7 ms·

A Chinese-Built Highway Drove Montenegro into Crippling Debt

60 points by justin66 5y ago

snicker7 5y ago
"If Montenegro is not able to repay China's state-owned Export-Import Bank on time, the bank then has the right to seize land inside Montenegro" China's about to sprout the first of its European colonies.
- redis_mlc 5y ago
  The point of the CCP BRI debt traps are: 1) to funnel unaccounted money from US capital markets ($2+ trillion) into 2) projects that use Chinese steel and cement, that drive down mfg. costs by 20% every time volume doubles then 3) to gain influence in foreign countries, leveraged on world bodies (UN, WHO, etc.) with their votes (ie. Greece already votes with the CCP) 4) then either profit or repo the foreign infrastructure, especially ports so that 5) the CCP can occupy the ports ("string of pearls") with the world's largest navy and commercial fleets, totalling 20,000 ships. Trump/Pompeo were squeezing #1, which would have caused the whole BRI house of cards to collapse. But now we just have Biden and his puppet masters. The above is a very clever scheme. I wonder if the CCP has a million functionaries sitting around dreaming this stuff up?
- Proven 5y ago
  Oh, well, hopefully few hundred acres will be left over to accommodate the natives and a little NATO military base :-) As a kingdom Montenegro did okay, but as a thieving socialist democracy not so well. This is why democracy sucks, folks. And screw the highway - it could have been anything, who cares - power plants, renewable energy scams, who gives a crap - it's all just means to an end (profiting from government corruption). Highways were easy to sell to the idiot voters - you don't have to explain how anything works, just promise that getting from A to B will take less time and get reelected. Montenegro is now ready for the EU - they need to be able to milk the EU funds for next 10-20 years while they get back to zero and return the money to the Chinese communist government. By then they'll have a ton of German debt, like Greece and other PIGS. What a joke Europe has become... There is no solvent country left south from Germany.
- deleted 5y ago
  [deleted]
- rchaud 5y ago
  Most loans are secured with collateral. 'Right to seize land' sounds pretty alarmist. Any one of Russia, the EU or NATO would have stepped in to to broker a deal without China, if the alternative was a CCP bank scooping up swathes of territory just outside their borders.
a0-prw 5y ago
Note: "Soc, the former justice minister. ''But I don't think this is a problem from China. It is our bad decision.'' They can almost certainly renegotiate for easier conditions: Yanis Varoufakis on China vs EU conditions: https://m.youtube.com/watch?v=9tJatdtv4jQ&t=24s https://m.youtube.com/watch?v=9tJatdtv4jQ&t=24s
- runawaybottle 5y ago
  Easier conditions means privatization of something and gift wrap it to the Chinese. It’s the same loan shark tactics the IMF uses to privatize things like water: https://amp.theguardian.com/business/2007/aug/16/imf.internationalaidanddevelopment https://amp.theguardian.com/business/2007/aug/16/imf.interna...
  - anonnoamp 5y ago
    https://www.theguardian.com/business/2007/aug/16/imf.internationalaidanddevelopment https://www.theguardian.com/business/2007/aug/16/imf.interna...
saturn5k 5y ago
We have a very similar situation here in North Macedonia with Chinese built highways and a loan covered by the Chinese Export Import Bank in the amount of ~640 million euros. (Later the cost of the projects increased by ~180 million euros more.) Corrupted state officials took a 25 million euros cut for giving the contract to the Chinese construction firm Sinohydro. (This was confirmed in tapped phone conversations that were leaked to the public.) Then prime minister Nikola Gruevski that was involved in the scandal and who negotiated the "cut" is on the run in Hungary, he was granted political asylum by prime minister Viktor Orban. Gruevski was indicted for other shady deals as well and faced a prison sentence here in North Macedonia. Nearly 10 years after the projects started most of the highway corridors are not completed and they are nowhere near completion. It is also well known that a lot of the construction workers are Chinese prisoners that were brought in here to work on the highways. I am not sure if their stay in the country is somehow regulated or if they are compensated somehow. You can read more here: https://chinaobservers.eu/exporting-corruption-the-case-of-a-chinese-highway-project-in-north-macedonia/ https://chinaobservers.eu/exporting-corruption-the-case-of-a...
- powerapple 5y ago
  Corruption maybe, the prisoners allegation is most likely to be false. I know some people working in similar projects through photography hobby (a group of amateur photographers, I am mostly interested in landscapes). There are benefits working abroad, such as tax breaks, allowances and so on, it makes no economy sense to have prisoners. And I don't question their compensation as well, most of them work to support their families, that's the only reason they work.
  - codys 5y ago
    If the state or employer is required or expected to supply additional benefits to people working abroad, the benefit to the state or employer in substituting workers with less ability (legally or otherwise) to claim or obtain those benefits is even larger than it might be in-country. (I'm ignoring the obvious issue of it potentially being less legally or politically easy to handle here as the parent comment does not mention these at all). It sounds like you have an anecdote about some people you know working on these projects, but the details that seem intended to imply that it's unlikely that _any_ people working these projects are Chinese prisoners actually imply the opposite.
DrNosferatu 5y ago
Oh yes - the Government Debt Is Like Household Debt fallacy / morality tail again. https://en.wikipedia.org/wiki/Fallacy_of_composition https://en.wikipedia.org/wiki/Fallacy_of_composition
- ppf 5y ago
  They share at least one property - you go broke slowly, then very quickly.
