Agreements with the Asian country say that China can obtain immediate refunds at any time, as well as request land or natural resources as compensation
The case is worthy, as is often the case in the Balkans, of a screenplay. As main players, Montenegro, China, and a series of agreements signed in 2014 for the construction of very expensive infrastructure, the Bar-Boljare highway, also known as “the highway that goes nowhere”. The real protagonist, however, is the small print that came in those documents.
The work was started thanks to a millionaire loan from the Chinese bank Exim – some 1,000 million dollars to be repaid in two decades, according to an estimate – and commissioned to another state company, China Road and Bridges (CRBC), responsible until now for the construction of the first section of the work, about 40 kilometers.
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The problem?
This section has not even been completed, the highway still does not generate a single penny indirect benefits, and, however, as of July, Montenegro, a tiny country, will have to start paying back its debt. This is established in the signed contract, which is subject to Chinese law.
If Montenegro does not manage to pay its debt on time – and the unfortunate highway will not be of any help in this regard: the planned section represents only a quarter of the 170 kilometers planned in the entire project, which still lacks a secure financier – you will face a serious problem. Beijing has a history of appropriating resources from those countries that have not been able to pay off their debts.
It was the case, which then went around the world, of the 99-year rental of the Hambantota port, which Sri Lanka ceded in 2017 after the Chinese authorities refused to renegotiate a series of debts that the country was unable to repay.
This is where the fine print comes in: the agreements with the Asian country provide that China can obtain immediate refunds at any time, as well as requesting land or natural resources as compensation
There have been few who have wondered if this has been the strategy planned by the Chinese from the beginning. However, according to researcher Mladen Grgic, this is probably not the case.
Although it was obvious that lending someone the equivalent of 30% of its GDP is problematic, particularly in the case of a small and relatively fragile economy, which basically depends on tourism and the service sector.
Dejan Milovac, director of the non-governmental organization MANS and an analyst in the contrast to organized crime and corruption, sums up the situation:
Will China end up buying Montenegro? I don’t think they are interested in Podgorica (the capital of the country).
Now, they could have an interest in taking over our hydrocarbons or, for example, with the strategic port of Bar. They are definitely not options that can be ruled out if Montenegro finally fails to pay the highway loan.
Tsunami in Brussels
Beyond the country, the case also poses a considerable problem for the European Union: Montenegro, which has been a member of NATO since 2017 and is in a strategic position on the Adriatic, is also one of the candidate countries to join the club European. Hence, the situation caused a small tsunami when last March the country’s Deputy Prime Minister, Dritan Abazović, publicly declared that he was asking for the EU’s help to repay the debt contracted with Beijing.
It seems to be a logical response to replace a bad loan with a new one, which would be easier for Montenegro to repay.
the Montenegrin politician said at the time.
The bold request sat Brussels like a shot and Podgorica was forced to back down. After European Commission spokesmen leaked that the bloc will not pay “the debts a country contracted with a third party,” the Montenegrin government retracted what was said and began to ensure that it has the money to pay Beijing its share for this year. This did not end, however, with controversies and resentments over the danger posed by the possibility of the Montenegrin economy either entering a state of clinical death or, worse, its link to the Asian giant becoming a tie for decades.
“The Montenegrin dilemma of the EU”, Majda Ruge and Vladimir Shopov called it in an analysis published by the European Council on Foreign Relations, in which they highlighted that the resounding no from Brussels also had the disastrous effect of causing a drop in bonds governments of the country. Rather, according to Ruge and Shopov, the EU should develop a “rigorous, long-term strategy” to counter the growing presence of China and Russia in the Western Balkans.
Analysts also reminded the EU that it is now moving on the mined ground. This, because the economy of the Balkan nation is strongly affected by the pandemic: GDP fell by 15% last year and its foreign debt reached 91.6% (that of the highway is equivalent to 16.7% of the total).
The Chinese, of course, have defended their investment, which was once seen as a bad idea by both French and US feasibility studies and the EU itself. After the controversy, the Chinese embassy in Podgorica issued several statements in which it denied that Chinese investments respond to “geopolitical” reasons. These loans “do not represent a threat to the security of the country or interfere in the internal affairs of the countries of the region,” says Chinese diplomacy, which says it is willing to work with the authorities of the Balkan country in favor of “mutual cooperation. beneficial “.
Said and done: after the European snub, the Minister of Finance, Milojko Spajić, met with the Chinese ambassador, Liu Jin, in a meeting in which they spoke of greater cooperation and the possibility that the vaccines produced in the giant Asian are authorized in Montenegro.
State secret
The issue remains far from resolved, as noted by analysts such as Milovac, whose organization has denounced the multiple confusing and potentially damaging clauses of the deal.
“Why, if not, have the Montenegrin authorities refused to disseminate information related to the project, claiming state secrecy, and have there been only two or three hearings in Parliament on the subject?”
The investigator assures that his institute also revealed that around 400 million dollars of the first section of the highway were allocated to companies linked to the current president of Montenegro, Milo Dukanović.
Others, like Grgic, have put on the table the “infeasibility” of the project.
“The section built so far, at a very high cost and not yet completed, is only a quarter of the total length planned for the highway. And it is very unlikely that Montenegro will find the rest of the money it needs because of the high debt contracted with the Chinese, “says the analyst.
It does not see China as primarily responsible for the mess, but rather “the deeply corrupt elite that has ruled Montenegro for the past 30 years,” referring to the previous Montenegrin government, toppled by a slim margin last year by the current ruling coalition of Montenegro, Serbian and pro-Russian nationalists.
The project raises blisters in almost all sectors of the population. Environmentalists, for example, point to the damage that the construction of the highway has done to the Tara River, a UNESCO world heritage site. A case in which a local prosecutor’s office has already opened an investigation. Also, the NEPA, Montenegro’s agency for the protection of nature and the environment, denounced last year that the Chinese ignored its warnings to protect the river. Likewise, the agency pointed out that the construction has caused the turbidity of the waters and the destruction of part of the biodiversity of the stream.
Such has been the outrage that, finally, the Chinese construction company was forced in recent weeks to promise to repair the damage caused, something that has not calmed the spirits of environmentalists.
“We have doubts about the quality of the rehabilitation proposed by CRBC, given that if they had done their job correctly, the Tara River would not be in the situation it is in now,” explained Liliana Jokic, of the United Civic Movement for Reform Actions, explained in statements to RFERL.
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Revyuh contacted Montenegro’s Investment Minister, responsible for the construction of the highway, and Ivan Brajovia, Minister of the Government of Dikanovic, but did not get a response.
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