My country (Nigeria) now spends 80% of its revenue servicing debt mostly owed to China (I blame stupid and corrupt government officials much more than China). Welp, time to go learn Mandarin...
Of course all the countries mentioned in the article are all the kind of country where 10-20% of the people on the government payroll don't even exist ("ghosts"), no bid contracts are routinely handed out to friends of the government (and sometimes even current employees of the government!), spend ridiculous proportions of the budget subsidizing gasoline to buy votes, etc. Why are these countries any more deserving of forgiveness than countries that act responsibly?
Reference for the uninitiated, a good read. Its veracity on the individual level may be questionable, but the techniques of subduing third world countries via heavy debt burdens is well documented.
No, western loan sharks are trying to get chinese loan sharks to forgive more debts via propaganda. There's many more poor countries on the brink of collapse with majority % western loans due to covid, a lot of multilateral negotiation on debt forgiveness right now where everyone needs to take haircuts. But west trying to pressure PRC to forgive more / higher burden, and PRC is going lol nope. Some useful idiots buy it, like they do debt trap narrative, meanwhile those in charge still flock to PRC loans where available for infra build up, because no one else, especially west, has capability to stepping up.
Oh, so, now China is the new IMF? Are they also requiring governments to privatize and cut social spending in education, health and housing like the IMF does?
No. China doesn't do that. That's why corrupt leaders love Chinese loans.
Unlike the IMF, China simply doesn't care that the loans will not actually lead to any improvements for the citizens of the recipient country, and are happy for the leaders to simply pocket the money in return for the country and its citizens paying China high rates and then eventually giving away the project to the Chinese.
The IMF/World Bank have been consistently maligned, but it's increasingly clear that their demands for prudence is beneficial to the actual citizens of the country. The negative consequences are not a result of the financial prudence they require, but rather, a result of the mess the country got themselves in so they needed to go to the IMF to get money in the first place.
The difference between the IMF and Chinese loans is that the IMF is a lender of last resort, whereas China's loans are for greenfield projects to country that are in perfectly fine financial situations.
The Chinese loans are attractive to leaders of countries because it allows them to advertise huge development projects, which are in many cases unsustainable and fiscally destructive, while pocketing most of the money, and letting the actual negative impacts, which show up a few years later, be dealt with by a future administration and the citizens of the country.
A closer analogy to the Chinese loans are World Bank loans, and while they have strict requirements, they've not really ever led to countries facing these massive debts, even though countries have been borrowing from the World Bank for far longer than from China.
China's BRI has been a great advertisement for the IMF.
1. The IMF gives loans at significantly lower rates than China does. That clearly points out that the donor countries in the IMF are far more generous than any other entity that will lend to the countries in question, which completely goes against the idea that the IMF is trying to extract money out of poorly situated countries.
2. The IMF has never, AFAIK, appropriated land and property for default, or if it has, it's been on a very small scale over many decades. China has already appropriated massive parts of sovereign territory during a very short period of time. That's another indication of how generous the IMF really is.
3. Most importantly, the major complaint about the IMF has always been their demands for "austerity". Admittedly (as in, the IMF has literally admitted this), the IMF regulations were too strict in this regard, and the IMF has consequently loosened a lot of these requirements. But what the BRI has shown is that the intention, and effect, of these requirements is indeed good for the citizens of the recipient country, because it reduces the chances that the leaders simply pocket the IMF money (some still do), and it reduces the chances that the country will be caught in a debt spiral (some still do). The BRI has shown an alternative where the donors do not require structural changes from the recipient countries. And almost predictably, the result isn't that it leads to the recipient country's administration running their country in a fiscally sustainable manner without the evil foreign oversight. The result is that the country continues to be run terribly, benefiting the leaders personally, and moving all the costs off to the next government and/or the citizens themselves, but a few years into the future. This is fairly obvious when you recognize that invariably it's teh leaders who brought the country to a position where they need to beg for money that are getting the donated money itself.
Essentially, the Belt and Road Initiative has pretty much completely undermined the idea that the IMF/World Bank (I didn't mention the World Bank because it's broadly considered far less coercive than the IMF) are an evil tool of western imperialism (which was obvious in the first place, considering the WB/IMF are completely voluntary organizations, and if they weren't so evil in the first place countries wouldn't go to them), and are in fact providing loans to countries that would never get them at all otherwise, at rates that are lower than anyone else would offer, and look out for the actual citizens (including future citizens) of the country in a way no other lending entity does.
The only reason countries are opting for BRI funds instead of the IMF at this point is because their corrupt leaders know that even though those funds are far more expensive, and will invariably lead to ceding sovereign control of territory/projects to China, China will not care about the leaders themselves pocketing the money, unlike the IMF.
> China has already appropriated massive parts of sovereign territory during a very short period of time.
What happens if the countries simply don't give up the territory? I.e. they default on the loan and then also don't hold out their end of the deal with whatever collateral was put up?
As the article points out, many of these loans have secret funds setup as collateral.
But if they don't hand over the money to China? Well, no one lends money to you anymore.
If you were the leader of a country, what is preferable? Giving up property and/or territory which allows you to continue borrowing so the people in your country can buy food and gas, or protecting the territory but the people in the country starving and running out of energy to run their businesses?
> But if they don't hand over the money to China? Well, no one lends money to you anymore.
> If you were the leader of a country, what is preferable? Giving up property and/or territory which allows you to continue borrowing so the people in your country can buy food and gas, or protecting the territory but the people in the country starving and running out of energy to run their businesses?
What would be preferable? To default. I'm serious. I mean otherwise what are your critiques about in this thread at all. Should the original loans have been agreed to? If not, why not? Money is coming in after all and if that is the only concern than what is the problem with the original loans.
Besides the fact that China won't loan to them in the future is maybe assured, but I don't see why it's assured they couldn't get loans from others. Though it's true that others maybe won't loan money under conditions where they can't make any repayment. Or maybe the others won't loan the money under conditions where it just disappears due to corruption. Sounds...good?
The US has undertaken economic imperialism outside the IMF for quite a long time. They have not been aggressive in the past couple of decades, however, yet the effe ts are still being felt today.
https://www.thecable.ng/zainab-ahmed-nigeria-to-spend-60-of-...