Hungarian parliament classified the $2bn rail project with China

Hungary's Parliament on Tuesday classified the details of the construction of a Chinese-backed railway link between Budapest and Belgrade, news wires reported. The giant project, launched amid critics, will be jointly financed by Hungary and the Export-Import Bank with the Hungarian state paying 15% upfront and 85% loaned by China.

Hungary and China signed a 20-year, $1.9bn loan deal for the project late last month, with a 2.5% interest rate. The classification bill argued that secrecy was necessary to help secure a loan from the Chinese bank to finance the project.

The venture is part of Beijing's effort to open new foreign trade links inside the EU. It wants to ship Chinese goods from Greece to Western Europe, but key sections in the Balkans are missing.

Hungary's government late last week earmarked 82bn forints ($256m) from its 2020 budget, which is already strained by a likely recession in the wake of the novel coronavirus pandemic, to finance the rail link.

The project is the country's second most expensive project after the Russian-led expansion of the Paks nuclear power plant in central Hungary.

The 150-km Hungarian stretch of the railway will be built by CRE Consortium, which includes holding company Opus Global, controlled by Lorinc Meszaros, an associate of PM Viktor Orban, Reuters recalls.

The project has suffered significant delays. China, Serbia and Hungary signed the original memorandum on the rail route in 2014. Construction in Serbia started in 2018. A Hungarian expert in Chinese relations, who wished to remain unidentified, told Reuters China had a political motivation to build the railway, which he said was pointless until it reaches the sea in Greece.

Opposition groups also said the project would never turn a profit, while European politicians have raised concerns over China buying influence amid the crisis.

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