Is the Chinese debt trap real? What are the biggest risks?
John Bolton, who was USA’s national security advisor during Donald Trump era and recently claimed that he had helped organize coups in other countries. He cited a failed 2019 Venezuelan coup attempt against President Nicolás Maduro to a media interview. Chinese CPC leadership thinks this is not unusual. Washington also boasts of its righteousness and legitimacy when it invades foreign countries and plans coups, as it has done with Afghanistan, Iraq, Venezuela, Yugoslavia, and many other countries. But USA at least takes UN mandate before targeting any country. This UN mandate is not possible for other P5 countries like Russia and China, as can be seen during Russian invasion of Ukraine. China understands this and launched ‘Belt and Road’ scheme in 2013 to overcome this limitation.
Bolton with correct Chinese map in the background (not included Akshai Chin, Arunachal Pradesh & Taiwan).
Trump era USA secretary of state Mike Pompeo: I was the CIA director; we lied, we cheated, we stole – This is how USA got UN mandate wage war in Libya, Iraq and Syria
There are only two ways to colonise a country – by war or by debt. China knows they cannot wage war with smaller countries by taking UN mandate just like USA. Russia cannot get a UN mandate to invade Ukraine which was part of Soviet Union three decades ago. The B&R scheme was typical debt trap diplomacy where corrupt dictators or ambitious elected leaders of third world countries will be given loan at higher than IMF/World Bank/ADB/JICA of Japan assistance rate for the while elephant projects which were not approved by IMF/ADB/JICA etc. agencies. Once the loan whose exact amount and rate of interest are kept secret, becomes bad debt, China will do the land grab under undisclosed mutual agreement. Many experts raised this concern since 2013 but there are large numbers of pro-China experts who promote Chinese values across the global media, who criticised these concerns as anti-Chinese smear campaigns by west.
Pro-China ‘experts’ will point Sri Lanka crisis due to all the other issue like Covid-19 related tourism loss, Ukraine war, freebies by Rajapaksha government, unplanned organic farming etc but will never blame China. They will say China related debt is only 10% of Sri Lanka’s total international debt but hide the fact that China charges exorbitant rate of interest. Hambantota port first phase construction loan was 6.3% and second phase was lower but still higher than IMF/ADB/WB. Compare this with ADB/WB/IMF/JICA loans which are around than 1-2%. JICA gave India bullet train loan at 0.1%. The exorbitant secret high Chinese interest rate was highlighted by Sirisena government who defeated Mahinda Rajapaksha in 2015. A layman also understands that for same amount of loan, 7% rate home mortgage loan is cheaper than 18% rate business loan.
Chinese loans are more expensive due to high interest rate
The current emergency in Sri Lanka proves the debt-trap B&R diplomacy actually works just like USA’s covert policy of regime change by political coup. Concerns were raised in initial phase of signing Hambantota sea port and those concerns were proved right when the port was leased to China for 99 years lease few years later. After depletion of foreign currency reserve and economic chaos, Sri Lankan President Gotabaya Rajapaksha fled abroad and his minister claims only neighbour India is helping during the crisis. India faces risk of refugee onslaught and hence compelled to support Sri Lanka. More than a dozen countries who supported high B&R investments may suffer the same fate as Sri Lanka over next three years where no Rajapaksha dynasty rules. Just keep watching.
Chaos in Colombo
Mahinda Rajapakhsa of Sri Lanka, K P Sharma ‘Oli’ of Nepal, Imran Khan of Pakistan and Abdulla Yameen of Maldives had to go because people saw Chinese debt trap coming. They kept taking loans from China to solidify their political position. This revolt was by government change by election or massive street protest.
The Chinese Belt and Road only successful in regime change as can be proved by these photo-ops.
Belt and Road is basically short-term gain for some greedy politicians and long-term pain for its citizens. This pain will lead to regime change as seen in few south Asian countries. If Chinese believe that QUAD is an arrangement aimed at containing rise of China then what is wrong if Indians believe that Chinese Belt and Road scheme is to encircle India with ‘string of pearls’ and debt diplomacy. Already Sri Lanka declared emergency to be followed by Pakistan, Nepal and Bangladesh within few years as the world is facing growth slowdown and in some cases recession.
Picture source: Google/Getty
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