Hungary signs a $ 2.1 billion loan with China for the Budapest to Belgrade railroad

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Hungary has signed a loan agreement with China that sets Europe’s first major infrastructure project of the Belt & Road Initiative in motion – the modernization of the rail connection from its capital Budapest to Belgrade in Serbia.

When completed, the new railway line will connect Europe with the port of Piraeus in Greece and open the European market not only to China but also to the rest of the world.

The $ 2.1 billion modernization of the rail link from Budapest to Belgrade is largely financed by a loan from China, with Hungary bearing 15 percent of the costs.

It is the second most expensive infrastructure project in the history of Hungary after the Russian-backed nuclear power plant in the city of Paks.

The rail link between Budapest and Belgrade is intended to open up China to Europe. CGTN

The rail connection between Budapest and Belgrade is intended to open up China to Europe. CGTN

Transport logistician György Firbás says that the completed rail link will have far-reaching advantages for Europe.

“It is important to us not only to expand this network for ourselves, but this freight will of course continue to flow to Austria, Germany, Slovakia and Europe,” said Firbás.

Today’s railway, an important access route to the Balkans and Greece, has not been renovated since it was built 40 years ago.

“This is the oldest and least modern, the most obsolete part of the Hungarian network that is still used in daily heavy goods traffic,” said Firbás.

China is providing 85% of the funds for the modernization of the rail link, Hungary 15%. / CGTN

China is providing 85% of the funds for the modernization of the rail link, Hungary 15%. / CGTN

Recently, the Hungarian government faced a backlash for keeping the details of the project secret for ten years.

The opposition has argued that the classification is intended to cover up suspicious deals, but the government says the public about the deal could harm Hungary’s foreign policy and interests.

Construction of the Serbian railway section began in 2018 when the country of Serbia borrowed $ 297.6 million from China.

Firbás said the railroad would eventually connect Europe with two Greek ports and one in Montenegro.

“These three seaports are the gateway to the south of the EU for traffic from anywhere east of us,” said Firbás.

“Not just China or Indochina, but Australia, New Zealand, the Gulf region.”

Continue reading: EU and China are finally preparing for important talks delayed by COVID-19

The new, faster rail link will run through rural parts of southern Hungary, opening up opportunities for agricultural and food processing improvements, as well as foreign investment in the small towns currently being held back by existing obsolete infrastructure.

“There is a workforce, there is land, there will be logistics available, so this would offer potential for new investments in an emerging part of Hungary,” said Firbás.

The construction of the rail link in Hungary will begin next spring.

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