The European Union says it will not pay off Montenegro's near-US$1 billion debts to China, rejecting the tiny Balkan nation's repeated pleas for January 28, 2020 - Adam Balcer - Analysis Issue 1-2 2020 Magazine. Chinese Exim Bank is Montenegros largest bilateral lender, accounting for a whopping 17% of total foreign debt. Montenegro is, after all, a Nato member state. Many media renew and even reinforce the criticism of this globally useful project, baselessly accusing Chinese Take Sri Lankas Hambantota Port. The $1 billion loan is nearly a fifth the size of the countrys entire economy. To make its debt trap score, China uses concessional loans that often come at commercial interest rates and long repayment dates. L aos has become the latest country to fall into Chinas dangerous debt-trap, Reuters reported on September 4, noting that the nation has been forced to cede majority control of its electrical grid to its giant neighbor to the north. Heres how Chinas infamous debt trap works: First, China offers to build and finance infrastructure projects in a developing country even if Serbia's debt to China is much lower in relation to GDP, but huge billions have yet to be calculated. By Jeremiah Jacques September 18, 2020. In the last few years, the question of whether Chinas Belt and Road Initiative (BRI) is predatory has been ripe for A prime example of Chinas debt-trap diplomacy. However, some suggest that it is a plan to further China's ambitions using "predatory loans" and "debt traps" to bring nations' under their sphere of influence. As Montenegro struggles to stay afloat financially having to repay a large Chinese loan, the EU refuses to help Montenegro, providing an excellent opportunity for China to get more than a foothold in the country. 1 Through the BRI, Mongolia, Montenegro, Pakistan, Kyrgyzstan, and Tajikistan. The European Union, meanwhile, has refused to bail out the tiny Balkan republic of Montenegro for mortgaging itself to China. 'ROADS TO NOWHERE' Meanwhile, The Chinese-built Mombasa-Nairobi Standard Gauge Railway in Kenya was supposed to weave 290 miles from the country's coast all the way to Uganda. The loan increased Montenegro's debt to about 78 per cent of its GDP in 2019. I have reported on the way Chinas political stances in Central Asia revolve around the BRI. The same could happen to Bar port in Montenegro. These financial crises illustrate the dangers of Chinas debt-trap diplomacy and its Belt and Road Initiative (BRI) to developing countries, as well as the national security threat they pose to the United States. Eight Countries In Danger Of Falling Into Chinas Debt Trap (Quartz) 2018 From the article: Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government. Additionally, Chinas debt empire has also been rearing its head in the Pacific, prompting fears the country intends to leverage the debt to expand its military footprint into south pacific. Debt-Trap Diplomacy: EU Rebuffs Montenegros Plea to Help It Repay Chinas $1B Loan the EU accession candidate into a debt crisis. Chinas Belt and Road Initiative: Heightened Debt Risks to Countries . In October 2018, Vice President Mike Pence said that China engages in debt-trap diplomacy, and elaborated, China uses so-called debt diplomacy to expand its influence. It is unclear where the money will come from or how Montenegro, a country with a GDP of $5.9bn, will repay its existing debt to China. The European Union says it will not pay off Montenegro's near-US$1 billion debts to China, rejecting the tiny Balkan nation's repeated pleas for March 2, 2021, 10:06 AM. It has been clearly debt-trapped by Beijing. Partners. This highway is designed to Roads to nowhere, abandoned railways and half-built bridges China has been accused of using debt trap projects to ensnare poorer countries and expand its power worldwide. Although the road, which is also being built by a Beijing-owned company, is years behind schedule, Chinas state development bank isnt offering Montenegro a break on its repayment. Montenegro, a country of ancient villages and vertiginous mountains that split from Serbia in 2006, has long suffered from poor roads and rail lines. The clearest case of debt trap diplomacy in the Western Balkans is that of Chinas highway project in Montenegro. Palabras-clave: Sistema sinocntrico; China; Estrategia; BRI; Debt trap. The following article is reproduced here in it's entiety from the Center for Global Development. The latest victim of Chinas debt-trap diplomacy is the small, resource-rich nation of Laos, that is reportedly struggling to avoid a sovereign default. It is portrayed as the