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1 Introduction

Megaprojects are considered as large-scale capital investments, single or multi-purpose. They include infrastructure projects, transport projects, economic development, and urban redevelopment (including waterfront redevelopment). This research is devoted to the analysis of UMPs as an instrument in the development of post-socialist cities, which are shaped by a mix of economic interests, socio-political and institutional framework.

Huge investments, large and diverse risks and impacts of megaprojects have led to a higher interest in their planning and management. The studies of megaprojects worldwide (del Cerro Santamaria 2013; Flyvbjerg et al. 2003; Kennedy 2013) show that the difference between the dominant regions of the Global North-WestFootnote 1 and South-East is not as large as it appears. Megaprojects usually involve “exceptional” forms of governance, and do not go through the normal channels (Kennedy et al. 2014). The issues of high risks and uncertainty, cost underestimation and overruns, low public informing, lack of transparency, social and environmental impacts remain similar in countries with different institutional systems and level of economic development.

In the post-socialist countries, transitional changes have created new power relations between different groups involved in urban development and increased influence of private investors. This paper will analyze the conceptual framework of the UMPs in the context of post-socialist city. After presenting the theoretical background related to urban planning and governance of megaprojects and highlighting their role and common features, the research will focus on the experience of Belgrade Waterfront Project (BWP).

2 Theoretical Background

The key research objectives are the analyses of the theoretical background of the role of megaprojects as an urban development instrument, as well as empirical analysis of the BWP experience and its potential development impacts.

The theory and methodology of urban planning and megaprojects faces complex issue of social contextualization of urban planning and governance, investment, and regulations. Since the 1970s and 1980s, under the pressure of globalization, the cities have started economic transformation according to the “Post-Fordist” development of different services, properties, high technology, etc. Different nature of urban development is linked to the political goals (Scott and Storper 2015), which shape the urban theory of global/world cities (Sassen 2008; Cochrane 2006; Brenner 1998, 2004).

Castells (1972), Lefebvre (1970) and Harvey (1973) supported a concept of the city as a theater of class struggle, and citizens’ rights to urban space. Brenner (1999), Cochrane (2006) and Harvey (2012) suggested the re-conceptualization of older concerns on urban politics and governance. Harvey (2012) pointed to neoliberal domination in the changing nature of political governance scales (from cities over states to the global level). In accordance to new political-economic doctrines, the reorganization on national level gave new inputs for urban governance. Harvey (1989) identified the shift from managerial into entrepreneurial governance, i.e., from the focus on urban services to the promotion of economic growth. These intentions are often realized through mega-development projects, speculative construction and political economy of place.

Top-down urban planning approach by megaprojects opens research on urban governance. Many researchers point to the top-down approach in planning UMPs and to the bottom-up public resistance to claiming urban spaces (Flyvbjerg et al. 2002; Davis and Dewey 2013; Kennedy et al. 2011). But, even with well-developed bottom-up methods, the management of complex systems is inherently problematic (Slaev 2017). Sellers (2002) criticized the central role of international business elites and the influence of external capital on urban-policy making. Swyngedouw (1996) indicates that the state seeks to attract capital through place-based interventions in urban regions. He argued that large urban development projects have “less democratic and more elite-driven priorities.” Political impulses are very important in the creation of urban MPs, but top-down approach offers no possibilities for democratic negotiations.

As instruments of urban planning and development, megaprojects include high-technology, sophisticated and non-standard technology, contemporary design, and ICT management. MPs are initiated by global economic restructuring and policy-makers, and supported by neoliberal urban development policies, often with transnational financial support and top political structure. UMPs promote interests of various property developers, but usually with state mobilization of public funds. Gellert and Lynch (2003) claim that MPs require coordinated flows of international finance capital. The spread of gains for the society is connected with direct government commitment to public benefits (Fainstein 2009).

MPs include substantive changes in the legal, economic and political framework. They have a special power and special status, an inherent nature, and a “special regime” of implementation (Altshuler and Luberoff 2003). They are not always planned in advance, but integrated ex post into planning documents. MPs represent a mode of urbanization (Roy 2003) and a “collateral” instrument against illegal, irregular and informal construction in cities of the South.

