A Chinese-Built Highway Drove Montenegro into Crippling Debt
npr.org
npr.org
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...
edit: Missed this comment which essentially answers my question:
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.
Selling drugs may be more profitable, but you still prefer a developer job. You cannot apply logic that way.
These are state companies, they are responsible for hundreds of thousands employees if not more, those people need jobs. And most jobs require training and expertises. Anyway, we are living in parallel worlds now. I am trying to chip in whenever I can.
http://www.asianews.it/news-en/Chinese-prisoners-used-as-lab...
https://www.moroccoworldnews.com/2013/11/111829/morocco-chin...
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".
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.
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.
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.
China's about to sprout the first of its European colonies.
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.
I'm asking seriously.
They will figure out some kind of concession behind the scenes. They might offer up access to their ports or something like that.
They can almost certainly renegotiate for easier conditions:
Yanis Varoufakis on China vs EU conditions:
https://amp.theguardian.com/business/2007/aug/16/imf.interna...
- 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).
"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.
You don't care if a foreign power controls a mall - but that is not the same as controlling ports / other infrastructure.
You can tax every person's salary by ramping up fees at the ports, or destroy all the malls in the country via the port.
I'm not saying it's a bad deal or a good deal - I don't know enough about all the effects.. but there isn't much difference in taking some money from a paycheck and making everything you buy with said paycheck more expensive for example.