anakaine 5y ago
Economic imperialism is how much of the western world has built empires and influence without military action. Those wishing to control, and who have the economic means to do so, offer the other party something that looks to be of mutual benefit - a new road, a Venezuelan oil refinery, a new port, etc in return for loan repayments and project sovereignty. So, the big econony offers the finance, runs the projects, goes out to tender, uses one of their own big employers so that taxes come back to them, and build something for the smaller economy that saddles them with debt that is barely able to be repayed. A failure to repay the debt will tank that countries ability to secure finance on the global market. You can offer them reduced repayments, demand extra investment opportunities, or take cuts of other income streams as a method of payment. The US has been doing this for a long time. Its one of the reasons why many South American and African nations have issues with the US. Chinas Belt and Road initiative is no different. Its economic imperialism dressed up with lipstick. The question is, what will they eventually demand in return? I suspect the most likely answer is "land".
- truetraveller 5y ago
  Ouch. Thanks for the insight. Are there any good articles on this, ideally, with verifiable facts?
  - anakaine 5y ago
    Confession of an Economic Hitman is an older, slightly conspiratorial semi autobiography that presents quite a few cases that have since played out due to the age of the text and projects, and many of the claims and examples have been corroborated. https://en.m.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man https://en.m.wikipedia.org/wiki/Confessions_of_an_Economic_H... Its a fun read, if you can make it past the slight BS at the start of the book. Once the author gets in to how the projects are set up and work, and you reflect on the bigger points, it becomes fairly clear that what is being suggested has played out as described.
    - truetraveller 5y ago
      Oh thanks. I was actually looking for something more factual/academic. Without any sensationalism. But, I'll take a look at this one in any case!
throwaway21_ 5y ago
Yeah, EU investing money - good, China investing money - bad. - Why it's bad? - Because they get influence over government. - But EU also gets even more influence when they invest money and finance myriads of NGOs? - Yeah, but that's different - we are the good guys and they are bad (even when we're doing same thing).
- dagw 5y ago
  Did you read the article? "A copy of the loan contract reviewed by NPR shows that if Montenegro is not able to repay China's state-owned Export-Import Bank on time, the bank then has the right to seize land inside Montenegro" Do EU contracts contain that sort of language? China knew they would never get paid back on this loan and made specifically to extract political and diplomatic concessions when the inevitable renegotiation happens. Furthermore China requires Chines state owned companies get the contracts for doing the work, so much of the money the lend out comes straight back to them.
  - MaheshC 5y ago
    As shown by Greece, the European Union in fact seizes wages from minimum salary workers. I don't care if a mall where I shop is owned by a French Corporation or a Chinese Corporation. But I do care if a foreigner entity comes and seizes part of my salary.
    - 7steps2much 5y ago
      Could you provide some more context and/or sources for this? The EU to my knowledge does not have the ability to seize anything from anyone.
      - aorth 5y ago
        Read about the austerity packages enforced by the EU in Greece over the last decade. Raised taxes, lowered tax brackets, restricted withdrawal of money from bank accounts, slashed pensions, cut bonuses and overtime, and on and on. Devastated Greece for years. https://en.wikipedia.org/wiki/Greek_austerity_packages https://en.wikipedia.org/wiki/Greek_austerity_packages
lloydatkinson 5y ago
I thought everyone knew this why was China seems to randomly invest in other countries infrastructure? It's not random, they hope countries can't pay for it so they get to slowly take over a country bit by bit.
- magicsmoke 5y ago
  Nationalizing the infrastructure is always an option. Unlike the US, China can't send marines around the world to seize the property.
  - devtul 5y ago
    For now. China is building its navy and aim to have maritime supremacy in 2050, with parity with the US by 2030. With more countries having China as their biggest trading partner than the US, Chinas ability to use embargoes as a political tool solidifies each day. China can wreck some countries economy if they stop trading with them, imagine forcing others to follow suit, it would break that country for good. Now pair embargoes with superior naval forces and China will be able to use their military freely while twisting the arms of any country that tries to voice opposition to it. Much like the US did in the past century, to be fair.
- bsd44 5y ago
  Yeah bad China, let's all take American loans and default on those instead!
chaosbutters314 5y ago
cant montenegro just kick them out and not pay? I mean, what's china going to do, invade them? It seems the most they could do is cut them off trade or something. I'm asking seriously.
- rchaud 5y ago
  They can. It happens more frequently than you would think, particularly where a recession hits and construction can't be completed because creditors called in loans and the workers can't be paid. They will figure out some kind of concession behind the scenes. They might offer up access to their ports or something like that.
bsd44 5y ago
All these flavours and you guys choose to be salty. :) When Greece couldn't keep up with the payments years ago Germany said "give us your islands then". Nobody bat an eyelid, but as soon as we owe money to someone who isn't a Western country then everything is wrong with the world. How about Montenegro default on an American loan instead of a Chinese loan? Would that make it better? :)

