VI High-Level Think Tanks Symposium of China and Central & Eastern

European Countries, Bled, Slovenia (3-4 September 2019)

Vardar-Morava-Danube water channel –

a mega project for the future regional nations prosperity

Emilija Geleva
Geopolitical analyst, Republic of Macedonia

The idea of connecting the river Danube with the Aegean Sea by a navigable route via the
rivers Morava and Vardar dates back to the 19th century. It is based on the geographical-
topographical characteristics and suitability of the terrain. Natural location of the Vardar and
Morava river beds and possibility of connecting them on a short section between the rivers
Južna Morava(Serbia) and Pčinjа (Serbia and Macedonia) affords extraordinary possibilities
to materialize a navigable route from Danube up to Thessaloniki in the Aegean Sea.
The geostrategic position of the Pannonia Plain and the Sava - Danube connection with
the Morava basin, which is linked with Vardar and, further, with the Aegean Sea and the
Mediterranean, is a unique system of valley - lowland zones of Europe . By linking all of
them, a great waterway could be created, one that would connect the North, South and
Central Europe, thanks to the Pan - European Corridor 7, Danube, and the existing waterway
Rhine - Main - Danube Canal .

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 Up to now a certain number of studies and projects were done dealing with the Vardar-
Morava navigable route. All studies and projects are approved as accomplishable for
realization and justified from technical and economic point of view. Almost all technical
parameters of the canal have been determined: the route, hydrological and geological
conditions, cross and longitudinal sections, structures on the waterway as well as the
structures on Vardar-Morava wider catchment area. This should enable and contribute the
successful regulation and realization of the navigable route as well as water utilization of both
catchment areas. In addition to this, basic economic parameters of the navigable route have
been provided.

650,10km
Total length
Length of canal in the Morava area 345,74km
Length of canal in Vardar area 274,68 km
Section on water parting 29,68 km
Total length of the regulated river courses of Morava, Vardar and Pčinja 483,60 km
Total length of lateral canals 166,50 km

Building of navigable route Vardar-Morava and its joining and fitting into European
magisterial canals through the canal Rhine - Main - Danube shall be of outstanding
importance both for regional economic prosperity and for complementary economics of the
EU countries as well for the Central Europe. Connected with the European canal network and
Rhine-Main-Danube artery, the Morava-Vardar canal will have a great influence on the
increase of their economic benefit and technically coordinated transportation system of water
and land transport. Navigable route Vardar-Morava shall be the shorten route Belgrade-
Thessaloniki for approximately 1200 km if compared to the route running by the Danube, the
Black Sea to the Aegean Sea. The achieved saving of costs is 25% to 30% in favor of the
waterway Morava-Vardar. In addition to it, time of navigation is shortened for three days.
The water canal “Vardar-Morava” is a giant infrastructure project that overoptimistic
circles in related countries, Macedonia and Serbia, compare with ancient Silk Road which
dates back before Christ. The aspiration to connect the East and West, China and Europe
dates back to the old days, before Christ. Over time, occasional contacts of Eastern with
Western civilizations led to development of the ancient Silk Road, about 6500 kilometers
long, used for goods (spices, silk, glass, ivory, precious stones, etc.) transportation, religion
expansion, interchange of cultural achievements and created knowledge. The decline of the
importance of mainland Silk Road began with the rise of the Chinese overseas trade.

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Travelling by the sea proved to be cheaper, safer and faster. Therefore, the digging of the
Suez Canal was of fundamental importance for connecting China, India, the Middle East and
Europe.
This important maritime route – proposed Danube - Morava - Vardar - Aegean Sea
waterway - could be a modern alternative to the ancient Silk Road. It would link the North
Europe with the Mediterranean Sea, through the center of the Balkan Peninsula, being an
important strategic project not only for Macedonia, but for all the countries of the North,
Western and Central Europe and the Middle and Far East region as well.