case par excellence for Chinas debt-trap diplomacy. Montenegro, the first victim of Chinas debt-trap diplomacy. The IMF estimated the project would cost another $1.2 billion to complete - and its feared China could seize land in Montenegro to cash in its debts. And worse still, it hasnt got any viable or useful infrastructure in return. Montenegrin leaders In March, Montenegros government lobbied for a bailout from the EU as it grappled with a huge debt payment to China. Chinas International Highway (BRI). The EU refused and the country turned to the banks. "Its a (Debt) Trap! The public debt in Montenegro, a state of 600,000 people on the Adriatic coast, stood at 97 percent of GDP last year and the coronavirus pandemic has wrecked the tourism industry, its main source of income. It is unclear where the money will come from or how Montenegro -- a country with a GDP of 4.9 billion euros -- will repay its existing debt to China. Montenegro is already in trouble. Inside Chinas debt traps costings BILLIONS as MI6 chief issues warning AS Beijing extends its influence under its ambitious Belt and Road Initiative, poor countries across Asia and Africa have been wooed by attractive Chinese loans and Beijings creation of man-made islands in the disputed South China Sea for use as military bases suggests the concern may be warranted. It is financed by a loan from China. Beijing has built only one highway in Montenegro through a Chinese loan of about $1 billion. The number of tourists entering Montenegro decreased significantly, further saddling the country with overwhelming debt and economic hardships. China currently holds around one-quarter of Montenegros total debt. The massive jump in the debt has forced the nation to ask for help from the EU and the US. The issue of the Chinese debt trap is groundless for a couple of reasons. left with. Reuters recently reported that the South Asian nation is handing over the majority control of the national electric power grid to China Southern Power Grid Company, a state-owned enterprise headquartered in Guangzhou. However, some suggest that it is a plan to further China's ambitions using "predatory loans" and "debt traps" to bring nations' under their sphere of influence. Montenegro represents one of the clearest examples of the so-called debt-trap diplomacy China is using to extend its influence in the Balkans and beyond, by offering considerable funds to local authorities to build large infrastructure, with the risk of making the receiving countries economically and politically dependent from Beijing. Author and analyst Brahma Chellaney coined the phrase debt trap diplomacy in 2017 to describe how China leverages excessive debt for infrastructure projects in countries that are strategic centers for its Belt and Road Initiative (BRI). Beijing [China] August 31 (ANI): Montenegro may be forced to cede part of its territory to Beijing as the country is staggering under USD If The Montenegrin plea to Brussels comes after the national public debt shot up to devastating 103.28% of GDP in December 2020. Now Djibouti, home to The first instalment on a $1 billion loan from China's state bank is due this month but it's unclear whether Montenegro, whose debt has soared to more than double its GDP because of the project, will be able to pay it back. Montenegros indebtedness also exploded from 76.5 to 103.3 percent of GDP during the year. [] Along these two dimensions, we identify eight countries where BRI appears to create the potential for debt sustainability problems, and where China is a dominant creditor in the key position to address those problems. We next describe the credit risk that China faces in each of the eight countries. That is how in 2017 China got a 99-year lease on a strategic Indian Ocean port in Sri Lanka. In 2014, Montenegro successfully concluded negotiations with Chinese partners to finance a highway project which would connect the Montenegrin coastal city of Bar with Serbias capital, Belgrade. There is, of course, a sound business logic in the EUs reluctance to Some Europeans are uneasy to find Chinas debt imperialism strategy, so effective in places like Sri Lanka and Djibouti, reaching their doorstep in Montenegro. Road to nowhere: Montenegro is $1 billion out of pocket to Huge collection, amazing choice, 100+ million high quality, affordable RF and RM images. EU punts chance to override Chinas BRI in the Balkans. The public debt in Montenegro, a state of 600,000 people on the Adriatic coast, stood at 97 percent of GDP last year and the coronavirus pandemic has wrecked the tourism industry, its main source of income. But