Debt trap and belt road initiative.

Debt trap and belt road initiative.

In last decade China has got a strong grip on Indian ocean by investing billions of dollars to build Port facilities and maritime trade routes as part of belt and road initiative. To basically help china boost their economy and also make export easier for themselves. Many poor countries fell in this trap by china and now we see them suffer for example Pakistan cannot put lockdown during corona pandemic. 

Here are 5 countries who got trapped in Chinese  debt.

Sri Lanka

In 2010 Sri Lanka got loan of about 8 billion dollars from china to build port of hambantota and other developments.

Looks like a great help from China but this port has no traffic and without any traffic it is impossible for Sri Lanka to pay back this huge amount so they were forced to give up the port to china for 99 years lease. And now china has decided to use this port for Chinese military purposes from where china can easily attack India from south.    

Similarly Sri Lanka built a airport with huge debt from china in Mattala which is 18Km away from hambantota . As consequence of this, Sri Lanka was considering a deal with India over this emptiest airport in the world with no air traffic which is very close to the port china acquired from Sri Lanka. So that they could repay the Chinese debt.

To reduce threat of Chinese attack on India this airport was then leased by India for $300 million.

So in short Sri Lanka had to sell itself and safety of own citizens for joining Belt and road initiative.

Pakistan

With around 40-billion-dollar project of china-Pakistan economic corridor (CPEC) which is big part of BRI, Pakistan now owes china about 6.6 billion dollars. 

And same as when Sri Lanka could not pay debt they had to lease port of hambantota for 99years Pakistan had to give up on Gwadar Port for 40 years.

 And now Chinese are building a joint naval and air facility for Chinese force, near Gwadar Port. Clearly with intentions to use it against India.  

Pakistan not only owes china a huge debt but it also has to pay high rates of interest for it. For some loans they have to give 34% returns on investment for 30 years. After which Pakistan realized their mistakes and said that they will no longer take funding from China for any large-scale development. Its not just China that Pakistan owes money, they also having hard time paying back to international monetary funds.

Even after taking so much of loans Pakistan is not showing much development in any sector other then terrorism. By the way china is provider of more then 70% of Pakistan’s arms and Ammunition classified under offensive Weapons.

Montenegro

Montenegro is a very small country in Europe with no highways. Mainly because they don’t need any highways. But out of nowhere China starts showing interest in building a highway in Montenegro for its belt road initiative. This highway was supposed to be 103 miles long with bridges and deep-cut tunnels and government described it to be a pathway to the modern world. 

 Montenegro has only 630000 people and they spent 950 million dollars on this highway which is insane. Because there is no way they are going to have the amount of traffic to justify its cost. Anyways china got deal of 70% of its construction, so who really cares about 630000 people of Montenegro and corrupt authorities.

And as you might have guessed Montenegro went out of money and strangled themselves so this pathway to the modern world leads to nowhere for time being. They need about 1.2 billion more to complete this highway and as IMF said they cannot afford that much of money.  

In short China successfully ruined happy live of another country. Montenegro govt. had to raise taxes freeze public sector wages and cut social spending

Story is not over at even after so much of difficulties Montenegro Prime minister has said that he will finish this highway and also promises to deepen co-operation with china on many more projects including hydropower and tourism at any cost. This is exactly the kind of commitment Chinese govt. wants.

Maldives

A paradise located in Indian ocean, with Awesome weather and clean beaches. Unfortunately red dragons found it.

Chinese Maldives friendship bridge of 225 Million dollar was funded through grant and loan from china. This amount may be very less for some countries, but for Maldives it is 100% of their GDP. That means it owes all the money to china which they generate in 1 year. 

This is not the only problem they are facing, due to rise in sea level there is high risk that Indian Ocean might swallow up this paradise by 2080.

Yeah so china might have to recover debt from water this time.

But as per past records of china, they might force Maldives to give up land for Chinese military till Maldives exists. They won’t show any mercy. After all Maldives has excellent strategic location very close to India.

Djibouti

 An African country Djibouti is now one of the Chinas Military bases located Just few miles away from American military bases. 

In 2018 a laser from Chinese base was aimed at American piolet leading to tension between Chinese and American militaries.

America is not a main reason China has arrived here. Their actual aim is to acquire a key African port which was acquired by Djibouti govt. from a Dubai based company. This port is of key importance for some countries to launch anti-terrorist mission in some part of Africa and middle east