Hungarian Protestors Oppose Flagship Belt and Road Project, a Fudan University Satellite Campus

A 10,000 person protest in Budapest may have derailed a landmark Belt and Initiative project in the Hungarian capital: a satellite campus of China’s prestigious Fudan University. At , Anita Komuves covered the protest and its potential political ramifications:

Liberal opponents of nationalist Prime Minister Viktor Orban accuse him of cosying up to China, and fear the campus could undercut the quality of higher education and help increase its influence in Hungary and the European Union.

“I do not agree with our country’s strengthening feudal relationship with China,” Patrik, a 22-year-old student who declined to give his full name, said at the protest in the Hungarian capital.

[…] The government signed an agreement with Shanghai-based Fudan University in April on building the campus at a site in Budapest where a dormitory village for Hungarian students had previously been planned.

[…] “Fidesz is selling out wholesale the housing of Hungarian students, and their future, just so it can bring the elite university of China’s dictatorship into the country,” the organisers of Saturday’s protest said on Facebook. [Source]

At The South China Morning Post, Finbarr Bermingham added further detail on the protest:

Addressing the rally, Gergely Karacsony, Budapest’s liberal mayor who is heavily favoured to win September’s primary to run against Orban on a unified opposition ticket, said: “We are raising our voice against the selling out of Hungary’s national sovereignty, not against the Chinese state, not against the Chinese people, especially not those with whom we live peacefully in this country together. We are standing up for our own country.”

Some protesters carried signs accusing Hungary’s leadership of “treason”, while others commemorated the Tiananmen Square killings in 1989, the anniversary of which was on Friday. More still poked fun at the cosy ties between Orban and Chinese President Xi Jinping.

[…] “The campus will take space away from a university town planned for Hungarian students. People will now start to see very visibly what it means when Hungary is not leaning towards our traditional allies in the West, but broadly favours autocratic allies,” said Katalin Cseh, a member of the European Parliament representing the liberal Momentum party. [Source]

Hungary’s right-wing president, Viktor Orbán, has cultivated close ties with China, in part by blocking European Union resolutions chastising the PRC for undermining political freedoms in Hong Kong. In return, China has lavished Hungary with Belt and Road-linked loans, i.e. funds for a Budapest to Belgrade rail line. Hungary is the only European Union nation to use a Chinese vaccine, Sinopharm, a privilege for which it pays an extraordinary price: $36 dollars-per-shot, nearly double the cost of the Pfizer-BioNTech vaccine and 15 times that of AstraZeneca’s offering. Hungary’s opposition parties, united for the first time since Orbán’s ascension to power in 2010, hope that anger over the planned $2 billion dollar campus will galvanize public opinion against Fidesz, Orban’s party, ahead of next April’s national elections.

The effort to build a Chinese university follows the expulsion of the George Soros-funded Central European University, once widely believed to be Hungary’s premier graduate school, in 2019. The project is widely unpopular in Hungary. A survey conducted by Hungary’s opposition parties found 96% of Budapest residents oppose the project. A separate poll taken by the liberal think tank Republikon Institute found that 66% of Hungarians opposed the project—notably, 31% of Fidesz voters opposed their own party’s proposal. Budapest’s liberal mayor, who is running against Orbán in next years elections, announced plans to rename four streets around the campus to Free Hong Kong Road, Dalai Street, Uyghur Martyrs’ Road, and Bishop Xie Shiguang Road, a move a Chinese Foreign Ministry spokesperson deemed “beneath contempt.” Global Times, an official Chinese tabloid, attributed the protests to an eclectic group of “anti-China” activists:

However, the staged public outcry has invariably turned out to be the latest stunt from an -China camp. A variety of subversive groups – separatists from Tibet, the island of Taiwan, and scholars with close ties to American-funded Sino-skeptical think tanks – and their involvement in the march is not only blatantly conspicuous but is in response to appeals by Budapest’s mayor Gergely Karacsony from the opposition party Dialogue for Hungary. [Source]

While concern over China’s human rights record is surely motivating some to protest, the opaque financial machinations underpinning the deal have also elicited anger and distrust. At Direkt 36, a non-profit investigative journalism outfit based in Budapest, Panyi Szabolcs reported that the project would be financed primarily through a Chinese loan, which would in turn be used to purchase mostly Chinese material and labor as part of a “Chinese only project”:

According to a draft proposal by two ministers, the construction, estimated by the government at €1.5B (HUF 540 billion), would utilize largely Chinese building materials, Chinese labor, and would mostly be financed through a Chinese loan, which Hungary would pay for. According to these documents, the Chinese contractor does not even have to fear that another bidder would beat them in open competition. Documents state that “the construction can only be carried out as a Chinese only project” and, through legislative instruments, “it is necessary to reach the point where the investment process can no longer be stopped”.

[…] This setup is the result of the Chinese economic policy of the last decade. “By the early 2010s, China faced a problem of overproduction: they had much more capacity in concrete, steel and other raw materials than would be necessary. They keep on producing, but they can no longer use it anywhere in their own country. The Belt and Road was invented so that this surplus as well as Chinese labor could be utilized abroad,” economist Krisztián Orbán explained. The Belt and Road Initiative, also known as the New Silk Road, was launched in 2013 by Chinese President Xi Jinping. ITM’s draft proposal portrays CSCEC, the bidder for constructing Fudan’s campus, as an “important player” of Belt and Road.