Vardar valley and economic importance of the river

The first Chancellor of United Germany, Otto von Bismarck, said 130 years ago: "The
one who controls the valley of Vardar, will be the master of the Balkans"
Vardar is the largest river in the Republic of Macedonia. It is 388km long and its river
basin covers an area of approximately 25,000 km². The origin of the name Vardar can be
traced in Sanskrit language meaning water (vārdara) or water navel.
Otherwise, according to historical data, due to the much more equitable flow, by the 16th
century Vardar was sailing from Thessaloniki to Veles for larger vessels and to Skopje for
smaller rafts transporting various goods. One hundred and fifty years ago, the river was
navigable and clean, with “gemii” (rafts and boats) sailing along the waters of Vardar. The
city beaches, located by the river banks, were legendary. You can always hear stories from
older people how they spent summer days on some of the city beaches. Today's situation with
the city beaches is different. They still exist, although they were rebuilt several years ago,
through the project "Skopje 2014". The only thing missing is bathing in it.
The valley and the flow of the river represent a very important landscape for Macedonia,
from economic, business, traffic and military-strategic aspects. By the river valley there are
the main road E-75 highway which is part of the European corridor 10. It connects
Macedonia with Serbia and Aegean Macedonia. In the upper stream there is the highway
Skopje – Tetovo – Gostivar, which is part of the European corridor 8 that connects
Macedonia with Bulgaria and Albania. As part of the same 2 European corridors in the valley
of the river, there is also the electrified railway Skopje - Thessaloniki and the railway Skopje
– Kicevo. These traffic routes are of great economic and commercial significance for
Macedonia. They are the main artery of connection with all other parts of the state and the
neighboring countries.

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 From Skopje to Gevgelia, an annual quantity of 4,5 billions M 3 of water flows out of the
territory through the Vardar River for only 60 hours. This poses two questions. The first is
whether the flowing out of the water can be decelerated, i.e., whether the water can be kept
for at least 60 days and the second question is how this can be realized. As part of the Vardar
navigable project, construction of 12 hydroelectric power plants is envisaged along Vardar
River, i.e., its section extending from Skopje to the border on Greece, which means within a
length of 200 km. Two of these are classical hydroelectric power plants (HPP 'Veles' and
HPP 'Gradec'), while the remaining 10 hydroelectric power plants are distributed in a cascade
along the river course, with small water head of H = 8,20 - 8,50 m and are considered
ecological hydroelectric power plants according to European criteria.
Hydro-energy utilization of the river Vardar has been studied in several phases. So far,
some basic designs have been prepared on individual hydro-technical facilities.
Simultaneously, shorter stretches of the main stream of the Vardar or its tributaries have been
handled. There are also some considerations regarding the general solution of the river
Vardar’s entire basin. The Vardar Valley Program envisages energy use of the Vardar stream
and its most important tributaries. As we said, on the Vardar stream, which means the water-
flow stretch from Skopje to the border with Greece, which is 200 km long, 12 hydro-power
plants have been planned for construction, of which the major ones are: Veles HPP with a
production of 300 million kWh and Gradec HPP with 257 million kWh. Other smaller hydro-
power plants have been deployed in cascades down the river stream, with a production of 60
to 130 million kWh, depending on the location and flow [7]. These smaller dams together
with their hydro-power plants have been envisaged to be embedded in the riverbed due to
their low height, with minimum excavation for construction work, which is a cost-effective
and functional solution. The river will retain its natural riverbed shaped with protective
embankments in the form of channels. The landscaping of the river in this way will also
satisfy the environmental requirements, since its natural basin and level will be retained to the
highest possible extent, as well as the groundwater regime, which protects the fertile
agricultural land.
The area of the Vardar Valley has been the focus of interest in its current development
and particularly in the last two decades. These interests amplify depending on the specific
geopolitical and economic situation of our country, and various aspects of integration of the
interest to landscape this area into the development plans at the regional level, as well as the
specific interests of developing the economy as a whole. The complex landscaping of the
Vardar Valley will include:

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- Construction of facilities for energy use;
- Construction of systems for the development of agriculture;
- Construction of systems for the development of tourism industry, sport and recreation;

History of the geopolitical interests for the “Balkan spine” Morava-Vardar

France was the first to show the interest to invest capital in regulation of
the Morava River. During the period of the second reign of Serbian ruler Miloš Obrenović it
was founded a French-Serbian steamship company for river traffic on Danube, Sava and
Morava. During the period from 1844 to 1864 this steamship company named "French-
Serbian Shipping Company", joining its interests with French "Principal Shipping Company"
established by decree of Napoleon III dated September 14. 1850 developing a vivid activity
to establish the river traffic on Danube, Sava and Morava.
In July 1859 the French company addressed to Serbian ruler Miloš Obrenović, applied
for exclusive permission for its steamer to navigate by the river Morava for the period of
thirty years". After longer negotiations, clearing up controversial questions, testing the
possibilities and after diplomatic interventions of Russian consul who "made an effort to
force the Serbian government to renounce the Russian company the right for navigation", the
contract was made on September 18. 1860.
In 1879, "Messenger of Serbian Learned Society" published the book "The Morava, Its
Present State and Navigation Possibilities" by Ante Aleksić, dealing with technical
possibilities and commercial justification of introducing the river traffic on the Morava.
In 1904 was renewed the movement for building the navigable route in order to connect
the Danube with the Aegean Sea. To realize this intention special efforts were made to make
England and Germany interested in financing the project. Contacts with influential financial
circles in England and Germany helped the idea, as well as well as suggestion to make the
Americans interested in this project, and through them, the English and Germans too. An
American firm of New Jersey (USA) in 1908 made a preliminary project design of a
navigable route Morava-Vardar in that time named as "the line of European economic
gravitation in relation to Suez Canal".
Nikola Stemenković, professor of Technical Faculty of University of Belgrade, was
engaged for the mentioned project as "an expert, authorized in building canals and river
regulations". Reports and preliminary project design with cost estimates for navigable route

