbibu Zida cela ekonomiskas joslas un 21.gadsimta jhras zida cela iniciativas ietvaros”).. Although access to other BRI memoranda signed with CEE countries is limited, secondary sources confirm that the Chinese values discourse was present in them, too.

The text offered to the Baltic partners differs significantly from the BRI MoU signed by Italy, which discursively resembles EU documents and has virtually no trace of official Chinese political values discourse (Memorandum of understanding, 2019). Three factors could account for the drastic difference between the two BRI memoranda: first, the Italian MoU was signed three years after the Latvian one, and perhaps the Chinese approach had changed; second, Italy had more leverage to negotiate the text; and third, China tried to use the CEE countries as a gateway for the introduction of its political values discourse in Europe.

Still, even though Chinese official communication towards the Baltic states in heavily laden with Chinese political value discourse in all sectors, the Baltic governments and public have proven to not be susceptible to them. Chinese political values have not entered the public discourse in Lithuania, Latvia, and Estonia. The Baltic states explored the cooperation opportunities without subscribing to China's normative BRI narrative, expressing interest only in the pragmatic value of Eurasian connectivity to their respective economies.

Furthermore, the Baltic states have remained faithful to the EU wording on value issues in communication with and on China. Several facts point towards the conclusion that the Baltic resilience to the Chinese interpretation of values is higher than in other BRI and “17+1” members.

First of all, in July, 2019, all three Baltic Permanent Representatives to the UN signed a Joint Statement addressed to the UN High Commissioner of Human Rights, calling on China's obligations as a Permanent Member of the Human Rights council to “uphold the highest standards in the promotion and protection of human rights” in connection to the reports on large- scale arbitrary detentions of Uighurs and other Muslim and minority communities (Letter to the United Nations Office at Geneva, 2019). None of the other members of China-CEE cooperation platform and BRI were signatories to the document.

Secondly, in May, 2020, an op-ed of 27 EU ambassadors to China was published in China Daily, omitting a phrase which was in the original text: “the outbreak of the coronavirus in China”. The European External Action Service had initially agreed to the cut, but apologized for this decision soon after and published the original text on its website. In response, multiple EU embassies re-published and set up Internet links to the original version. According to mapping conducted by Mercator Institute for China Studies, out of all EU countries involved in BRI and “17+1” cooperation in Europe, only the embassies of the three Baltic states along with Italy, Czech Republic, and Romania immediately republished the links to the original version, Slovakia followed a few days later, whereas Greece, Croatia, Slovenia, Poland, Hungary, Bulgaria decided against it (Huotari, 2020).

It would seem that the governments that choose to be discursively supportive or discursively unaccommodating towards the Chinese stance on values, such as those of Serbia and Hungary in the first case and those of Lithuania, Latvia and Estonia in the second, are doing so to serve their own political agendas, dictated by a pre-existing domestic setting, rather than by the Chinese pressure to do so.

The Lithuanian, Latvian, and Estonian example demonstrates that it is possible to be involved in a pragmatic dialogue with China without subscribing to Chinese keywords and discourse on political values and remaining loyal to the EU value outlook. Nevertheless, unlike visible and immediate changes in the domestic political systems, such as the strains on democracy and rule of law, the narrative of the Chinese political values is a much more fluid phenomenon, and therefore the risk of the discursive resilience of the public domains of the Baltic states remains pronounced as long as the Baltics continue to engage in China-led formats.

4. Baltic financial resilience to debt arising from infrastructure loans

China's lending practices along the Belt and Road and on the bilateral basis has been the recipient of the most vocal criticisms from international organizations, including the EU. The 2019 High Representative of the Union for Foreign Affairs and Security Policy Joint Communication to the European Parliament, the European Council and the Council states: “Chinese investments have contributed to the growth of many receiving economies. At the same time, these investments frequently neglect socioeconomic and financial sustainability and may result in high-level indebtedness and transfer of control over strategic assets and resources.” (EU-China - A strategic outlook, 2019).

Chinese researchers also acknowledge that debt risks arise due to the inexperience of Chinese financial institutions in the CEE region: “Especially in the Central and Eastern European countries, a region between developed countries and emerging market countries, China's financial institutions still lack some experience in financing, which has led them to become one of the main bodies facing questions of the “debt trap” theory” (Liu, 2020).

