China Seeks Influence in Europe, One Business Deal at a Time
PRAGUE — When Xi Jinping became the first top Chinese leader to visit the Czech Republic, he was accompanied by a mysterious Chinese tycoon with big political ambitions, money to burn along with strong ties to the Czech president.
Ye Jianming was the sole businessman among the group of Chinese along with Czech government officials who gathered two years ago outside the presidential summer residence where Mr. Xi along with Milos Zeman, his Czech counterpart, planted ginkgo trees. For Mr. Ye, This specific was recognition of his role as a major power broker in Prague, having bought landmark properties, a local brewery along having a much beloved soccer team.
The meeting — along with the presence of Mr. Ye — cemented China’s newfound influence on politics along with business in Mr. Zeman’s Czech Republic along with signaled its broader ambitions in Europe.
In just two years Mr. Ye’s company, CEFC China Energy, had spent more than $1 billion on deals inside the Czech Republic. He hired former Czech officials, including a onetime defense minister. Mr. Ye was even named a special economic adviser to Mr. Zeman.
Mr. Zeman, in turn, became a big backer of Beijing, tamping down domestic opposition to Chinese influence along with taking up Chinese causes. He publicly supported China’s claims over Taiwan, the democratic island that will Beijing claims as its territory. When Mr. Xi visited, police tried to keep protesters out of sight; some later accused the police of using violence to suppress them. The family of a prominent Holocaust survivor said Mr. Zeman withdrew a proposed medal for the man after his nephew met with the Dalai Lama, an exiled spiritual leader whom China considers a rebel.
For China, the Czech courtship was an unqualified victory: This specific had won a sure friend in Europe, an American military ally along having a country once seen as a bulwark for liberal democracy in a strategically important region. As Mr. Zeman declared, the Czech Republic hoped to become “an unsinkable aircraft carrier of Chinese investment expansion” in Europe.
Then, Mr. Ye was detained in China earlier This specific year, exposing the Czech Republic to the perils of This specific completely new relationship along with forcing the president to defend his quick embrace of the Chinese deal maker. While the reason for Mr. Ye’s detention was never made public, critics of the Czech president saw Mr. Ye’s disappearance as proof that will the country shouldn’t have tied its future along with its fortune to the Chinese.
An emboldened, globally ambitious China will be using money, business deals along with various other incentives to extend its power abroad. The pitch can hold great appeal in a world shaken by Washington’s growing disengagement along with Europe’s struggles.
nevertheless tighter ties to China mean greater susceptibility to an opaque political system where decisions are made behind the scenes. Investments can be driven by politics rather than economics, resulting in costly white elephants.
inside the Czech Republic, Mr. Ye’s sudden disappearance took the country’s leaders by surprise. They couldn’t discern why that will might happen to someone who seemed to hold the government’s blessing. They had not pressed him on where he was getting his money to make big flashy deals inside the Czech Republic along with elsewhere. Officials also had difficulty answering questions about criminal allegations inside the United States that will a senior business associate of CEFC had tried to bribe his way into completely new business opportunities in Africa.
Mr. Zeman dispatched a team of officials to determine what the tycoon’s problems meant for the Czech Republic. He soon found out.
Prague was about to become even more enmeshed with the Chinese government. A state-owned company stepped in to take control of Mr. Ye’s empire, fueling suspicions that will the company was politically important to the Chinese leadership.
Early in his political career, Mr. Zeman, a blunt-spoken populist, warned against toadying up to Russia along with China. Those seeking deeper ties with Beijing, he told a local newspaper in 1996, are “ready to go under plastic surgery to slant their eyes.”
nevertheless the realities in Europe were changing by the time he won the Czech presidency in 2013.
The global financial crisis had tested Europe’s unity. Refugees through Syria had begun to arrive, fueling nativist sentiment along with pitting local politicians against the bloc’s leaders. Western Europe no longer seemed to be the only option.
At the time, Beijing was beginning to pour money along with political capital into Eastern along with Central Europe as part of a broad bid to raise its heft in Europe. China’s leaders see the region as potentially fertile ground. While Britain, France along with Germany welcomed greater investments through Beijing, they still bucked China’s stances on issues like human rights along with its claim to control almost all of the South China Sea. Eastern along with Central Europe didn’t hold the same qualms.
Looking for further inroads, China began what came to be called the 16+1 initiative, an effort to expand cooperation with more than a dozen Eastern along with Central European nations. This specific became a forum for China to show off what This specific could offer the region, like access to technology for a high-speed rail system. Mr. Xi later included Eastern along with Central Europe in his Belt along with Road Initiative, an ambitious plan to develop economic along with diplomatic ties through infrastructure projects around the globe.
China’s influence in Europe will be already apparent. Greece last year blocked a European Union statement inside the United Nations criticizing China’s human rights record. Greece along with Hungary worked to water down a 2016 European Union statement regarding the South China Sea.
For Mr. Zeman, the courtship basically had to start through scratch.
