China’s High Speed Rail Silk Route Connecting Oslo and Stockholm

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A delegation from China’s Association for Promoting International Economic and Technical Cooperation has visited Oslo to discuss the potential for a high-speed rail link between Oslo and Stockholm, Alf Johansen of the Värmland-Østfold Border Committee has said on Danish public radio.

China has offered both financing and the expertise to expand the initial build-operate-transfer (BOT) suggestion. The route will offer an alternative to hundreds of thousands of passengers currently flying between Stockholm and Oslo, with the proposed high-speed railway reducing the traveling time to just below three hours.

“It is in Norway’s, Sweden’s, and China’s interest to build a profitable, safe, environmentally friendly, and fast high-speed rail between Oslo and Stockholm. This will contribute to better cooperation in the Nordic region and a faster development of the region, Huang Xin, the leader of the Chinese delegation, told the Norwegian Dagsavisen daily.

The first stage of the project involves rebuilding and refining existing rail lines at a cost of over 50 billion SEK (US$6.3 billion). A second possibility would see an entirely new high-speed railway built at a cost of around SEK 170 billion kronor (US$22 billion), both effectively cutting the traveling time from over five hours to less than three. The service is touted as an especially convenient alternative for the roughly 1.5 million travelers per year who currently choose to fly between the Nordic capitals.

While Johansen argued that the project was a lucrative one, with potential profits arriving after just a few years, Swedish reactions have been more wary. Sweden is currently embroiled in a hot debate about increasing Chinese investments, particularly revolving around the proposed container harbour in Lysekil, which its detractors claim is an environmental and security risk. In his opinion piece, unequivocally titled “Don’t let China build a Swedish-Norwegian railway,” Aftonbladet‘s leading columnist Daniel Swedin pointed out that China’s investment in the EU increased by a whopping 76 percent in 2016 alone, following which, the EU Commission called on member states to stop selling ports, telecom companies, and energy production to China.

“The EU is not keen on seeing China make proposals to EU member states without prior reference to Brussels”, says Chris Devonshire-Ellis of Dezan Shira & Associates. However, we have a situation here not dissimilar to the Chinese proposed Belgrade to Budapest high speed rail, where one member is an EU nation and the other is not. Norway is not a member of the EU and is not bound by its protocols. Sweden is and must comply. Brussels has previously expressed concerns over the tendering process, however, there has been no mechanism to permit funding from non-EU countries involving cross-border infrastructure. Clearly the Chinese are irritating Brussels by offering not just to build, but also to finance. However, these are projects that the EU themselves should have been instigating. These situations I suspect will only increase. The Chinese are highlighting the infrastructure bottlenecks within the EU and Brussels doesn’t like it. It remains to be seen how, if any, political mechanism can be adopted to allow the Chinese to both fund and build what is much-needed infrastructure to bring the EU closer to its Eastern and other European neighbors. The problem for Brussels is keeping other EU states, such as Hungary, happy when blocking such moves. It is going to be a continuing political thorn for Brussels to deal with”.

 

About Us

Silk Road Briefing is produced and written by Dezan Shira & Associates. The firm provides governments and corporate businesses worldwide with strategic, legal, tax and operational advisory services to their SMEs and MNCs investing throughout Eurasia and has 28 offices across China, India, Russia and the ASEAN nations, and partner firms in Central Asia. We have specific and long term experience in China and the OBOR countries. For assistance with OBOR related issues, please contact the firm at silkroad@dezshira.com or visit the practice at www.dezshira.com

 

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