A major problem in megaproject policy is misinformation about the costs and benefits, and high risks. The “megaproject paradox” includes risky scenarios, underestimated costs, overestimated benefits and revenues, undervalued environmental impacts, overvalued economic effects (Flyvbjerg et al. 2003), as well as legal and ethical issues. Flyvbjerg (2014b) argued about the “iron law of megaprojects”—exceeding the budget and time-frame, a lack of accountability, and delays. He also indicated on the so-called “survival of the unfittest”, i.e., building the worst projects instead of the best.

The key challenges, risks, and uncertainties in planning of UMPs ought to be identified, considered, and managed, including complex nature of UMPs; external shocks; stakeholders; governance changes of contract conditions; new legal and financial instruments, etc.

2.1 Applied Approach

In analyzing the urban megaproject Belgrade Waterfront, we combined a contextually appropriate approach, benchmarking and some elements of the phronetic planning approach. These approaches focus on the syncretic forms of urban and development policies and the current discourse analysis in Serbia (Zeković et al. 2015a).

3 Example of the Belgrade Waterfront Project

As a result of a number of exogenous and endogenous factors, a collapse of strategic thinking, research, and governance exists in Serbia for almost three decades. In developmental terms, after the socio-economic growth and development in the 1980s, the dissolution of the former Yugoslavia, regional wars, international isolation and sanctions, Serbia’s economy collapsed, with the uncertainty of recovery. Serbia is one of the most undeveloped European countries on the “inner peripheries of Europe” (Vujošević et al. 2010). Its integration into EU or “Europeanization” outside the Union depends on development perspectives, global trends and a new institutional context.

In such circumstances, large investments of an already over-indebted country into an expensive megaproject of the inner-city waterfront redevelopment could hardly be expected to receive wide expert and public support. However, the idea of the Belgrade Waterfront megaproject has already been announced to the public in 2012, in accordance with the “fast-lane approach to investors”, with political statements that the “Tower Belgrade will become a new trade-mark of the capital city and Europe.” Bancroft (2015) argues that the BWP embodies the promise of Belgrade’s return to the world stage. After adopting the Agreement and Law on Cooperation between the Government of the Republic of Serbia and the Government of United Arab Emirates (2013) Serbian government founded the Belgrade Waterfront Company in 2014 to mobilize public funds for the BWP implementation.

The BWP was integrated ex-post into the master plan of Belgrade in 2014, and Belgrade Waterfront Spatial Plan was adopted in 2015. The BWP is a Dubai-inspired project of the old city’s waterfront redevelopment with little public resistance. However, the Academy of Serbian architects adopted a Declaration on the BWP in 2015, with arguments against the project.

In accordance with the specific ordinance (2006, 2012), the BWP is verified as a national priority, which illustrates a dominant model of public–private partnership with a national/metropolitan influence, despite the influence of an international private investor. The main legal precondition for the realization of the BWP was the adoption of a lex specialis—a Law on establishing the public interest and the special procedures of expropriation and issuance of construction permits (only) for the BWP (2015). Another legal precondition was a Joint Venture Agreement (JVA) between the Republic of Serbia, Belgrade Waterfront Company and investors from the UAE, without a tender process. The Ministry of Building, Traffic and Infrastructure has issued construction permits for the first two towers and their construction has already started.

The main goal of the BWP is to activate the waterfront and develop a modern urban center, thus promoting an international image of the Belgrade. The key objective of the Belgrade Waterfront Spatial Plan is to transform a neglected area into a modern city center. The general objectives are: protection of river Sava biodiversity, landscape improvement; revitalization of cultural heritage; better life quality; affirmation of Belgrade such a tourist destination; modern commercial offer; construction of major transport systems and infrastructure.

The BWP envisages the construction of two million m2 on 177.27 ha: 6128 flats (one million m2), commercial spaces (main tower 210 m high, shopping mall, several tall buildings), social, cultural, recreational and free spaces. There are predictions about cleaning the riverfront, old buildings, railway infrastructure, abandoned ships, environmental clean-up, etc. Total investment in BWP is 3 billion EUR for three phases (8–30 years).