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were submitted to Serbian and Turkish governments in 1909 with "an application for
concession and permission for execution of necessary preliminary works and treatment of site
to finance the project up to final building of the navigable route". However, political situation
in Europe in relation to the Balkans put out the action and disabled any hope for any success
of political ideas, which could support the project, and any attempt to materialize it was given
up. The wars broke out in 1912 and later on it was necessary to eliminate the consequences of
the wars. Therefore, any activity associated with realization of building up the navigable
route Morava-Vardar fade away and technical-economic investigations and building
possibilities were not continued before 1961.
Diplomatic archives register that the Kingdom of Yugoslavia presented the idea for
the implementation of the Morava-Vardar-Aegean Sea project, to be financed by the
international community, before the People’s Assembly in Geneva in 1932. Out of five
projects suggested then, this was the only one that was declined due to unjustified economic
and technical factors. This especially applied to the portion from Stalac to the Aegean Sea, as
noted in the telegram by Ivo Andric, the then charge d’affaires in the Kingdom delegation.
The project envisaged the creation of a new waterway stretching over roughly 700
kilometers, connected via the Danube to the Rhine and the North Sea, i.e. by way of the
Danube countries with the Black Sea as well as the Mediterranean countries, including the
Suez Canal.

Macedonia and the Vardar channel project

Following World War II, Macedonia showed great interest for the justification of this
project called The Vardar valley as soon as in the initial 5-year plan. In the chapter titled
Study and layout of a partial movement of the Skopje-Gevgelija route from the monograph
The history of Macedonia’s railway aimed at putting the Vardar valley to use in terms of
energetic efficiency, the author points out: With the first 5-year plan, building of
hydroelectric power plants began in our Republic as well. This included the study of the flow
of the river Vardar which has a steady decline of its riverbed throughout its entire
length...Apart from a small patch of ravines, the Skopje-Gevgelija railroad follows the river
Vardar throughout. This is why it is necessary to think of moving the existing railroad in
every portion of the Vardar riverbed suitable for building dams... Supporting this conclusion,
the then Electric Power Company of the Socialist Republic of Macedonia signed an
agreement with the Authority for studies, design and supervision of railway construction
from Belgrade on 25 September 1963, immediately following the catastrophic earthquake in

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Skopje on 26 July 1963. The project was revised in 1964, when the right bank version with
certain modifications was adopted. During the last Yugoslav Government headed by Ante
Markovic, the Vardar valley project received an award for the most promising development
project to be up for an award at a contest for project developing. Once Macedonia gained its
independence, the project was made topical again between 1994 and 1999 by two
consortiums, one from Macedonia and the other one from France. The French consortium
was represented by the state-owned electric utility company EDF and the French company
CNR which managed a system of hydroelectric power plants on the river Rhone in France.
After 2000, the French consortium backed out due to supposed political reasons and the
overall instability of the region.
After the independence, all subsequent governments of Macedonia were interested in
executing the project, but the impression remained that they focused solely on the Vardar
valley, as if not taking into consideration the continuation of the corridor towards Morava and
the Danube. In this context, the analysis of the planners and the experts in Macedonia
remained limited exclusively to the Macedonian portion of the project, with sizable cuts and
removal of portions of the project visualized by the French and Macedonian consortiums at
the time. 15 years after the French consortium left, the idea of this project was brought to life
once again. Instead of the French, the new investor of finances, know-how and expertise was
China, i.e. the KBE Corporation which built the Hydro plant Kozjak accumulation. The
megaproject Vardar valley could serve as salvation for the energetics, transportation,
ecological, tourist, hydrological, agricultural and economic state of Macedonia. That was the
atmosphere in which the negotiations with the China Development bank were initiated. What
was new was that the Macedonian state decided to remain the owner of the Vardar valley,
whereas the Chinese side would act as the contractor and creditor via the Chinese
Development bank. The Macedonian experts working on the project for a longer period of
time felt that the project that was elaborated in collaboration with the French consortium
should be taken as a starting point in the negotiations with the Chinese partner. The Vardar
valley project does not end at the Macedonian border with Greece, but has the option of
continuing into neighboring Greece, where the river Vardar is known under the name Axios
with its drainage basin joining the Aegean Sea.

Technical and financial challenges surrounding the implementation of the Morava-

Vardar- Aegean Sea project
This mega project, or at least the section passing through Macedonian territory, is faced

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with numerous obstacles ranging from financial to geopolitical. Speaking of political
challenges, at the time when the French partners were present in the field, complicated
political and security crisis in Kosovo, instability in Serbia during the Milosevic regime and
later on a crisis in Macedonia, as well as the continuous unfavorable bilateral situation
between Macedonia and Greece were all taking place. It was exactly in 1999-2000 that the
French consortium opted out of this project.
Speaking of financial and technical problems, this project is shaping up to be the costliest
energetics project on the territory of Macedonia in its entire history. The construction of the
12 hydroelectric power plants along the river Vardar alone would cost at least 1,5 billion
euro. In April 2011, the Government of Macedonia signed a Memorandum of understanding
with the Chinese international water and electric corporation (KBE) and the Chinese
development bank. The Government planned on taking out a loan of 1.275 billion euro or
85% of the needed investment amount, while the remaining 15% or some 225 million would
come from the country’s budget. The Vardar riverbed runs parallel to the Skopje-Gevgelija
highway and the railroad, which would require a dislocation in some areas. Out of the total
150 kilometers of the railroad, it is necessary to move some 80 kilometers, 30 kilometers near
the hydro plant Veles and 20 at the Gradec one. According to the figures published by
ELEM-Macedonia’s power plants on their website in relation to the initial open call, the
dislocation of the railroad alone would cost around 167 million euro, plus another 50 for the
highway. In mid-2014, the Government of the Republic of Macedonia announced that the
implementation of the Vardar valley project would mean biting off more that one can chew.
The Government gave up on the recapitalization of ELEM and the tendering procedure
concerning the Cebren and Galiste hydroelectric plants, as well as the Vardarska dolina
project. The explanation given was that the latest feasibility study by ELEM showed that the
complete implementation of the project required 1,9 billion euro, which the country did not
have at that time. A large portion of this money, or close to 200 million euro was supposed to
be spent on dislocating the railroad of Corridor 10, which comes close to the cost of building
a dam. At the same time, an important hydrological question came up. According to professor
Durnev who was one of the auditors of the project, the river Vardar did not have a sufficient
quantity of water to operate 12 hydro- power plants. The water resources are
disproportionately distributed throughout the year and the riverbed of Vardar is scarce in
the water in both the summer and the autumn months. In order for them to function, the 12
hydro-plants would require 200 cubic meters of water per second, and the current average is
120 to 150 cubic meters per second.

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 The arguments presented by the Macedonian Government, as well as the expert opinions,
only confirm that the Vardar valley project cannot be carried out independently, excluding its
Danube-Morava-Vardar portion. This is why it is necessary to plan, coordinate and execute
this, as Jovan Cvijic calls it, the spine of the Balkans on a regional level with the assistance of
a powerful investor and contractor.

Geopolitical aspects of the Vardar-Morava channel

Due to the geostrategic interests of different EU countries and the USA to hold the
region under their umbrella and to control and govern the natural resources of the Balkans
and its economic development, the project was prevented to be realized by pressing and
forcefully changing the government in the Republic of Macedonia.
In general, there art three principal geopolitical actors which interests cross over this
mega project: Chinese, Euro-Atlantic (EU and USA), and the regional or local national states
interest.
1. Why does the BBSP corridor matter for China? The geopolitical importance of the
Budapest (Hungary)-Belgrade (Serbia)- Skopje (Macedonia)-Piraeus (Greece) corridor, for
the purpose of this part of the paper designated as the BBSP corridor, rests with its ability to
connect the New European Land Bridge running from Urumqi, through Eurasia in direction
of Brest (Belarus) and the MSR, running from China’s southern coastal areas to the Red Sea
and entering into the Mediterranean Sea via the Suez canal. The BBSP defines a
transportation axis running in both directions and connecting Southwest Germany, Prague,
Bratislava, Budapest, Belgrade, Pristina, Skopje, Thessalonica or Piraeus in Greece. Either
through the Suez Canal or via the Gibraltar Strait, the sea lines of communication (SLOC) are
designed to reach major sea ports into Mediterranean Sea, such as Piraeus-Thessaloniki
(Greece), Marseille (France), Benghazi (Libya), Tunis (Tunisia), Livorno-Venice (Italy), and
Barcelona (Spain).
The sea-land connectivity requires deep water sea ports. Hence the importance of Piraeus
grew in the context of B&RI, since the Hong Kong Chinese Ocean Shipping Company
(COSCO) purchased a 35-year concession to upgrade and run two container cargo piers and
transform Piraeus into a regional hub for sea trade with Europe. The poor performance of the
Greek economy has turned into an asset to identify Greece as a valuable partner to China.
The BBSP further represents the segment that closes off the loop, connecting the Chinese
heartland to central Europe, by land and sea, facilitating land access to one of the most

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productive and economically dynamic regions in Europe The idea of this corridor is to create
a land-sea express passage composed of a high-speed rail line, alongside special
arrangements concluded through customs clearance treaties, trade and investment facilitation
settlements, free trade agreements and foreign direct investments. The BBSP has the ability
to further develop the trade flow between China and the European Union, taking into
consideration that China is already the EU’s largest trading partner. In addition, the BBSP
holds the potential to advance the development of the so-called Central and Eastern European
Countries (CEEC) at regional logistics level, to link the Mediterranean Sea and the Danube
River, and to explore the advantages of the future enlargement of the Suez Canal.
2. EU liberal structures perception of the project: “China’s rapidly increasing political
influencing efforts in Europe and the self-confident promotion of its authoritarian ideals pose
a significant challenge to liberal democracy as well as Europe’s values and interests. While
Beijing’s efforts have received much less scrutiny than the efforts of Putin’s Russia, Europe
neglects China’s increasing influence at its own peril. Drawing on its economic strength and
a Chinese Communist Party (CCP) apparatus that is geared towards strategically building
stocks of influence across the globe, Beijing’s political influencing efforts in Europe are
bound to be much more consequential in the medium- to long-term future than those of the
Kremlin.”
Or more: “This cooperation is better known as the “16+1,” referring to the 16 CEE states
with which China (the “+1”) is developing ties: Albania, Bosnia and Herzegovina, Bulgaria,
Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro,
Poland, Romania, Serbia, Slovakia, and Slovenia. The 16+1 mechanism involves quite a
heterogeneous group of countries. Of the 16 participating CEE states, 11 are EU member
states (five of which are also members of the single currency eurozone), four are EU
candidate countries, and one is a potential candidate state. To many observers, therefore, the
multiple high-level summits, business meetings, and statements by representatives of the
CEE countries and China seem to be framing a new regional context in the European
continent.
China’s cooperation with CEE countries has attracted a growing barrage of criticism from
the European Union (EU). In the past three years, EU officials have lambasted China for
allegedly undermining the European integration process by turning the CEE countries into
“Trojan horses” and sowing division in the continent. Some have even demanded that China
adopt a “One Europe” policy just as the EU supports the “One China” policy. This
culminated in early March 2019, just as President Xi Jinping was embarking on his trip to

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Italy, in an official proclamation by the European Commission that for the first-time labelled
China as a “systemic rival” of the EU.”
USA analysis: “China is creating a game of power to transform most of the world into
the core of a new international order. Its “Belt and Road” strategy seeks to connect Asia, the
Middle East, Africa and Europe through infrastructure projects, including ports, railways,
power plants and communication networks. China has portrayed the “Belt and Road” as an
engine for shared development and growth. However, although Beijing's strategy does
address the needs of infrastructure, the “Belt and Road” ultimately serves China's ambitions
in the economic, diplomatic and military fields.”
3. Nevertheless, the economic interest of the regional participants in this project must
prevail. China, Greece, Macedonia and other regional and Central European countries
must be united over the project that can bust economic development. For the regional states it
is “sine qua non” in their future development and better living standards for their nations.
That is why this China - CEE think- thank “17+1” network should create and provide a good
climate in all respective countries and help political and public understanding for the
Vardar-Morava navigable route, as a benefit to all and as a better future of our coming
generations.

Emilija Geleva, geopolitical analysts, ex- advisor for foreign politics to the Prime Minister
of the Government of the Republic of Macedonia (1998-2002). During her long and
outstanding professional carrier she was Director of the Institute for Geostrategic
Researches and Foreign policy in the Macedonian MFA, State Advisor, foreign politics
journalist in Macedonian National Television, correspondent from Washington D.C.

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