Chinese officials have strenuously denied any ulterior motive to the investment in Montenegro and the wider region. concentration of that debt with China as creditor. If Montenegro cannot pay, it faces arbitration in Beijing and could be forced to give up control of key infrastructure, according to a copy of the contract seen by AFP. China has been widely criticised for saddling small countries with unmanageable debt as part of its global Belt and Road Initiative. A real game changer in the region. Since these statistics are based on June 2107, while Pakistans total external debt and liabilities have constantly increasing from $83.1 billion then to $88.9 billion by Dec17 and still growing. Is Serbia falling into China's debt trap? But Chinese officials have strenuously denied any ulterior motive to the investment in Montenegro and the wider region. Eastern Europe has criticised China's plans of connectivity in the continent. The first is so-called debt-trap diplomacy where China directly acquires critical infrastructure in a country that is unable to service its debt. The European Union announced on 15 September that it was launching a new investment program called the Global Gateway to counter Chinas controversial development programme, the Belt and Road Initiative (BRI), which has left many poor countries with huge debt burdens. No need to register, buy now! Story over in Germany. First, no matter the percent of the debt, which is around one- third of Montenegrin annual GDP and onethird of the total Montenegrin debt, it is pretty sure that Montenegro can pay off the debt. It is unclear where the money will come from or how Montenegro -- a country with a GDP of 4.9 billion euros -- will repay its existing debt to China. Despite its popularity and importance in Montenegro, the highway has drawn the ire of the Western media, which has dubbed the project a "debt trap," alleging that the Chinese-aided project would bankrupt the Balkan country. In the Western Balkans, by contrast, citizens know the crisis was merely postponed, and they are watching to see whether the next German government learns the Critics worry that it will use financial leverage to boost its political power, in what they dub "debt-trap diplomacy". The Montenegrin governments request to the Commission of the European Union to help it repay the debt to Chinas ExIm bank for the construction of the highway serves as a further indictment of the Belt and Road Initiative. If we add the current years debt inflow of $1.6 billion so far, Pakistans total debt liabilities to China stand around $19 billion. In both cases, China wins, Europe loses. The majority of the debt is to foreign lenders, representing 91.46% of the countrys GDP. Sri Lanka is often cited as the textbook case of Chinas debt-trap diplomacy. But Djibouti, Fiji, the Maldives, Montenegro, Pakistan, Tonga and Zambia are all in similarly precarious positions, thanks largely to a lack of transparency in Chinas bri loans. Montenegro, a Balkan country that is expected to join the European Union, has fallen into Chinas Belt and Road debt trap with debts of 4.33 billion euros (about 145.677 billion Taiwan dollars), accounting for 103% of its GDP. The IMF has been doing the "debt trap" game for decades. If Podgorica does default on the loan, China can access land and assets in Montenegro as collateral. Critics worry that it will use financial leverage to boost its political power, in what they dub "debt-trap diplomacy". Montenegros finance minister on Friday (16 April) tried to ease concern over a near $1 billion Chinese-backed road project, insisting the While we are on the subject of infrastructure, I want to take a moment to talk about how a highway in little Montenegro is playing out in the larger geopolitical struggle with China. The International Monetary Fund once believed that the country could no longer afford any new debt. China in this context may appear to be an honest broker and friendly investor, but could a Montenegro-style debt trap await? If Montenegro cannot pay, it faces arbitration in Beijing and could be forced to give up control of key infrastructure, according to a copy of the contract seen by AFP. These countries will all face rising debt-to-GDP ratios beyond 50 percent [] Source: Gerstel, Dylan. The latest to fall prey to Chinas debt-trap diplomacy is Laos, which recently signed a 25-year concession agreement allowing a majority Chinese-owned INTRODUO Nos ltimos anos, tm-se observado e estudado a onda de crescimento chinesa e a forma com que o pas surge como uma nova aposta no sistema internacional, principalmente no que concerne aos campos poltico-diplomtico e socioeconmico. China in this context may appear to be an honest broker and friendly investor, but could a Montenegro-style debt trap await? The latest film by the Centre for Investigative Journalism of Montenegro with a very symbolic name Put svile (Silk Road) provides a critical analysis of Chinese loans to Montenegro and poses serious questions, most of which are avoided by local politicians. 