Pakistan’s senior officials emphasized that simply seeking loans from international organizations is insufficient; instead, Pakistan must devise a strategy to repay the debts incurred through CPEC extensions…reports Asian Lite News
Pakistan’s struggling economy and current monetary policies have left the nation unable to repay loans and fulfill commitments related to Independent Power Producer (IPP) projects initiated under the China-Pakistan Economic Corridor (CPEC).
The administration has always turned a blind eye towards the matter, stated Kamran Khan the President and Editor-in-Chief for the Dunya Media Group, a prominent news organization in Pakistan.
In a debate session with Khalid Mansoor the Former Special Assistant to the Prime Minister of Pakistan on CPEC and Shabbar Zaidi the Former Chairman, the Federal Board of Revenue (FBR) mentioned Pakistan is now locked in a CPEC debt trap, and only China has the key to set us free. Today, Pakistan’s IPPs under the CPEC offer a classic example of a debt trap. According to his statement during the Dunya news debate, “The creditor country extends excessive credit to a debtor country with the intention of extracting economic or political concessions when the debtor country becomes unable to meet its repayment obligations. The conditions of the loans are often not publicized. The borrowed money commonly pays for contractors and materials sourced from the creditor country.”
China-Pakistan.
His statement also mentioned that “Highly over-invoiced, non-competitive CPEC power projects, with a promised minimum of 17 per cent dollarized profits, have delivered the world’s most expensive electricity to Pakistani people and industries. Capacity payments and 3.5 per cent plus London Interbank Offer Rate loan terms have turned Pakistan’s debt burden into a full-fledged national security crisis. And now classic outcome of an intelligently laid debt trap: Pakistan just can’t pay the financial charges and now China has a critical say in our economic destiny.”
He said that merely asking for a loan from international bodies is not enough, Pakistan needs to find a way by which Pakistan can pay back the debt extended by CPEC.
In the debate, he questioned Mansoor, “Why did we not enquire that the loans that we are getting from China are on the market price and not over invoiced, and was Pakistan capable of paying the questioned loans back when they were offered?”
Answering the same, Mansoor said “We did not make any adequate policies for China separately, as making policies is the job of the government. We were supposed to get investment to set up industries, if these industries had been set up it could have enabled us to pay back the loan. But all this did not happen”
Taking the same issue even further, Shabbar Zaidi the Former Chairman of FBR said “Since day one I have been the person who has raised questions over the financial viability of CPEC. I have been the one person in Pakistan who has always said that the proposed Special Economic Zones cannot be developed and the strategy behind CPEC is wrong, and our country will not be able to return loans at 17 per cent return. And I always have shown my confidence the transfer pricing designed by Pakistan is wrong”.
Zaidi also added, “Tell me a single CPEC plant that has maintained proper operations in Pakistan and we have verified the entity’s supply”. He also added that the loans and projects offered under the CPEC are not a Foreign Direct Investment (FDI) but a bond that has to be paid back to China which Pakistan in its current economic conditions cannot fulfil in any way. (ANI)
A major problem with these projects in Africa is the excessive presence of Chinese stakeholders. The majority of these projects in African countries like Ghana, Uganda, and Mozambique, to name a few, are being funded by Chinese financial institutions. Other than Chinese banks, the Chinese element is present excessively, manifesting as Chinese construction companies who are undertaking projects in the continent. Dr Aditi Sharma writes on the perils of the Chinese Model of resource-backed infrastructure financing in Africa
The model of resource-backed lending for infrastructure development has gained renewed attention in the development financing discourse as well as international media controversies. The model has attracted attention for two reasons: one, the nature of the resources involved, and second, the controversial nature of the lenders involved, namely China. Moreover, the borrowers involved in the process are also often poor developing countries, prone to unfair debt deals, further exacerbating the international community’s concerns.
To be succinct, the resource-financed infrastructure exchange takes place in two ways. In one case, the income from resource sales is used for repaying the loans to the lending nations, and in the other case, the natural resources are swapped in the future in return for the provision of infrastructure. Though the model of financing appears pro-development and efficient for Africa, as evident, the exact execution of the project may not be so.
A major problem with these projects in Africa is the excessive presence of Chinese stakeholders. The majority of these projects in African countries like Ghana, Uganda, and Mozambique, to name a few, are being funded by Chinese financial institutions. Other than Chinese banks, the Chinese element is present excessively, manifesting as Chinese construction companies who are undertaking projects in the continent.
Across African nations, there is an outstanding concern amongst the local people as well as companies regarding the effectiveness of infrastructure-related Chinese development aids. The general outcomes of the infrastructure projects are technology transfer from the technology-rich nation. However, there is a very limited technology transfer in this case as there is no focus on capacity building, and the local population is barely involved in projects. The Chinese companies are majorly responsible for infrastructure development in these countries. The process is so Chinese that the labour involved in the construction is also from China. This leads to a gap in the labour market, with locals bereft of employment opportunities. Traditionally, undertaking massive projects solves two major economic issues in the process. First, it helps build public infrastructure and enhance welfare by improving living standards. Second, these projects are undertaken by the governments as a fiscal instrument to increase spending in the economy, generate employment, and curb poverty. Now, with Chinese involvement, huge infrastructure projects are being executed with limited involvement of the locals, rendering the dire issues of poverty and unemployment in these regions unaddressed. This process is far from building self-reliance and long-term sustainability in these nations.
There are other incentive-related issues with this financing model. As long as the borrowing economies are working fine, the model works. However, the moment they default or commodity prices crash, the borrowing nations are in deep trouble. If the collateral (which is the resource they have sworn to swap) loses its value due to market volatility, the borrowers fall short of collateral and default. Countries like Angola and Ghana have faced similar issues. Given the recent default and IMF’s debt restructuring in Ghana, the concern about Chinese loans became crucial. Ghana, using a resource-backed borrowing approach, has collateralized its debt using bauxite, cocoa, and oil. Given its default, if China decides to call off its loans, Ghana stands to lose its natural resources. As per a Ghanaian official, if they are not able to furnish the desired quantities of aluminum from the bauxite ore, the Chinese will ask for other sources of revenue, like tax revenue. The loan agreement empowers China to take over Ghana’s oil, cocoa, bauxite, and even electricity sales earnings to pay off the debt.
Skeptics conjecture that default is often desirable for lending nations as it allows them to act more extractive and stringently. There is another concern with the Chinese presence in Ghana. The mineral extraction has put forest ecosystem in some regions of Ghana in extreme danger, while Chinese authorities have never been known for any kind of environmental considerations.
China’s infrastructure aid is also extending to fund the construction of schools and universities. Experts fear that allows China to exercise its influence in their curriculum by providing it’s flair of ‘Chinese elements.’
A deeper understanding of Chinese presence in Africa allows one to draw parallels to the expansion of imperial and colonial interests in the past. Ideally, lenders providing development aid need not bring their own companies and people to undertake construction in the borrowing nation. After all, the idea is to ensure that developing countries gain technological advancements and capacity. The Chinese way is different and appears decapitating for African sovereignty.
The issue is two-fold, but at the heart of it is one problem: the incentive problem. African governments often lack discipline, end up making extravagant election promises like Ghana did, and do not have the capacity to ensure equitable distribution of outcomes of development projects yet. Given ubiquitous underdevelopment and often recurring political instability, they lack incentives. At the same time, China has excesses incentive but is perverse. