6 ms·

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 econom

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!
truetraveller 5y ago
Also, what if the country says "sorry, you cheated us, we're not gonna pay. get lost"?
- anakaine 5y ago
  Thays the equivalent of defaulting on an international monetary loan. So either: Contractual penalty clauses are activated Credit rating is dinged and the country cannot secure international finance Trade sanctions among financiers allies Reputation damage
  - magicsmoke 5y ago
    Contractual penalty clauses are activated: Good luck collecting, get lost. Credit rating is dinged: In the eyes of the lenders that debt trapped you. Why would you still want to be rated well by them? Country cannot secure international finance: Continuing to secure financing from the people trying to debt trap you is a good idea? Reputation damage: Same idea, why do you want to keep your reputation up with debt trappers? Trade sanctions among financiers allies: This one actually has teeth. Don't pay your debts, don't get to trade with your debtors until you do. Hence why Iran and Cuba are locked out of trade with western countries due to their nationalization of western capital. Taking on debt as a precondition to accessing a trading bloc so they get you hooked onto trade and can use that as leverage to force you to pay up is a pretty good power play. Of course, that leverage decreases if have other trade blocs as options.
    - rchaud 5y ago
      > Credit rating is dinged: In the eyes of the lenders that debt trapped you. Why would you still want to be rated well by them? Chinese loans don't have the strings that IMF loans come with. The latter will usually make the loan conditional on reforming monetary/fiscal policy changes and even business law. For example, the loan might require a lowering of trade or investment barriers for foreign investors, and it would be rationalized as a way to make the economy more dynamic. Or make it more vulnerable to the whims of international capital movements.
laurent123456 5y ago
The politicians in these countries are often corrupt and happily defraud the state, which doesn't help with repaying debts.
- deleted 5y ago
  [deleted]
beepboop77 5y ago
I’m sorry but I don’t think that’s true. While the US has used military pressure/invasion there are little to no loans with such predatory terms. In fact the US gives a significant amount of aid to countries with few conditions.

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!

truetraveller 5y ago

Also, what if the country says "sorry, you cheated us, we're not gonna pay. get lost"?

anakaine 5y ago
Thays the equivalent of defaulting on an international monetary loan. So either: Contractual penalty clauses are activated Credit rating is dinged and the country cannot secure international finance Trade sanctions among financiers allies Reputation damage
- magicsmoke 5y ago
  Contractual penalty clauses are activated: Good luck collecting, get lost. Credit rating is dinged: In the eyes of the lenders that debt trapped you. Why would you still want to be rated well by them? Country cannot secure international finance: Continuing to secure financing from the people trying to debt trap you is a good idea? Reputation damage: Same idea, why do you want to keep your reputation up with debt trappers? Trade sanctions among financiers allies: This one actually has teeth. Don't pay your debts, don't get to trade with your debtors until you do. Hence why Iran and Cuba are locked out of trade with western countries due to their nationalization of western capital. Taking on debt as a precondition to accessing a trading bloc so they get you hooked onto trade and can use that as leverage to force you to pay up is a pretty good power play. Of course, that leverage decreases if have other trade blocs as options.
  - rchaud 5y ago
    > Credit rating is dinged: In the eyes of the lenders that debt trapped you. Why would you still want to be rated well by them? Chinese loans don't have the strings that IMF loans come with. The latter will usually make the loan conditional on reforming monetary/fiscal policy changes and even business law. For example, the loan might require a lowering of trade or investment barriers for foreign investors, and it would be rationalized as a way to make the economy more dynamic. Or make it more vulnerable to the whims of international capital movements.

laurent123456 5y ago

The politicians in these countries are often corrupt and happily defraud the state, which doesn't help with repaying debts.

deleted 5y ago
[deleted]

beepboop77 5y ago

I’m sorry but I don’t think that’s true. While the US has used military pressure/invasion there are little to no loans with such predatory terms. In fact the US gives a significant amount of aid to countries with few conditions.