The decision-making regarding megaprojects in Serbia is exclusive and elite driven. This is visible: (1) by innovations in the existing Planning and Construction Act (PCA), (2) by appreciation of the new lex specialis (expropriation for private elite hi-tech housing and commercial purposes for the BWP), (3) by verification of the BWP as a national strategic priority, (4) by property development regulation, (5) local communities are excluded from decision-making and poorly informed about BWP. Political leaders and the mayor of Belgrade provide the majority of the information regarding the BWP. Dogan (2015) argued that a strong national initiative in this project represents a top-down approach to the regeneration of the wider Savamala district. Eror (2015) argued that “it’s a state-driven model” called “top-down” or “hyper” gentrification.

3.1 Benchmark of Development Impacts of the BWP

The absence of accountability is evident in the BWP decision-making. Monitoring and control systems are insufficient, as well as the approaches for evaluating main social, economic and environmental impacts.

Benchmarking of possible development impacts of the BWP include intensive social impacts (raising social inequalities, gentrification, involuntary resettlement, networking of the key actors), intensive impacts on national level (overuse of public funds, limiting the State in making laws that are incompatible with the BWP interests), high public financial risk, strong urban transformations, intensive demographic growth (17,700 new inhabitants), low development and economic effects, low transparency and public participation, environmental impacts, and others (Table 13.1). Policy-makers promoted the BWP, emphasizing its role in creating employment (13,169–200,000 new employees), promoting tourism, using domestic inputs, improving productivity, growth competitiveness, high-quality services, etc.

Table 13.1 A preliminary impact assessment of the BWP
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Due to the complexity of the BWP, it would be difficult to provide proofs for such possible impacts and their exact scopes. The lack of a feasibility study for the BWP and non-transparent data are reasons for the insufficiently reliable and quantified assessment of its effects.

Total investment in capital infrastructure and utilities is 400 million EUR. The cost of activating the location is between 790 and 1000 million EUR (Kontrapress 2014), while expropriation costs will reach 7.1 million EUR. The Belgrade Waterfront Spatial Plan states that the revenues from urban development land and participation for infrastructure are 1.03–1.33 billion EUR, while the potential revenue from urban land (land value) varies from 168 to 336 million EUR.Footnote 2

Benchmarking of regulation indicates some open regulatory issues which may have potential impacts on the development effects of the BWP, such as: (1) The Decision of Serbia’s Commission for State Aid as a moot point. The Stabilization and Association Agreement (2008) and EU regulations prohibit the disturbance of competition by state aid for the elite-housing and commercial spaces; (2) No pre-feasibility study, no scientific analysis, and no urban study; (3) A discrepancy in choice of institutions included in the evaluation of urban construction land, (4) Unclear dynamics of investment, total sum, and agreed (disproportionate) share of the strategic partner in financing the buildings in the BWP, and a real risk from the lack of finances; (5) The regulatory regime implicates public risks and costs, an inverted order in the preparation of the pre-feasibility study and different appraisals, implementation postponement, and (6) Discrepancies in the Law on accepting the agreement between the governments of the Republic of Serbia and United Arab Emirates with the Constitution (e.g., agreements, programs and projects according to this law are not subject to public tender, while the Constitution prescribes that international agreements must be in accordance with the market economy).

The introduction of specific legal and policy instruments in Serbia under neoliberal economic pressures is a key source of the future change in the metropolitan tissue by the BWP. Potentially negative development impacts of the BWP in some legal aspects of the urban construction land might comprise: (1) Leaseholds of public urban land without fees to the Belgrade Waterfront Company which is in dominantly private ownership of BWP investor (by Regulation, 2012); (2) Right of lease to the Belgrade Waterfront Company gratis will be converted into the right of ownership. This Company can transfer the right of ownership to other parties without a fee (after constructing building/s and obtaining a use-permit) in accordance with lex specialis, Regulation (2012); (3) The obligation of Serbia and the City of Belgrade to finance and build all external and internal capital infrastructure till December 31, 2019; (4) An enactment of necessary legislation allowing full set-off of all land development fees against public land development costs on the project level. Land development fees will be governed by a separate agreement between the City of Belgrade and national institutions. If Serbia does not fulfill contractual obligations, it has to pay damages to the strategic partner; (5) The final calculation of the costs between investors and the City of Belgrade will be made after completing the construction of all planned facilities, but without a stated period; (6) Serbia could not change the BWP plan without the approval of a strategic partner, while the partner can change some parts of the plan; and (7) Serbia has an obligation to adopt the necessary changes to other laws that are desirable according to the JVA, and it can limit the independence of the national government in passing the laws.

