The article under review titled Debt Stress on the Road to “BELT and ROAD” was published in Wilson Center on January 16, 2024. This article discusses how China’s ambitious infrastructure project Belt and Road Initiative is turning into a debt trap for developing states as China through creating a web of interdependence convinces developing nations that as they lack Roads, Railways, Bridges, Power grid we will lend you a lot of money and our companies will come in to build this for you and when these foreign nations are unable to keep up with their payment china can easily demand concession in exchange of debt relief.
He addresses how the Belt and Road initiative project launched by Chinese President Xi in 2013 to connect Eastern Asia to European economies grew its focus to include Africa Oceania and Latin America after 10 years the project was undertaken by 150 countries and 40% of Global GDP. But many countries most probably Western nations criticize China as it is using the BRI as a tool to expand the country’s global reach and influence.
Lending loans is not a bad thing as it brings development and jobs but it depends on terms and conditions as same is the case with BRI terms and conditions because it is more favored to China. Notably based on terms if any change in the policy of the borrower country is not acceptable to China it has the only power to terminate the contract and ask for immediate payment if this is not enough most Chinese contracts are confidential looks like China has some masterplan.
The author also undertakes the unconventional research of Aid Data an international development research lab at William and Mary’s Global Research Institute showing that 80% of Chinese loans go to countries that are struggling with debt and that these loans are in their repayment period but countries are not in a position to do so. The author gives the example of Sri Lanka and Zambia how in Zambia protest against new taxes to repay foreign debt turned violent causing death and how Sri Lanka borrowed millions to develop a massive port Hambantota but when it struggled to pay back the money it ended up with a new deal that gave China control of the port for 99 years.
While giving concluding remarks author reflects how with more and more stories emerging from countries failing to achieve the desired objective of the project, nations like Italy and the Philippines are backing from it due to issues of lack of transparency, Sovereignty concerns, and debt stress.
Overall, the Belt and Road Initiative presents opportunities but concerns surrounding its potential of a debt trap cannot be ignored. So it is crucial for developing countries to carefully analyze the terms of BRI financing and prioritize sustainable debt management. Along with that developed nations or the West can offer viable alternatives or by promoting responsible lending practices risks associated with BRI such as of repetition of colonization can be mitigated resulting in mutual benefit for all countries.
The writer is a student of “BS International Relations” at “ International Islamic University” and a member of PYDIR.
Debt Distress on the Road to “Belt and Road”
https://www.wilsoncenter.org/blog-post/debt-distress-road-belt-and-road