[…] The amount of Hungarian public funding for building Fudan’s campus is really significant. For example, it exceeds what Hungary’s government spent on the annual operating costs of the country’s entire higher education system, which totaled €1.3B in 2019. However according to economic site G7, it was actually just net €800M. Moreover, the government documents obtained by Direkt36 list additional costs related to Fudan’s Budapest campus. According to ITM, between 2023 and 2027, outfitting and operating the institution will cost approx. €275M. Later, “in the period after the full ramp-up of the university”, an annual €45M will be needed for these purposes, which can be provided in the form of direct state support and corporate sponsorships. At the same time, ITM hopes that this would be largely paid by China. [Source]

“Chinese only” projects negotiated behind closed doors, and consequently plagued by allegations of corruption, have been endemic to the Belt and Road Initiative. Despite high hopes that the BRI would attract Chinese investment, economic relations between the two countries remain limited, accounting for only 1.48% of Hungary’s exports and 6.15% of its imports. At China Observers in Central and Eastern Europe (CHOICE), Szabolcs Panyi, the journalist who published the extensive exposé on the campus’ financing excerpted above, argued that Hungarians’ opposition to the project was less a reflection of a geopolitical shift away from China and more the result of shock at the price tag:

Hungarian government estimates put the size of Fudan’s Budapest campus – called Fudan Hungary University – at 520,000 square meters in buildings, spread over 26 acres, with an additional 40 acres accounting for the surrounding parks and greenery. The price tag for this enormous construction is estimated at a whopping $1.687 billion (540 billion Hungarian forints) – more than Hungary spends on the annual operation of its over two dozen state-run public universities combined. To seasoned China watchers, there is nothing unusual neither in the magnitude nor in the financial conditions of a regular BRI project. Hungary’s general public, however, was truly shocked to learn that Hungarian taxpayers would have to pay the exorbitant cost of construction for Fudan University’s new campus.

[…] Bribery and corruption risks are not only obvious given CSCEC’s tarnished reputation and involvement in various scandals around the world, but due to unexplained discrepancies shown in internal Hungarian government documents. Namely, that CSCEC pledges to erect Fudan Hungary University’s buildings for $1,06 billion, much lower than the $1.687 billion cost estimate of the Hungarian government, while at the same time, the Chinese financing proposal would cover a total expenditure of $1.81 billion. There is absolutely no explanation for this ‘overfinancing’, which is even more concerning given that high-level corruption in Hungary is traditionally linked to state-funded construction projects.

What makes this even worse is that the Hungarian government carefully designed the legal structure of the project in such a way that they can avoid launching public procurements and open biddings in the construction and later in the operation of the campus. In the case of the Budapest-Belgrade railway reconstruction, the two countries signed an international agreement, which made it possible for them to sidestep stricter EU procurement regulations. After years of negotiations, the two sides finally agreed to contract a consortium of two Chinese and a Hungarian company – the latter is owned by Orbán’s childhood friend, Lőrinc Mészáros. [Source]

Despite the large protests, Hungary’s parliament, which is controlled by Orbán’s Fidesz party, voted to donate the land to the Fudan Hungary University group. Yet in a rare concession to public outrage, parliament voted to hold a referendum on the project—but only after next year’s elections. From Emma Graham-Harrison at The Guardian:

“This is a novel situation. It’s the first time that any Chinese investment has become a high-level political issue in Hungary,” said Péter Krekó, analyst at thinktank Political Capital. “The government seemed to be pretty committed to go along with this project, until it saw it could be an electoral issue.”

He said the government has a track record of pausing controversial ideas until they feel less politically vulnerable, in this case after the election. “It’s pretty sure that if they are re-elected they will re-implement it,” he said.

[…] [District mayor Krisztina Baranyi] dismissed the referendum promise as a “cheap trick” that aimed to divert attention from intensive planning and asset transfers expected before the poll, and vowed the campaign would continue. [Source]

At National Public Radio, Rob Schmitz reported on parallel corruption concerns surrounding a BRI-funded railway link between Belgrade and Budapest:

SCHMITZ: Apart from the Fudan University campus, Vladisavljev says many Hungarians are also angry about a nearly $3 billion Chinese-backed high-speed rail project that’ll connect Budapest with the Serbian capital of Belgrade. Hungary will pay 15% of the costs upfront for its portion of the rail line and take out a loan from a Chinese bank for the rest of it, while a company owned by a childhood friend of Orban’s will help construct it. Then last year at the beginning of the pandemic, Hungary’s parliament gave Orban emergency executive powers.

VLADISAVLJEV: The majority in the Hungarian parliament used the state of emergency to push some of the aspects of the railroad contracts and some of the other contracts that have been tied to the Chinese.

SCHMITZ: One of the measures made the details of the contract with China classified, protecting them from public scrutiny. Katalin Cseh, a member of the EU Parliament for one of Hungary’s opposition parties, says that’s why there is so much popular angst over the $2 billion plan to build the Chinese campus in Budapest, the first of its kind in the EU. [Source]

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