Citizens are mainly excluded from the decision-making, including low level of public informing. The protests of citizens and NGOs reflect insufficient transparency and democracy in the planning of BWP.

4 Recommendations for Future Research and Application

In many regions of the South-East, state policies support urban development compatible with elite tastes and consumption that promotes socioeconomic inequalities, thus enabling global finance capital to shape the city (Watson 2012). This “privatization” of planning, as Shatkin (2011) calls it, through megaprojects tends to undermine the public administration of urban space and replace local authority with private governance. Recent research of megaprojects in cities of the South (Kennedy et al. 2014) showed the decreased significance of local government within the process of economic development.

The empirical findings of the BWP open possibility for a new insight into planning and appraisal of UMPs, that includes an alternative/improved approach and the following recommendations: more transparency and real public participation, improved regulatory framework, less use of private international risk capital, compilation of pre-feasibility study and appraisals, public bid for possible involvement of the private sector in financing the capital city infrastructure, and limitation of the state guarantee to lenders for funding the UMPs, especially in joint projects. The improved approach to planning UMPs includes a goal-driven approach in the preparation of the feasibility study and decision-making instead of traditional technical-driven approach (Table 13.2). This improved approach is closer to the general context in the countries of the North-West and a key instrument in their planning systems. The improved approach to planning UMPs should include

Table 13.2 Preliminary assessment of differences between traditional and “alternative”/improved approach to planning UMPs
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  1. (a)

    Improvement of the urban planning system, better evaluation methods, planning evaluation of alternatives, implementation policy, and more innovative urban land policy tools (Zeković et al. 2015b);

  2. (b)

    Establishment of minimum international standards for the change of national legislation of the UMPs;

  3. (c)

    More transparency in decision-making, with the real and wide participation of different stakeholders, their involvement in “policy re-design” and formulation and evaluation of alternatives. Outdated and often inappropriate in the context of changing urban environments, bureaucratic approaches are still predominantly used in the major part of the Global South (UN-Habitat 2009);

  4. (d)

    Performance of UMPs implies a goal-driven approach in the preparation of the feasibility study which differs from the traditional technically driven and top-down approach in decision-making. In the planning of capital urban projects, significant elements are democratic legitimacy (both top-down and bottom-up simultaneously), technical and economic rationality, social and environmental acceptability. The performance of UMPs should derive from key objectives of policies/plans and public interest. The traditional technical solution-driven approach in decision-making of MPs characterizes the Global South-East, but sometimes also appears in the Global North-West;

  5. (e)

    Setting better regulatory framework involves elimination of policy risks and/or their inclusion before decision-making (e.g., risk assessment), underestimating costs and overestimating benefits, as well as different types of ex ante impact assessments for evaluating, mitigating and balancing different impacts.

Generally, tools suggested in the “alternative”/improved approach are mainly used in the North-West, while traditional instruments predominate in the South-East. The new approach in planning, governing and implementing UMPs also requires multidisciplinary approach, critical analysis of the conventional approach, introduction of measures for improved policies and planning, and determination of the interplay between the different pools of power.

5 Conclusions

Our analysis highlights the differences in institutional, social and economic environment that shape the Belgrade Waterfront Project. At the same time, the BWP induced a substantial change of institutional framework (introduction of specific legal and policy instruments) under neoliberal economic pressure, which represents a key source of future changes in the metropolitan tissue. The benchmarking of the developmental effects of the BWP especially underlined: intensive social inequalities, marginal social mobilization of the key actors and stakeholders, intensive impacts on national level, high displacement effects, high public financial risks, strong urban transformations, low development and economic effects, low transparency and public participation, environmental impacts, etc.

The specific nature of the BWP requires specific instruments, including legal, financial, economic, construction, environmental, and more innovative and flexible urban land instruments. The proposed recommendations for their improvement would result in better development effects for the city.

Decentralization of regulation powers is important from the standpoint of planning, decision-making, governance, control, and implementation of megaprojects. It provides recommendations for future research and application, for a continuing in-depth analysis to mitigate all consequences of the UMPs, including determination of the interplay between different pools of power (“from power to tower”).