Montenegro in the hands of Chinese loan

A huge Chinese loan to build a highway caused trouble for Montenegro. But this happens with many Chinese subx0>Manduz New Street projects. China is trying to lend rescue loans, but it creates new addictions. According to a study by the Institute for World Economics in Kiel, Germany (Ifw) of China's ambitious commercial project, the new “Silk” road has high follow-up costs. More and more countries in expansion and development, which have received loans from China for infrastructure construction, have problems paying off loans as planned. In recent years the Chinese government has significantly increased the delivery of rescue loans.

According to the German institute 60% of all Chinese loans given in the world are threatened by indiscretion. In 2010 this figure was multiple 5%, according to the study analysis of Harvard Kennedy School and the World Bank.

Highways in Montenegro

In Montenegro it was inaugurated last year after seven years of construction time a 41km highway segment. The construction cost exceeded 1.2 billion euros. About 800m euros came as loans from China. Montenegro called for EU assistance, since the first installments of the loan had to be repaid, because it could otherwise pay in due time.

The 41km of roads passing through Montenegrin Montenegrin Montenegrins were built by a China-led Chinese company.

Montenegrin citizens, however, are satisfied with the new road. The Kolashin, known as a preferred destination, especially for mountaineering in summer and for skiers in winter has benefited. Road construction has led to tourism boom in the Kolashin area.

Revenues have tripled even in small bars, like an ice cream stand. “We are now connected to other cities, we have many tourists, they can come much faster here, I think it's a very good thing”, says Katarina, who runs the stern.

Highway Problems Remain

But will the truffle's silver suffice? The vehicles pay 3 euros and 50 cents to use the new highway, it is hard to imagine that this $1 billion investment will be compensated for with income from such a fee.

Natasa Kovecevic, who works for a nongovernmental organisation, views the Chinese loan as very problematic. She has long opposed such a project. She says the 41km segment is a heavy burden on the budget of a small country like Montenegro. “We have annual revenues from the highway amounting to about 9m euros. We have to pay 40m euros in loan installments every six months. It is very clear that income is not enough to cover credit payments, and the rest should come from the state budget. ”

And the researcher, Nina Vujanovic, who is well aware of the financial planning of government projects, thinks that China's top credit could jeopardise Montenegro's EU membership. According to EU criteria, state debts are not allowed to be more than 60% of gross domestic production. “Currently close to 70% and clearly Montenegro no longer has financial spaces for other reforms that burden state finances. ”

Montenegro lacks the money for retraining its aging road network, and the 41km of the highway suddenly ends up in gravel. China has offered other loans to continue building the highway, but the Montenegrin government views the project with many risks. In Podgorica, you know, if they can't pay the installments, that now Beijing has the right to confiscate their state property. Montenegro is surrendering its sovereignty through infrastructure. If we fail to pay off debts, China can take over important parts of infrastructure, for example hydropower, railway, or ports”, Kovacevic criticises.

With the first 41 kilometers of the highway, Montenegro has become dependent on China. For this dependence not to grow further the EU must be more engaged.

Destruction of the Environment

Another problem of the new highway is the environment: The highway passes through the Tara River Valley, which has been declared part of U's World Heritage NESTO, known for its crystal water and green shores. The top of the river is still clean, but the river vegetation has been destroyed where the highway passes. There are no more plants, so many fish, and the coast has been disfigured because of the depositing of tons of digging materials, concretes have been destroyed. There's garbage everywhere from highway work. The river is turbulent by the waste of change. “The chicken comes from the ecstatics and steeps along the river. All of this ends up in water and doesn't allow flora to develop. This covers everything and living things no longer have to feed”, Kovacevic says. There's still no project to renaturalize the river. / DW