Last week, the Romanian government announced that it intends to ban Chinese companies from participating in public infrastructure tenders, which was coincidentally followed by a wave of restrictions for Chinese companies in Central and Eastern Europe. The Czech Republic also aims to ban CGN from taking part in the public tender to build the Dukovany Nuclear Power Plant (CGN was already removed by the Romanian Government from the project of the Cernavodă Nuclear Power Plant last year), while Greece announced that China’s State Grid and South Power Grid were disqualified from participating in a bid for a mid/low-voltage transmission operator.
This wave of restrictions may have been motivated by the coming 17+1 summit, as a message that countries like Romania, the Czech Republic or Greece want to send to Beijing. All these countries used to have very good relations with China over the past years, mostly thanks to China’s closer relations with some of their political leaders. But these relations worked in reverse as of late, when even Milos Zeman, the president of the Czech Republic and a close friend of Beijing, changed his mind and became a bit more hesitant when it comes to China. His rebellious turn began two years ago when he questioned his participation in the 2020 17+1 summit, but also the mechanism’s relevance. Today he is lobbying to keep Russia’s Rosatom in the tender for the Dukovany Nuclear Power Plant, while supporting the ban on CGN.
In the meantime, in Romania, things changed drastically after a right-wing party, the National Liberal Party (PNL), came to power in late 2019, replacing the more China-friendly left-wing government. The PNL government not only supported a draft bill that will restrict Huawei’s access to the country’s 5G network, but also decided to cancel CGN’s involvement in building reactors 3 and 4 at Cernavodă, ending more than six years of negotiations.
Today, Romania is led by a coalition government centered on PNL, which went even further and is aiming to ban Chinese companies from participating in infrastructure tenders, because, according to the deputy prime minister Dan Barna, Chinese companies appeal after losing a tender and so they prolong the implementation of the project. While this may sound like an awkward reason, the story is more complicated.
The Romanian Prime Minister, Florin Cîțu, recently talked about the necessity of keeping a distance from China as a healthy way of developing the country. This was soon followed by the press reports that the minister of transport from a different party, Cătălin Drulă, proposed the ban against companies from non-EU countries with which Romania or the EU haven’t signed a public procurement agreement. The main target seems to be China, but the proposal also has another victim: Turkey. Although Romania has a strategic partnership with Turkey, which should translate to closer relations, this ban, if implemented, will affect the Turkish-Chinese consortium that was selected to build the Ploiești-Brașov motorway, a section of Romania’s most important motorway project.
In 2019, the Romanian government, led by the Social Democratic Party (PSD), awarded the contract for the construction of the Ploiești-Brașov section to CCCC—Makyol, a Chinese-Turkish consortium, in a public-private partnership. After the National Liberal Party replaced PSD in the government, it canceled the public-private partnership, leading to an appeal from the Chinese-Turkish consortium at the National Council for Solving Complains (CNSC). The cancelation of the public-private partnership made economic sense, because it wouldn’t solved traffic problems as the motorway would have had a fee of almost 6.3 euro/100 km, which most Romanian drivers couldn’t or wouldn’t want to pay, continuing to use the existing public roads.
It was not the first appeal that a Chinese company made in Romania. In March 2020, a Chinese-Romanian consortium appeal the decision of the National Road Infrastructure Management Company (CNAIR) to exclude it from taking part in the public tender to build section 5 of the Sibiu-Pitești motorway. After the exclusion, both the National Council for Solving Complains (CNSC) and the Bucharest Appeal Court said that the Chinese-Romanian consortium had the right to reenter to the tender. Their opponents, the Italian company Astaldi, appealed, won and now the Chinese company made the final appeal and Romania is waiting for the final decision that will allow the public tender to take place.
In May 2020, CNSC rejected the appeal of the Chinese company CRRC and its Romanian associate Astra Vagoane Călători Arad, in which they argued that in their bid for electric wagons they faced discrimination.
In September 2020, another Chinese company, China Railway, interested in building section 4 in the Sibiu-Pitești motorway appealed after CNAIR asked them to provide more details about the technical and financial offer, after their bid was placed on the first position, but gave them a short time. CNSC admitted their appeal.
This is the background in which the minister of transport, Cătălin Drulă, rolled out his proposal to ban Chinese companies from taking part in infrastructure public tenders, because, according to him, “it’s time to make a strategic choice. Romania’s strategic choice in the last year has been quite clear, if we look at [building the reactors at] Cernavodă, if we look at the discussions about 5G. And then, in the interest of the geo-strategic options of this continent that is on a trans-Atlantic security axis, we have to make some choices that are made in other states of the European Union and choose European companies”. In defending the proposal, the government has argued that it has consulted and has support from the EU, through the Communication from the European Commission no. 5494/2019. According to news reports, the memorandum was also motivated by the argument that Chinese companies distort the tenders through dumping prices made possible by state aid, but as of now, no Chinese company has yet signed a contract for a major infrastructure contract in Romania.
While the government’s argument is based on the idea that Chinese companies offer prices that are too low and prolong the implementation of a project when they appeal, Cătălin Drulă is also among the few Romanian politicians who have publicly expressed more critical positions regarding China. According to him, Romania should stand by its allies, the US, NATO and the EU, and distance itself from China. He is one of the most vocal critics of Huawei in Romania. Last summer, he asserted that “the Romanian state has a clear geo-strategic orientation towards a partnership with America, the North-Atlantic and European security partnership, and in all these security areas there is the decision not to build these 5G networks on the technology of a company controlled by the Chinese government. It is a simple issue not to entrust a key part of your country’s economic infrastructure to a government which has interests fundamentally different from the Western world. We have an orientation towards America and have made a commitment not to build this network with Chinese technology, there are other alternatives”. Back then, he also warned about the danger posed by “China’s investment offensive in other strategic fields”, such as the construction of highways or by participating in train tenders.
While Cătălin Drulă’s position regarding China is very clear, the government’s stance may be, in the end, different. Firstly, when asked by reporters, the Romanian Prime Minister, Florin Cîțu, didn’t seem to know much about the memorandum that aims to ban Chinese companies from tenders and denied the news. The same day, the deputy prime minister, from the same party as Drulă, confirmed the existence of this memorandum. Secondly, although Florin Cîțu said that Romania should keep a distance from China, last year, the former PNL minister of transport was very keen to promote a small infrastructure project won by a Chinese company to build the Zalău ring road — the first road building project won by a Chinese company in Romania. Lastly, as a right-wing party, PNL may be uncomfortable from banning certain companies from public tenders (when it terminated CGN’s involvement in the Cernavoda Nuclear Power Plant last year, the PNL government invoked its opposition to state aid).
While all the action of the government over the past two years, from Huawei to Cernavoda and infrastructure projects, give the appearance of concern regarding China and a lively debate about the future of Romania-China relations, this is not the case. For the moment, these actions are more motivated by domestic politics, than confronting geopolitical or national security threats, as China is placed in opposition with the EU and the US, which are Romania’s fundamental relations. By taking action against Huawei and CGN’s involvement in Cernavoda, the PNL government wanted to signal to Washington and to Romanian voters its commitment for the transatlantic alliance and Romania’s strategic partnership with the US, especially in opposition to PSD’s more China-friendly approach.