How a Chinese-built highway plunged Montenegro into deep debt: NPR

PODGORICA, Montenegro — The stretch of highway that threatens to cripple Montenegro’s economy begins in the foothills outside the capital Podgorica, where scaffolding lines a multi-lane highway closed to the public. The highway ends, for now, in isolated mountainous terrain east of the city.

The Chinese state-owned company has not yet finished construction, so cars use the old road below. The highway has not yet been paid for. The first tranche of a billion-dollar loan from a Chinese state bank is expected in July, and it is unclear whether Montenegro, whose debt has reached more than 100% of its gross domestic product at because of this project, will be able to do it. . Worse still, says former Justice Minister Dragan Soc, once completed the road will lead nowhere. “We joke: it’s a highway that goes from nothing to nothing,” he says.

The project – a 25-mile stretch of a proposed 270-mile highway that would connect the port of Bar in Montenegro, on the Adriatic Sea, to Belgrade, the capital of neighboring Serbia – not only raises questions about decisions made by the previous leaders of Montenegro and is not sustainable. debts associated with China’s ambitious infrastructure and trade initiative across multiple continents. It also has implications for China’s growing influence on the European Union’s periphery and whether the EU missed an opportunity to help Montenegro.

I can’t afford it

Montenegro’s government says the first section has put it so in debt that it can no longer afford to build the rest of the highway. “I think we may not pay this generation, but future generations,” says Soc, the former justice minister. “But I don’t think it’s a China problem. It’s our wrong decision.”

He is not the only one to criticize the previous government for having catapulted the country into historic debt with this project, signed in 2014 with the China Road and Bridge Corporation and financed by the Export-Import Bank of China. “We are now (a) victim of the very bad decision of the former government,” said an exasperated Dritan Abazovic, Montenegrin deputy prime minister. Euronews this spring with the aim of calling on the EU to come to the aid of Montenegro; THE country objectives to one day be a member of the EU.

A copy of the loan agreement reviewed by NPR shows that if Montenegro is unable to repay China’s state-owned Export-Import Bank on time, then the bank has the right to seize land in Montenegro, provided that They do not belong to the army or are used for diplomatic purposes.

Furthermore, the former government of Montenegro allowed a Chinese government court to have the final say on the execution of the contract. Deputy Prime Minister Abazovic told Euronews in May that he found the terms incredulous. “This is not normal,” he said. “This is part of a logic of national interest.”

China’s ambitions

Another source of confusion concerns why China was interested in this project in the first place. For years, Montenegro had planned to build this highway, but European banks were not interested in lending money because they did not think they would be repaid, says Milica Kovacevic, president of the Center for democratic transition, an advocacy group in Montenegro. Podgorica. Kovacevic has spent his career studying Russian investment and influence in Montenegro. “We fully understand Russian policy towards the region, and it has not changed for hundreds of years,” she says. “It was never about occupying. But it was about destabilizing and preventing any Western integration that was taking place at the time, whether in the Austro-Hungarian Empire or now in the EU and NATO. So we knew the objectives. We could “Prepare for that. For China, I don’t think anyone understands what the end goal is. ”

But Stefan Vladisavljev, program coordinator for the think tank Belgrade Fund for Political Excellence, thinks he knows. For years, he followed Chinese-funded projects in his native Serbia. He sees broader political goals for Beijing, particularly in the case of Montenegro where, despite its appeals to the EU, Brussels has refused to help repay the country’s loan to China.

“It was a good opportunity for Brussels to gain ground in the region,” said Vladisavljev. “It was a good opportunity for Brussels to show its commitment to the region.”

According to him, by not helping Montenegro, the EU has ceded its potential influence to China, which has economic leverage over the country and the region, and whose presence in this country underpins political projects wider. “The fact that the Western Balkan countries are not part of the European Union gives them the opportunity to define their foreign policy and national policy outside the EU framework,” explains Vladisavljev. “So it’s an easy way to access European territory. It’s an easy way to establish a sphere of influence in the immediate neighborhood of the European Union.”

And this is a goal that China has been working hard on in the region for years. As part of its Belt and Road Initiative, Beijing has bought the Greek port of Piraeus, making it the second largest port in the Mediterranean, and it is also building highways and railways worth billions of dollars, including a high-speed railway project linking Belgrade to Budapest.

The Chinese embassy in Montenegro declined an interview request from NPR, as did several members of Montenegro’s government. Vladisavljev believes the government’s sudden silence – after reaching out to the world press when it needed EU help earlier this year – is a sign that Montenegrin officials are in talks with Beijing to restructure the loan conditions. This is something Beijing has done with other Belt and Road projects over the past year.

“It’s like buying a Ferrari”

Meanwhile, outside the capital, Chinese construction crews are putting the finishing touches on the toll and tunnel for the new section of highway. Mladen Grgic, a research associate at the European Institute of Asian Studies, says that for all its problems, it is the most beautiful road his country has ever known. “For Montenegro, having such a highway is like buying a Ferrari with the average salary,” he says. “And then you think, oh, maybe I don’t have money for gas.”

Grgic is finishing his doctoral thesis on Chinese projects like this in the Balkans and, he says, they all have one thing in common. “These kinds of projects are always political,” he says. “And that’s basically how everything happens in the Balkans. You use public money to redistribute it to your network of cronies… and then you use it for political purposes, and so on.”

Today, he says, that corruption is facilitated by money from a rising superpower eager to wield influence.

Abazovic, the deputy prime minister, said in an interview in May that he was open to opening an investigation into allegations of corruption among members of the previous government over the China-built highway. But that was before he stopped speaking to the international press; before the EU rejected its request for aid; before his government begins negotiations with Beijing on how to repay the money it owes China.

So far, no corruption investigation has been opened.