60 points by justin66 5y ago

"If Montenegro is not able to repay China's state-owned Export-Import Bank on time, the bank then has the right to seize land inside Montenegro" China's about to sprout the first of its European colonies.

redis_mlc 5y ago
The point of the CCP BRI debt traps are: 1) to funnel unaccounted money from US capital markets ($2+ trillion) into 2) projects that use Chinese steel and cement, that drive down mfg. costs by 20% every time volume doubles then 3) to gain influence in foreign countries, leveraged on world bodies (UN, WHO, etc.) with their votes (ie. Greece already votes with the CCP) 4) then either profit or repo the foreign infrastructure, especially ports so that 5) the CCP can occupy the ports ("string of pearls") with the world's largest navy and commercial fleets, totalling 20,000 ships. Trump/Pompeo were squeezing #1, which would have caused the whole BRI house of cards to collapse. But now we just have Biden and his puppet masters. The above is a very clever scheme. I wonder if the CCP has a million functionaries sitting around dreaming this stuff up?
Proven 5y ago
Oh, well, hopefully few hundred acres will be left over to accommodate the natives and a little NATO military base :-) As a kingdom Montenegro did okay, but as a thieving socialist democracy not so well. This is why democracy sucks, folks. And screw the highway - it could have been anything, who cares - power plants, renewable energy scams, who gives a crap - it's all just means to an end (profiting from government corruption). Highways were easy to sell to the idiot voters - you don't have to explain how anything works, just promise that getting from A to B will take less time and get reelected. Montenegro is now ready for the EU - they need to be able to milk the EU funds for next 10-20 years while they get back to zero and return the money to the Chinese communist government. By then they'll have a ton of German debt, like Greece and other PIGS. What a joke Europe has become... There is no solvent country left south from Germany.
deleted 5y ago
[deleted]
rchaud 5y ago
Most loans are secured with collateral. 'Right to seize land' sounds pretty alarmist. Any one of Russia, the EU or NATO would have stepped in to to broker a deal without China, if the alternative was a CCP bank scooping up swathes of territory just outside their borders.

