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Road deal with China blamed for catapulting Montenegro into historic debt: NPR

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In southeastern Europe, Montenegro needed a good road and China offered to build it. Montenegro is not sure now that it can afford it and owes China the equivalent of a quarter of its economy.


The small mountainous country of Montenegro in southeastern Europe needed a good road. China offered to build it. And now Montenegro owes China the equivalent of a quarter of its economy, and Montenegro is not sure it can pay. Now this path is part of a larger drama about a battle for influence in countries outside the European Union. Here’s Rob Schmitz from NPR.

ROB SCHMITZ, BYLINE: The 25-mile section of the highway that threatens to take over Montenegro’s economy begins here in the mountains outside the capital Podgorica. The multi-lane highway is lined with scaffolding. The Chinese construction company has not finished it yet, so the cars are using the old road below it. Nor has it been paid yet. The first payment on the $ 1 billion loan is due in July, and it is unclear whether Montenegro will be able to pay the money back to China. What’s worse, says former Justice Minister Dragan Soc, once completed, the road will lead nowhere anyway, at least not yet.

DRAGAN SOC: We make a joke, so it’s a highway from nowhere to nowhere.

SCHMITZ: That’s because the road runs out in the middle of the mountains, a small 25-mile section of a proposed 270-mile highway that aims to connect the port of Bar de Montenegro on the Adriatic Sea with Belgrade, the capital. from neighboring Serbia. The Montenegrin government says the first section alone made it so indebted that it can no longer afford to build the rest.

SOC: And I think we will pay, maybe not this generation, but future generations. But I don’t think that’s the problem with China. That is our bad decision.

SCHMITZ: You are not the only one blaming the previous government for catapulting the country into historic debt with this project, which was signed in 2014 with a Chinese state contractor and financed by a Chinese state bank. Earlier this spring, Montenegro’s Deputy Prime Minister Dritan Abazovic Soviet spoke to European media in an effort to call on the European Union to come to Montenegro’s rescue. Montenegro aspires to be a member of the EU one day.

DRITAN ABAZOVIC: Now we are victims of the terrible decision of the previous government.

SCHMITZ: A copy of the loan agreement reviewed by NPR shows that if Montenegro is unable to repay China’s state-owned Export-Import Bank in time, the bank could confiscate land within Montenegro as long as it does not belong to the military or is used for non-military purposes. diplomats. In addition, the former government of Montenegro approved allowing a Chinese government court to have the final word on the performance of the contract. Deputy Prime Minister Abazovic told Euronews in May that these terms are incredible.


ABAZOVIC: And I don’t understand what kind of people are officials of the previous government that signed the agreement that if something happens, hypothetically, someone can take their land. This is not normal. This is out of any kind of national interest logic.

SCHMITZ: Another source of confusion is why China was interested in this project in the first place. For years Montenegro, which has poor infrastructure, had plans to build this highway, says Milica Kovacevic. But European banks weren’t interested because they didn’t think they would get the money back. Kovacevic, president of the Center for Democratic Transition in Podgorica, has spent her career studying Russian investment and influence in Montenegro.

MILICA KOVACEVIC: We fully understand Russian policy towards this region, and it did not change for hundreds of years. It was never to occupy, but it was to destabilize and prevent any Western integration that existed at that time, whether it was the Austro-Hungarian Empire or now the EU or NATO. So we knew the objectives. We could prepare for that. For China, I don’t think anyone understands what the end goal is.

SCHMITZ: But Stefan Vladisavljev thinks he knows. For years, the foreign policy analyst has been monitoring Chinese-funded projects in his home country, Serbia, and sees broader policy goals for Beijing, especially in the case of Montenegro, where, despite its pleas to the EU, Brussels refused to help repay its loan to China.

STEFAN VLADISAVLJEV: It was a good opportunity for Brussels to gain ground in the region. It was a good opportunity for Brussels to show its dedication to the region.

SCHMITZ: You say that by not helping Montenegro, the EU has ceded potential influence to China, whose presence there underlies a broader political plan.

VLADISAVLJEV: The fact that the Western Balkan countries are not part of the European Union gives them the opportunity to create their foreign policies and their national policies outside the EU framework. Therefore, it is a simple way to access the European territory. It is the easiest way to establish a sphere of influence in the immediate neighborhood of the European Union.

SCHMITZ: And that’s something, he says, that China has been working hard on in the region for years. Under its Belt and Road initiative, Beijing bought the Greek port of Piraeus, making it the second largest part of the Mediterranean. And it is also building billions of dollars’ worth of roads and railways, including a planned high-speed railway that will connect Belgrade and Budapest. The Chinese Embassy in Montenegro rejected an interview request from NPR, as did several members of the Montenegrin government. Vladisavljev believes that the government’s sudden silence after communicating with the world press when it needed the EU’s help earlier this year is a sign that it is in talks with Beijing to restructure the terms of the loan.

Meanwhile, Chinese construction crews are putting the finishing touches on a toll booth and tunnel on the new stretch of highway. Mladen Grgic, an associate at the European Institute for Asian Studies, says that despite all his problems, it is the most beautiful road his country has seen.

MLADEN GRGIC: For Montenegro, having a highway like this is like buying a Ferrari with the average salary. And then you’re thinking, like, maybe I don’t have gas money.

SCHMITZ: Grgic is finishing his PhD thesis on Chinese projects like this one in the Balkans. And he says they all have something in common.

GRGIC: These types of projects are always political and basically it is about how many things are done in the Balkans. You use public money to redistribute it to your crony network or companies and then use it for political purposes etc.

SCHMITZ: And now, he says, this is made easier with the money of a rising superpower eager to exert its influence on a global level. Earlier this spring, Montenegro’s Deputy Prime Minister Abazovic told reporters that he was willing to launch an investigation into alleged corruption among members of the previous government on the road built by China. But that was before he stopped talking to the international press, before his government started talks with Beijing on how to pay back the money it owes China. And so far, no corruption investigation has been launched.

Rob Schmitz, NPR News, Podgorica.


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NPR transcripts are created on an urgent deadline before Verb8tm, Inc., a contractor to NPR, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authorized record of NPR programming is the audio record.

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