On Apr 13, Reuters reported that the European Union rejected Montenegro’s request for bailing out its $1 billion highway loan from the CCP – putting this small Western Balkans country under severe financial pressure.
In 2014, the Republic of Montenegro signed an agreement with the Export-Import Bank of China (ExIm Bank) for a dollar-denominated loan worth nearly $1 billion on financing 85 percent of the highway project. The first 41-kilometer of this highway (or equivalent to a quarter of the entire project) costs 20 million Euros per kilometer, making it one of the most expensive highways in terms of cost per kilometer in the world, according to Milojko Spajic, finance minister of the Republic of Montenegro.
A Serbian media outlet – Balkan Insight – reported in June 2019 that the prominent local watchdog (NGO MANS) warned that the Chinese construction team was destroying the Tara River, which is under the protection of UNESCO. It said the construction of bridges, the mining and disposal of gravel and sand were seriously damaging the riverbed.
The agency urged the Ministry of Sustainable Development and Tourism Department to investigate the project back in 2016, but the prosecution insisted the project had not caused significant environmental damage. “The prosecutor’s investigation refers to only a small part of the devastation that has happened at the construction site near Matesevo. The Black spots on that route still remain without adequate attention from the authorities”, said Dejan Milovac from NGO MANS.
The prosecution in the town of Kolasin (located near the project) said in a press release that it was against the law for the Chinese construction company to start work without submitting reports on environmental protection measures, causing more damage to the surrounding environment.
Back to the economic perspective, the CCP holds a quarter of Montenegro’s debt, the first repayment of which is due in July, despite serious delays in the construction of the highway. If the Republic of Montenegro defaults, the terms of the contract give the CCP the right to obtain a mortgage on Montenegrin land. Not only that, the government of Montenegro previously signed a contract that is worth 54 million Euros with a Chinese consortium, which is about selling the country’s thermal power plant to the CCP.
At the same time, the government of the Republic of Montenegro is negotiating with Beijing for another outstanding debt that is worth 127 million Euros. The country’s finance minister said that Montenegro’s current dependence on the CCP for infrastructure development does not make sense from a geopolitical point of view, and that Montenegro must maintain closer ties with its EU allies, especially on the economic front.
Tena Prelec, an academic from Oxford University, said: “The EU should get involved, the Republic of Montenegro is the EU’s backyard and the EU must show that it is a geopolitical player”.
In conclusion, it will cost so much more than a piece of land to fill up the CCP’s appetite. The CCP’s ambitions of taking over the entire world are now crystal-clear: this highway project is part of fulfilling that ambition.
Disclaimer: The views expressed here are those of the authors and do not necessarily reflect the views of GNEWS.org.