As all three criticisms of China - systemic, discursive and financial - are interlinked, the Joint Communication establishes that the financial risks have the potential to spill over into systemic risks: “This compromises efforts to promote good social and economic governance and, most fundamentally, the rule of law and human rights” (ibid.).

Admittedly, the Baltic states never constituted the primary region for China's infrastructure investment interests, still, during the early stages of both “17+1” and BRI, infrastructure financing appeared in all major documents.

When the “17+1” cooperation platform was first introduced by the then-premier of China Wen Jiabao in Warsaw, 2012, the infrastructure loans made up the core part of the offer, as it spoke of “establishing a USD 10 billion special credit line, a certain proportion of which will be concessional loans, with a focus on cooperation projects in such areas as infrastructure [..]” (Wen, 2012). The Chinese side also emphasized the requirement for state guarantees for such loans.

The EU member states involved in the platform, including the Baltic states, expressed that such a model of cooperation is not suitable to them for three reasons. First of all, as EU member states Lithuania, Latvia, and Estonia have access to EU co-financing for infrastructure projects. EU co-financing is grant-based instead of loan-based and can make up to 85% of the project cost E.g. the EU provides up to 85% of the total eligible costs for “Rail Baltica”- an infrastructure project of unprecedented scale in the Baltics with the total estimated construction cost of EUR 5.8 billion (approx. USD 6,45 billion) (National and EU Contribution).. Under such circumstances, taking out loans to finance projects that can be covered from the EU budget made no sense. Secondly, the loan application procedure presented by the Chinese side initially demanded state-issued guarantees. According to EU law, guarantees linked to a specific financial transaction such as a loan are classed as constituting State aid (Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees, 2008), therefore, are subject to the Article 87 and Article 88 of the EC Treaty on aid granted by a member state. State guarantees for a loan issued to cover the operation of a Chinese company in Latvia would be considered competition distortion and thus incompatible with the common market (Inotai, 2020). Third of all, Beijing requested that the projects financed by Chinese loans would be partially granted to Chinese companies - the so-called “Chinese component” clause. In order to qualify for a loan, a country needed to guarantee a 50% Chinese component minimum, which would violate the EU law on public procurement.

All of the above made joint projects practically implausible, but not theoretically impossible. The only way to proceed with infrastructure cooperation on Chinese terms for the Baltics would be to challenge EU procedure - Hungary opted for this course of action in the procurements relating to Budapest-Belgrade railway, a project 85% of which is reportedly financed by the Exim Bank of China, although the terms of the loan agreement are classified (Inotai, 2020). The decision caused the European Commission to launch an infringement procedure against Hungary in 2016. Still, it should be noted that infringement procedures are not that uncommon in the EU. Therefore, the major argument against cooperation in infrastructure on Chinese terms in Lithuania, Latvia and Estonia has not entirely been the impossibility of such action, but rather a conscious governmental decision to act in concert with Brussels (see Chapter 2). Ultimately, the position of both Baltics and Hungary was determined by the domestic political reality, in the Baltic case dictated by Euro-reliance, but in the Hungarian case, as Hungary's former European Commissioner P. Balazs notes: “The Budapest-Belgrade railway is just another opportunity for Orban to annoy the West and prove that he can have allies and partners outside the EU” (quoted in: Inotai, 2020).

As a result of several rounds of negotiations throughout 2013-2016, China realized that infrastructure loans were not a feasible model of cooperation with the Baltic region, shifted the offer away from infrastructure lending and focused on the potential of high-value-added investment and cooperation in transport, logistics, tourism, and fintech with the Baltic states (The Sofia Guidelines for Cooperation between China and Central and Eastern European Countries, 2018).

Admittedly, the 2016 project of the Latvian BRI Memorandum of Understanding still states China's interest in financing infrastructure in the Nordic-Baltic region: “The two Participants will facilitate participation of Chinese financial companies in financing private, governmental and regional projects in Baltic and Nordic countries by expanding cooperation between their state-owned and commercial financial institutions” (Protokollemuma projekts, 2016). And yet, the Baltic states explicitly turned down China's proposals regarding infrastructure loans, regardless of the interest of the latter in the massive Rail-Baltica project.