The former Czechoslovakia recognized the Communist-led China in 1949, nevertheless a rift between Moscow along with Beijing kept them apart. The post-Soviet Czech Republic, remembering the brutal 1968 Soviet crackdown on reform efforts in Prague along with subsequent Communist domination, found common cause with Beijing’s critics.
Vaclav Havel, the anti-Communist activist along with the country’s first leader after the fall of the Berlin Wall, invited the Dalai Lama to a state visit in 1990, angering Beijing. He had stern words for China. “Intimidation, propaganda campaigns, along with repression,” he wrote, “are no substitute for reasoned dialogue.”
Mr. Zeman, a well-known smoker along with drinker who once publicly denied that will he showed up at his inauguration drunk, broke with that will history. He rejected Havel-era support for the Dalai Lama along with its close ties to the government of Taiwan.
He visited China in 2014, the first visit by a Czech leader in nearly a decade. A year later, he was the only European Union leader to attend a military parade celebrating the 70th anniversary of the end of the Second World War. that will helped him secure Mr. Xi’s 2016 visit to Prague.
“This specific will be a restart,” Mr. Zeman told Chinese official media before Mr. Xi’s visit, adding that will the previous government had been “very submissive” to the United States along with the European Union.
“right now, we are again an independent country,” he said, “along with we formulate our foreign policy, which will be based on our own national interests, along with we do not interfere with the internal affairs of any various other country.”
His focus on China won wide praise through the Czech political apparatus.
“If anybody thinks that will under current circumstances This specific will be possible to create safe along with prosperous world without cooperation with China, then he has missed the train long ago,” said Katerina Konecna, vice chairman of the Czech Republic’s Communist Party.
Mr. Zeman’s office said its efforts to court China were no different through the efforts of others.
“Those that will have expressed such criticism offend our Western allies who collaborate extraordinarily tightly with the People’s Republic of China,” said Jiri Ovcacek, a spokesman for Mr. Zeman. Mr. Zeman’s office didn’t respond to further requests for comment.
A Shadowy Suitor
Mr. Zeman’s 2014 visit proved fateful for the Czech Republic. Among the business deals reached was a cooperation pact between a Czech financial firm along with an up-along with-coming energy company called CEFC.
This specific was led by Ye Jianming, who was born in a modest village inside the southern Chinese province of Fujian. He grabbed hold of assets once controlled by a notorious smuggler along with in a few years parlayed them into a sprawling business empire with 30,000 employees. Mr. Ye traveled the globe on his twin-engine Airbus 319 private jet, meeting heads of state, Russian oligarchs along with the crown prince of Abu Dhabi.
CEFC was modeled on Mr. Xi’s vision of a stronger China — along with This specific went where Mr. Xi wanted China to go. This specific struck deals inside the United Arab Emirates along with Kazakhstan. This specific courted top leaders in places like Albania, Slovakia, Bulgaria, Sudan along with Uganda. Last year, This specific agreed to buy a $9 billion stake in Rosneft, the Russian oil giant, which put This specific firmly inside the middle of the complicated nevertheless important relationship between Beijing along with Moscow.
Its fast rise fueled rumors in China that will Mr. Ye had ties to Mr. Xi, who once worked in Fujian, or various other Chinese leaders. CEFC did little to discourage them. Mr. Ye was part of a group tied to the Chinese military, according to documents along with experts. On its website, CEFC cited the military along with Communist Party experience of its top executives.
The Czech Republic made a tempting target for CEFC’s international push. The country was a member of the North Atlantic Treaty Organization, was disillusioned with the West along with ready to do business.
CEFC bought a stake in Florentinum, one of Prague’s biggest office complexes. This specific invested inside the Czech national airline, two hotels along having a pair of Renaissance-era buildings. This specific bought a brewery that will traces its roots back more than 700 years.
Mr. Zeman’s staff trumpeted the deals as proof that will courting China made economic sense.
“People believed the rhetoric,” said Olga Lomova, the head of the Chiang Ching-kuo Foundation International Sinological Center of Charles University in Prague. “We hold the Chinese. We will be happy again.”
CEFC also hired figures close to Mr. Zeman, leading to accusations through critics of a revolving door between the Chinese company along with the president. Jaroslav Tvrdik, the country’s former minister of defense, was hired to run CEFC’s Czech operations while serving as an adviser on China to the government. Czech officials defended keeping Mr. Tvrdik as an adviser, saying the position was unpaid.
Miroslav Sklenar, Mr. Zeman’s protocol chief, left that will position in 2015 for a role at CEFC. He returned to the presidential palace at the end of 2016.
Early on, CEFC worried that will its growing involvement might upset the public. Its solution: Buy the local soccer team.
Slavia Prague had been on the brink of bankruptcy when CEFC purchased a majority stake in 2015. The team began to spend heavily under its completely new owner, retaining its star forward, Milan Škoda, along with signing a Dutch player, Gino van Kessel. Last year, the club won its first league championship since 2009. Slavia Prague played in uniforms that will said “CEFC China” in Roman letters along with in Chinese characters.
