The billion-dollar disaster - China's influence in Montenegro

Montenegro is building its first-ever motorway. Due to a huge loan scandal, it’s now become the country’s highway to hell. 40 bridges and 90 tunnels are expected to be built and financed by the Chinese. However, the project has been hit by corruption allegations, construction delays and environmental tragedies. Today, out of the planned 170 kilometres, just 40 have been completed, writes Juris Paiders.

The motorway is one of the most expensive in the world. It's financed by a loan from China loan. Paying back this money is creating problems. The story starts with Montenegro's former Prime Minister and current President, Milo Dukanović. He conceived the motorway to boost trade in the small Balkan country.

However, lacking funds to start construction, he accepted a billion-dollar loan from China in 2014. Other investors didn't want to get involved. Prior to this, French and American feasibility studies highlighted the risks of such an oversized project. The European Investment Bank and the IMF also announced that it was a bad idea.

Now, with the pandemic crushing Montenegro’s tourism-dependent economy, the country is struggling to find a way to finance the missing stretches of road.

The motorway should link Bar Harbor in the south to the border with Serbia in the north. The first section was scheduled to be finished in 2020, but it still isn't.

Politicians promised that the motorway contraction will boost employment in Montenegro. However, the Chinese contractor brought in its own workers, with no contracts or social security contributions.

An NGO backed by the EU is investigating corruption allegations involving subcontractors. Out of the huge loan from China, 400 million Euros were given to subcontractors, which some of them are linked with President.

In Montenegro people are hoping that there will be justice and someone should pay for this ambitious constructions plan. However, some fear that China has its eyes on Bar's deep-water harbor. When signing the billion-dollar-loan with China, Montenegro agreed to some strange terms, like giving up sovereignty of certain parts of the land in the case of financial problems. Arbitration in this scenario would take place in China using Chinese laws.

A long-term harbor concession would fit nicely into China’s “Belt-and-Road-Initiative”, a global infrastructure project to access markets. Harbor authorities in Bar are already hoping for an economic upturn and have plans for two new terminals.

The Chinese-managed motorway isn’t just mired in cronyism allegations; it’s also accused of damaging the protected Tara river valley. The ecology group 'Green Home', after several monitoring of Tara River, has concluded that impact of incompetent construction on river is disastrous. Sediment from the construction site is trickling into the water, preventing the fish from spawning.

Chinese managers have been accused of ignoring basic EU standards and Montenegro is criticized for failing to supervise construction correctly. Rubble has changed the Tara riverbed, perhaps irreparably.

Environmental experts proposed alternative layouts of the motorway that would have avoided the Tara valley, but they were ignored.

The river Tara is UNESCO protected and it should be forbidden to gravel the soil and sand, but this is happening there because of the construction work.

All over the Western Balkans, Chinese investment has slowed down EU compatible reforms. China’s silk road ambitions are not always in line with EU standards of good governance, environmental protection, rule of law and transparency. Their influence is creating a wedge between the EU and the Balkan states.

The opinions expressed in the above article are those of the author alone, and do not reflect any opinion on the part of EU Reporter.

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