a0-prw 5y ago

Note: "Soc, the former justice minister. ''But I don't think this is a problem from China. It is our bad decision.'' They can almost certainly renegotiate for easier conditions: Yanis Varoufakis on China vs EU conditions: https://m.youtube.com/watch?v=9tJatdtv4jQ&t=24s https://m.youtube.com/watch?v=9tJatdtv4jQ&t=24s

runawaybottle 5y ago
Easier conditions means privatization of something and gift wrap it to the Chinese. It’s the same loan shark tactics the IMF uses to privatize things like water: https://amp.theguardian.com/business/2007/aug/16/imf.internationalaidanddevelopment https://amp.theguardian.com/business/2007/aug/16/imf.interna...
- anonnoamp 5y ago
  https://www.theguardian.com/business/2007/aug/16/imf.internationalaidanddevelopment https://www.theguardian.com/business/2007/aug/16/imf.interna...

saturn5k 5y ago

We have a very similar situation here in North Macedonia with Chinese built highways and a loan covered by the Chinese Export Import Bank in the amount of ~640 million euros. (Later the cost of the projects increased by ~180 million euros more.) Corrupted state officials took a 25 million euros cut for giving the contract to the Chinese construction firm Sinohydro. (This was confirmed in tapped phone conversations that were leaked to the public.) Then prime minister Nikola Gruevski that was involved in the scandal and who negotiated the "cut" is on the run in Hungary, he was granted political asylum by prime minister Viktor Orban. Gruevski was indicted for other shady deals as well and faced a prison sentence here in North Macedonia. Nearly 10 years after the projects started most of the highway corridors are not completed and they are nowhere near completion. It is also well known that a lot of the construction workers are Chinese prisoners that were brought in here to work on the highways. I am not sure if their stay in the country is somehow regulated or if they are compensated somehow. You can read more here: https://chinaobservers.eu/exporting-corruption-the-case-of-a-chinese-highway-project-in-north-macedonia/ https://chinaobservers.eu/exporting-corruption-the-case-of-a...

powerapple 5y ago
Corruption maybe, the prisoners allegation is most likely to be false. I know some people working in similar projects through photography hobby (a group of amateur photographers, I am mostly interested in landscapes). There are benefits working abroad, such as tax breaks, allowances and so on, it makes no economy sense to have prisoners. And I don't question their compensation as well, most of them work to support their families, that's the only reason they work.
- codys 5y ago
  If the state or employer is required or expected to supply additional benefits to people working abroad, the benefit to the state or employer in substituting workers with less ability (legally or otherwise) to claim or obtain those benefits is even larger than it might be in-country. (I'm ignoring the obvious issue of it potentially being less legally or politically easy to handle here as the parent comment does not mention these at all). It sounds like you have an anecdote about some people you know working on these projects, but the details that seem intended to imply that it's unlikely that _any_ people working these projects are Chinese prisoners actually imply the opposite.

DrNosferatu 5y ago

Oh yes - the Government Debt Is Like Household Debt fallacy / morality tail again. https://en.wikipedia.org/wiki/Fallacy_of_composition https://en.wikipedia.org/wiki/Fallacy_of_composition

ppf 5y ago
They share at least one property - you go broke slowly, then very quickly.

anakaine 5y ago

Economic imperialism is how much of the western world has built empires and influence without military action. Those wishing to control, and who have the economic means to do so, offer the other party something that looks to be of mutual benefit - a new road, a Venezuelan oil refinery, a new port, etc in return for loan repayments and project sovereignty. So, the big econony offers the finance, runs the projects, goes out to tender, uses one of their own big employers so that taxes come back to them, and build something for the smaller economy that saddles them with debt that is barely able to be repayed. A failure to repay the debt will tank that countries ability to secure finance on the global market. You can offer them reduced repayments, demand extra investment opportunities, or take cuts of other income streams as a method of payment. The US has been doing this for a long time. Its one of the reasons why many South American and African nations have issues with the US. Chinas Belt and Road initiative is no different. Its economic imperialism dressed up with lipstick. The question is, what will they eventually demand in return? I suspect the most likely answer is "land".

