A grandiose waterway scheme has some heavyweight backers, but doubts persist, and a possible Czech government shakeup could scupper it.
Concrete seems to be a favorite material for planners in Central Europe as a heritage from communist times. One old “concrete” idea now being pushed by Czech President Milos Zeman and his business circles is the Danube-Oder-Elbe canal linking the southeast and northwest of Europe. The government last week approved part of the Czech side of the project: a canal across Moravia, meant to connect with a similar project planned for Poland.
If the project is ever completed, the total bill in all participating countries could reach a staggering $25 billion in taxpayer money, according to a Czech government estimate.
Even though the actual digging work wouldn’t start until 2030, there are already doubts about the canal’s economic viability and fears of irreparable ecological damage. Thus, the most probable outcome is that the new government formed after elections next autumn will cancel the project – especially if current Prime Minister Andrej Babis fails to retain his post – because it is widely understood that the canal bill is his nod towards the president. Regional elections this month suggest that even if Babis’s ANO party wins those elections, the opposition could team up against them.
But at this moment, the project seems to be the only visible Czech contribution to a wider infrastructure-building scheme. Known as the Three Seas Initiative, it originated in the presidential palace of Polish head of state Andrzej Duda in 2015, presented as a common initiative with then-Croatian president, Kolinda Grabar-Kitarovic. Twelve countries have joined so far – members of the old East Bloc plus Austria. The fifth annual summit of Three Seas presidents was supposed to take place in Estonia in June this year, until the COVID-19 pandemic forced its postponement until 19 October, downscaled to an online event.
The initiative has been embraced by the countries between Estonia and Bulgaria as a way of attracting money, mostly for infrastructure investment to build north-south connections, which are still non-existent or very poor. In communist times, the preference was to build roads, railroads, and pipelines on an east-west axis anchored by the USSR. Lack of north-south connections has contributed to the slow catch-up process of Central European economies on their way to prosperity and, in the case of energy supplies, supports the prevailing dependence of some countries on Russian gas and oil.
Three Seas was recently embraced by the United States, along with a pledge to contribute $1 billion to the Three Seas Infrastructure Fund being established with its headquarters in Tallinn. One task of the fund will be to attract U.S. private investment; according to a recent discussion hosted by the Atlantic Council think tank, American investors are very interested.
In the initiative’s favor is its basic aim to build infrastructure in the form of roads and railways, energy connections, and digital connectivity. On the other hand, some doubts have been voiced, mainly in the Czech Republic, which is rather skeptical and reluctant to join the initiative fully. For one thing, based on their past record, the Poles have a reputation for floating big projects that never come to pass. Polish leaders are also distrusted because they do politics in a way that leaves them open to charges of trying to build a regional political hegemony. Three Seas is also seen as potential competition with similar EU projects and thus an ineffective use of money. And there is a fear of growing division between east and west within the EU.
Polish diplomats are trying to calm such fears. “The strategic aim of the Three Seas Initiative is to maintain and strengthen the unity of the EU and the Euro-Atlantic space,” Polish Deputy Foreign Minister Pawel Jablonski recently told me during a trip to Prague in part to pitch the benefits of the project to the Czechs. The European Commission will have a role in the initiative as well, he said.
The Czechs also argue that without the participation of Germany – something the initiative is working on – nothing big can happen in the region.
A further concern for the Czech side is connected with the way projects like Via Carpathia should be managed and financed. The basic idea behind this highway network joining the Baltic states to Greece is to fund it by means of PPPs, or public-private partnerships. This is very controversial in a region where similar projects have been tarred by allegations of corruption.
It is impossible to close the infrastructure gap between the east and west of the EU without the private sector, Kristalina Georgieva, the Bulgarian head of the International Monetary Fund, told the Atlantic Council’s online discussion. There is also a need for transparency, she warned.
The IMF contributed to the Three Seas Initiative with a study studded with numbers, estimates, and potential gains from new infrastructure investment.
That Central Europe desperately needs better infrastructure is beyond doubt. But projects like the Czech canal do not help build trust that taxpayers’ money will be used effectively and with long-term, green, economically sustainable goals in mind.
Some might see American support as a strategic counterbalance to Russian and Chinese economic pressure in the region.
But when the expected result is measured only in cubic meters of concrete and not in high value-added work, there should be serious doubts and discussions. On the other hand, the canal could bring cash into the region, which in the longer term will struggle to get money from EU funds. The Three Seas Initiative supporters have still some explanatory homework to do.
Martin Ehl is chief analyst at Hospodarske noviny, a Czech business daily.