An aerial view shows part of a highway near Podgorica, the capital of Montenegros. The highway project, constructed by a large Chinese state-owned company, risks derailing Montenegro's economy. Savo Prelevic/AFP
NPR: How A Chinese-Built Highway Drove Montenegro Deep Into Debt
PODGORICA, Montenegro — The section of highway that threatens to cripple Montenegro's economy begins in the foothills outside the capital Podgorica, where scaffolding lines a multi-lane expressway closed off to the public. The highway ends, for now, in the remote mountainous terrain east of the city.
The Chinese state-owned company hasn't finished construction yet, so cars are using the old road underneath it. The highway hasn't been paid for yet, either. The first installment of the $1 billion loan from a Chinese state bank is due in July, and it's unclear whether Montenegro, whose debt has climbed to more than a 100% of its gross domestic product due to this project, will be able to afford it. What's worse, says the country's former Justice Minister Dragan Soc, once completed, the road won't lead anywhere anyway. "We make a joke: It is a highway from nothing to nothing," he says.
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WNU Editor: What is particularly galling about this situation is that Montenegro now wants Europe to pay-off their unsustainable Chinese debt .... Montenegro in 'final phase' of talks with Europe to cut China debt (Reuters), while at the same time pushing for EU membership .... Montenegro aims to become EU member in 2024 (BNE).
My advice to the EU is to take your time. The culture of corruption in the Balkans is deeply rooted, and you need to give them the time to undertake the necessary anti-corruption measures and legal reforms before admission.
IS the highway worth the money spent. That is no featherbedding? If so, the Chinese gave them their money's worth. Still for a seller to upsell a buyer for more they can afford, if not illegal is unethical and bad business practices.
ReplyDeleteIf you look at the map of Iowa the are building two east west interstates to the north and to the south of I-80. They have wanted them back in the 70s or 80s or before. Obviously, if they had built them out in 5 years in toto they would have bankrupted the state of Iowa and USA (assuming that DOT did that in every other state.) Instead they are doing it in stages. First as city bypasses, connecting ear by bypasses, rinse and repeat.
America has had the problem since the 1920s. (Everyone ha had it since the beginning of time). Herbert Hoover identified dam projects and other expensive projects that would be beneficial , but were not cost effective at the time. The idea was to draw up plans and execute the projects during recession to smooth out the business cycle.
WNU is correct. The Montenegran establishment needs to grow up.