truetraveller 5y ago
Ouch. Thanks for the insight. Are there any good articles on this, ideally, with verifiable facts?
- anakaine 5y ago
  Confession of an Economic Hitman is an older, slightly conspiratorial semi autobiography that presents quite a few cases that have since played out due to the age of the text and projects, and many of the claims and examples have been corroborated. https://en.m.wikipedia.org/wiki/Confessions_of_an_Economic_Hit_Man https://en.m.wikipedia.org/wiki/Confessions_of_an_Economic_H... Its a fun read, if you can make it past the slight BS at the start of the book. Once the author gets in to how the projects are set up and work, and you reflect on the bigger points, it becomes fairly clear that what is being suggested has played out as described.
  - truetraveller 5y ago
    Oh thanks. I was actually looking for something more factual/academic. Without any sensationalism. But, I'll take a look at this one in any case!

throwaway21_ 5y ago

Yeah, EU investing money - good, China investing money - bad. - Why it's bad? - Because they get influence over government. - But EU also gets even more influence when they invest money and finance myriads of NGOs? - Yeah, but that's different - we are the good guys and they are bad (even when we're doing same thing).

dagw 5y ago
Did you read the article? "A copy of the loan contract reviewed by NPR shows that if Montenegro is not able to repay China's state-owned Export-Import Bank on time, the bank then has the right to seize land inside Montenegro" Do EU contracts contain that sort of language? China knew they would never get paid back on this loan and made specifically to extract political and diplomatic concessions when the inevitable renegotiation happens. Furthermore China requires Chines state owned companies get the contracts for doing the work, so much of the money the lend out comes straight back to them.
- MaheshC 5y ago
  As shown by Greece, the European Union in fact seizes wages from minimum salary workers. I don't care if a mall where I shop is owned by a French Corporation or a Chinese Corporation. But I do care if a foreigner entity comes and seizes part of my salary.
  - 7steps2much 5y ago
    Could you provide some more context and/or sources for this? The EU to my knowledge does not have the ability to seize anything from anyone.
    - aorth 5y ago
      Read about the austerity packages enforced by the EU in Greece over the last decade. Raised taxes, lowered tax brackets, restricted withdrawal of money from bank accounts, slashed pensions, cut bonuses and overtime, and on and on. Devastated Greece for years. https://en.wikipedia.org/wiki/Greek_austerity_packages https://en.wikipedia.org/wiki/Greek_austerity_packages

lloydatkinson 5y ago

I thought everyone knew this why was China seems to randomly invest in other countries infrastructure? It's not random, they hope countries can't pay for it so they get to slowly take over a country bit by bit.

magicsmoke 5y ago
Nationalizing the infrastructure is always an option. Unlike the US, China can't send marines around the world to seize the property.
- devtul 5y ago
  For now. China is building its navy and aim to have maritime supremacy in 2050, with parity with the US by 2030. With more countries having China as their biggest trading partner than the US, Chinas ability to use embargoes as a political tool solidifies each day. China can wreck some countries economy if they stop trading with them, imagine forcing others to follow suit, it would break that country for good. Now pair embargoes with superior naval forces and China will be able to use their military freely while twisting the arms of any country that tries to voice opposition to it. Much like the US did in the past century, to be fair.
bsd44 5y ago
Yeah bad China, let's all take American loans and default on those instead!

chaosbutters314 5y ago

cant montenegro just kick them out and not pay? I mean, what's china going to do, invade them? It seems the most they could do is cut them off trade or something. I'm asking seriously.

rchaud 5y ago
They can. It happens more frequently than you would think, particularly where a recession hits and construction can't be completed because creditors called in loans and the workers can't be paid. They will figure out some kind of concession behind the scenes. They might offer up access to their ports or something like that.

bsd44 5y ago

All these flavours and you guys choose to be salty. :) When Greece couldn't keep up with the payments years ago Germany said "give us your islands then". Nobody bat an eyelid, but as soon as we owe money to someone who isn't a Western country then everything is wrong with the world. How about Montenegro default on an American loan instead of a Chinese loan? Would that make it better? :)