Montenegro disbursed $ 1 billion for China
Perched atop huge cement pillars that dominate Montenegro’s scenic Moraca River canyon, sits an incomplete highway that threatens to ruin the tiny nation of the Balkans.
China Road and Bridge Corporation, the state-owned company that is building the bridge with imported Chinese workers, has yet to complete construction of the first section of the 270-mile highway to Belgrade, the Serbian capital.
The first tranche of a billion dollar loan from the Chinese state bank is due this month, but it is not known whether Montenegro, whose debt has more than doubled its GDP because of the project, will be able to reimburse it.
A copy of the loan agreement reviewed by NPR shows that if Montenegro misses the deadline, Beijing has the right to seize land inside the country – as long as it is not owned by the military or used for diplomatic purposes.
In addition, the country’s former government has given the green light to a Chinese arbitration tribunal to have the final say in any contract disputes.
Deputy Prime Minister Abazovic said in May the terms were ridiculous.
“This is not normal,” he told Euronews. “This is outside of any sort of national interest logic.”
Stretching from the Montenegrin port of Bar on the Adriatic Sea to landlocked Belgrade, the route is at the heart of an intense debate over Chinese influence in Europe, both within EU member states and countries aspiring to join. the bloc such as Montenegro and its Balkan Neighbors, Serbia, Macedonia and Albania.
As Beijing expands its economic reach under the ambitious Belt and Road Initiative (BRI), poor countries in Asia and Africa have benefited from attractive Chinese loans and the promise of transformative infrastructure projects.
This allowed them to develop in ways that might not have been possible without access to China’s vast foreign exchange reserves.
But some countries, like Sri Lanka, Djibouti and Mongolia, have found themselves burdened with debt and increasingly dependent on Beijing’s largesse.
Montenegro is the first country in Europe to find itself in this position with what has been dubbed “the highway to nowhere”.
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The government says the first 25-mile section of the proposed 270-mile highway has them so much in debt that it cannot afford to build the rest.
Justice Minister Dragan Soc told NPR: “We’re kidding: this is a freeway from nothing to nothing.”
He added, “I think we may not pay this generation, but future generations. But I don’t think it is a China problem. It is our wrong decision.
The idea of building a highway from the coast to Serbia dates back to 2005, a year before Montenegro voted for independence from its neighbor.
The project was championed by Milo Djukanovic, who has been President or Prime Minister of Montenegro almost continuously since 1991.
The government hoped that the highway would give an economic boost to the underdeveloped north of the country, strengthen trade with Serbia, and improve road safety, as Montenegro’s narrow and winding mountain roads are notoriously dangerous.
“This highway is a big problem in Montenegro. It reminds people of Tito of the days of great socialist projects in the region, ”said academic Mladen Grgic, referring to the longtime communist leader of the former Yugoslavia, Josip Broz Tito.
– But it’s a trap. Now that it has started, politicians can’t stop it – no matter how harmful it might be. And frankly, they don’t want to, ”said Grgic, author of a 2017 highway study.
The six countries of the Western Balkans – Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia – are surrounded by EU member states. But the region has suffered from underinvestment and poor governance since the wars of independence of the 1990s, making it economically backward.
Over the past decade, as the EU grapples with a succession of crises and put the bloc’s enlargement on hold, other powers, including Russia and Turkey, have stepped in to fill the void.
China has been particularly active. In 2012, he started organizing annual “16 + 1” summits with Eastern and Southern European states to discuss investment opportunities, infuriating Brussels.
A year later, he unveiled BRI, his grand plan to secure land and sea trade routes from Asia to Europe and Africa.
The Western Balkans, strategically positioned on the southern flank of Europe, is a key entry point for China to reach Central Europe and beyond.
China’s investments in the region total more than 6 billion euros – including highways, railways and power plants. Serbia, the region’s largest economy and long-time Beijing ally, has won the lion’s share.
Montenegro could be attractive to China for a number of reasons. This gives Beijing a port of entry to Europe from the Adriatic, and close economic and political ties with the Podgorica government could prove invaluable to China if Montenegro becomes a member of the EU.
Abazovic, the deputy prime minister, said in an interview in May that he would consider opening a corruption investigation into the previous government’s decision to support the Chinese highway.
But since then he has started talks with Beijing on how to repay the money Montenegro owes and has stopped talking to the international press and no longer appealed to the EU for help.