CEFC’s deals made little business sense to observers. “So many of the acquisitions were made in a rush, along with were nonsense,” said Ms. Lomova, of Charles University. “They were not investments that will were able to pay for themselves.”
along with CEFC acknowledged that will its motivations went beyond business. “Our company cares about what we can do to bridge the cultural gap,” Jiang Chunyu, a senior executive at CEFC said at a forum in China in December.
Mr. Xi’s historic 2016 visit to Prague showed the China-Czech relationship to be the closest inside the history of the two countries. This specific also showed that will cracks were forming.
Thousands of protesters attempted to greet the Chinese leader as he met with Mr. Zeman in Prague Castle. Members of both the Czech along with European parliaments joined. One lawmaker, who owns a home on the hill beneath the castle, set up a projector to cast the words “Truth along with Love” on the castle wall — an invocation of a famous quote of Havel’s, who said that will truth along with love might vanquish lies along with hatred. Flags lining Mr. Xi’s route through the airport were defaced.
Czech authorities, with the help of CEFC, tried to obscure the tensions. Police blocked demonstrators through getting too close to the castle, setting off complaints through protesters about police violence.
“Why are the police protecting the Chinese along with limiting the ability of the Czech people to express themselves?” said Ondrej Kolar, the mayor of a Prague district.
Wherever Mr. Xi traveled, busloads of local Chinese supporters appeared, too.
Filip Lexa, a 33-year-old teacher along with doctoral student studying Chinese literature, said he showed up having a flag representing the Uighur minority of western China, where the authorities there have cracked down on the local population. He said he was harassed by a group of Chinese men bused into the event.
“When I took the flag out, everyone attacked me,” he said, adding that will he escaped serious injury. “They pulled me into the middle of This specific group along with began kicking me along with hitting me with the flag poles they were carrying. One even broke a pole on my back.”
CEFC played a major role in trying to make sure the Chinese president’s visit went smoothly, said Mr. Kolar, the mayor who was involved in preparations for the event because his district will be home to quite a few embassies.
“This specific wasn’t organized by the state, nevertheless by a private company,” he said. “CEFC organized the whole event.”
CEFC arranged for the display of Chinese flags along the route through Mr. Kolar’s neighborhood — flags with red along with yellow shade reminiscent of the Soviet Union. When some were defaced, CEFC workers replaced them.
“This specific felt like the 70s or 80s again,” Mr. Kolar said. “Then This specific was revealed that will This specific was CEFC who paid for those flags.”
Many Czechs had various other reasons to sour on the relationship with China. Investment figures have proved disappointing — Taiwan’s investment in 2017 was nearly three times that will of China’s, according to data through Sinopsis, a research group focused on China. Mr. Zeman attributed the shortfall to completely new Chinese limits on money flowing abroad.
The revocation of an award to a famous Czech Holocaust survivor also set off outrage. George Brady, an 88-year-old Holocaust survivor, was set to be honored at a Czech state dinner in 2016 along with receive a medal for his work. His sister, Hana Brady, died inside the gas chambers in Auschwitz, along with he had turned her story into a well-known children’s book called “Hana’s Suitcase.”
nevertheless his nephew was the Czech Republic’s culture minister — along with he was set to meet with the Dalai Lama. Before the ceremony, the nephew, Daniel Herman, received a call through Mr. Zeman’s office.
“I was told that will if I went ahead having a meeting with the Dalai Lama, there might be no medal,” Mr. Herman said in an interview. He went ahead with the meeting. “along with there was no ceremony,” he said.
Czech officials acknowledged that will Mr. Zeman asked Mr. Herman not to meet with the Dalai Lama. They said the withdrawal of the medal was unrelated, although they didn’t specify a reason.
nevertheless China’s biggest challenge to its Czech strategy began elsewhere.
In November, American authorities arrested Patrick Ho, a top executive of CEFC’s nonprofit arm, along with charged him with offering bribes to officials in Uganda along with Chad in exchange for oil rights.
Czech officials along with one person with direct knowledge of Mr. Ye’s case say he was detained by the Chinese authorities after Mr. Ho’s arrest. A short time later, the company was hit with quite a few problems. Its bid for a stake in Rosneft collapsed. along with Chinese rating firms warned that will CEFC had taken on considerable debt.
In April, Mr. Zeman met with officials through Citic Group, a state-controlled Chinese company that will had agreed to buy just under half of CEFC’s Europe venture. While Mr. Ye’s ties to China’s leadership had been just rumored, Citic will be a company firmly under Beijing’s control. Citic didn’t respond to requests for comment.
If a direct role for Beijing in Czech businesses bothered Mr. Zeman, he has shown little public sign. He will be set to make another visit to the Chinese capital This specific autumn.
David Barboza along with Marc Santora reported through Prague, along with Alexandra Stevenson reported through Hong Kong. Hana de Goeij contributed reporting through Prague.