Currently, there are no China-financed infrastructure projects - neither on national nor international levels - taking place in the Baltic states. Some controversy is arising due to a plan to build a TallinnHelsinki tunnel with one third of the project cost - 15 billion Euros - provided by Chinese “Touchstone Capital Partners” as investment, making the company a minority stakeholder (Tallinn-Helsinki rail tunnel secures 15 billion euros of funding, 2019), and two thirds in the form of a loan. Furthermore, the MoU for building the project includes 3 Chinese state enterprises: China Railway International Group, China Railway Engineering Company, China Communications Construction Company. If this project will be launched, it will have the potential to tilt the Baltic financial resilience in China's favour. However, this endeavour is under criticism from Estonian officials (Quinn, 2020).

Conclusions

Since the beginning of China's initiatives in Central and Eastern Europe, three distinct risks have been voiced by various Western actors, namely, Beijing as a legitimating factor for strains on democracy; increased presence of the Chinese interpretation of values; and debt arising from infrastructure loans. The Baltic region is a valuable case for research, as none of the risks associated with an increased Chinese involvement have transpired in the region. Hence, the paper analyses Baltic resilience along three intertwining domains - systemic, discursive and financial.

On the systemic spectrum, regardless of engagement with China, governments and populations of the three Baltic states have been and remain explicitly Euro-optimistic and strongly rooted in the values of the Euro-Atlantic community. There are three distinct characteristics of the Baltic political culture that could account for the systemic resilience - anti-authoritarian sentiment due to the domestic interwar historical background, Euro-optimism due to the lack of political autonomy and economic development during the Soviet period, and pro-Atlanticism due to the deterring role of NATO vis-a-vis Russia in the region after 2004, and especially since 2014.

From the point of view of discursive Chinese presence, the official documents signed between the Baltics and China in the BRI framework contain traits of the Chinese official political discourse - more so than the documents signed by, e.g. Italy. There is evidence to suggest that Chinese officials have been using the new China-introduced platforms to introduce Chinese political and societal values that stem from the domestic political agenda of the PRC, such as “community of shared destiny”, “dialogue of civilizations”, “Silk Road spirit” et al. Nevertheless, Lithuanian, Latvian, and Estonian example demonstrates that it is possible to be involved in a pragmatic dialogue with China without subscribing to Chinese keywords and discourse on political values and remaining loyal to the EU value outlook.

Finally, in the financial resilience domain, the Baltic states expressed that PRC infrastructure loans are practically implausible due to the availability of grant-based EU co-financing for infrastructure projects, as well as the impossibility to issue state guarantees and ensure a 50% Chinese component minimum during the procurement. Still, the EU as a restrictive factor does not fully account for the absence of China-financed infrastructure in the region. Other EU members have opted for China-banked infrastructure even in the face of EC infringement procedures. The Baltic states exercised their agency and made a conscious decision to stick to EU rules. As a result of several rounds of negotiations throughout 2013-2016, China realized that infrastructure loans were not a feasible model of cooperation with the Baltic region, shifted the offer away from infrastructure lending. Currently, there are no China-financed infrastructure projects - neither on national nor international levels - taking place in the Baltic states.

The Baltic resilience offers OSCE an analytical toolkit for assessing the results of bilateral and multilateral engagement of China with OSCE members, as well as third countries. As the “EU-OSCE-China security nexus” (Weidenfeld & Huotari, 2016) has emerged in Central Asia, the three domains of resilience to China's influence - systemic, discursive and financial - can serve as a point of departure for gain/risk assessment of cooperation with China in the mutually proclaimed areas of common interest, namely, migration, the fight against terrorism, economic and environmental development and climate change (In visit to China, OSCE PA President Muttonen highlights areas of mutual interest, future co-operation, 2017).

In conclusion, it appears that the governments that choose to be systemically, discursively and financially supportive or, on the opposite, unaccommodating towards China, are doing so based on their own political agendas, dictated by pre-existing domestic settings, rather than by direct Chinese pressure. Therefore, ultimately, the key to resilience lies in the hands of the state actors themselves.

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