1. Why do the Balkan countries borrow from China at all and how much corruption is at stake? May 7, 2021 - Visar Xhambazi - Articles and Commentary. by David Hutt April 14, 2021. DEBT TRAP. Eight Countries In Danger Of Falling Into Chinas Debt Trap (Quartz) 2018 From the article: Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government. Montenegro is building one of the most expensive highways in the world. Montenegro, the first victim of Chinas debt-trap diplomacy. Montenegro is working with European officials and financial institutions to refinance a $1 billion debt to China, taken out by the previous However, it is essential to note that China holds about one-third of Montenegros total debt, which reached 103% last year. Read more: Montenegro is at the risk of turning into the first country fully colonised by China, but Russia wont allow that While some Western sources claimed that Chinas debt book diplomacy uses strategic debts to gain political leverage with economically vulnerable countries across the Asia-Pacific region and Africa, other China-inclined sources claim the opposite based on several cases taking place. Montenegro are affected by the Be lt and Road debt, given that they owe not only China but the IMF and the World Bank as well (Fernholz, 2018). Montenegro is the smallest country in the Balkans, with a population of just over 600,000. Montenegro has learned the risks of partnering with China the hard way. Last year, with more than $1 billion in debt to China, Sri Lanka handed over a port to companies owned by the Chinese government. For the sake of comparison, according to the data of the World Bank, in 1999, after several months of bombing, Serbia had an economic decline of 9.4 percent. Reuters recently reported that the South Asian nation is handing over the majority control of the national electric power grid to China Southern Power Grid Company, a state-owned enterprise headquartered in Guangzhou. A European Union official dubbed the Chinese project a road to nowhere because it is impossible for Montenegro to borrow enough money to complete construction. An island country in South Asia, Sri Lanka is portrayed as a country that has fallen into Chinas debt trap due to the China-financed public investment projects. Today, that country is offering hundreds of billions of dollars in infrastructure loans to governments from Asia to Africa to Europe to even Latin America. The term was coined by Indian academic Brahma Chellaney.. [] The latest victim of Chinas debt-trap diplomacy is the small, resource-rich nation of Laos, that is reportedly struggling to avoid a sovereign default. Montenegros first debt payments are due this summer. 26 Apr 2021, 2:00 pm. Montenegro is teetering on the edge of an alleged Chinese debt trap but EU refuses to lend a helping financial hand. Debt-trap diplomacy is a term in international finance which describes a creditor country or institution extending debt to a borrowing nation partially, or solely, to increase the lender's political leverage. Hambantota Port was one such investment project, which was leased to China Merchant Port Holdings Limited for 99 years for $1.12 billion in 2017. Therefore, Vujanovi does not believe in a debt trap scenario like in Sri Lanka. Chinas debt-trap diplomacy is a myth. The International Monetary Fund once believed that the country could no longer afford any new debt. Find the perfect China and debt stock photo. If A Reuters report said that the Chinese loan for the highway "sent Montenegro's debt soaring." Mongolia, Montenegro, Pakistan, and Tajikistanare at a high risk of debt distress due to BRI loans. Issue 1-2/2022: Tug of war? Debt to China has grown from zero to as much as 640 million euros (15.3 percent of GDP) since 2014. If the past two years have anything to show, it is that Montenegro-China relations are a self-fulfilling prophecy. Montenegro, a Balkan country that is expected to join the European Union, has fallen into Chinas Belt and Road debt trap with debts of 4.33 billion euros (about 145.677 billion Taiwan dollars), accounting for 103% of its GDP. Montenegro, one of the presumed front-runners of the EU accession process, is facing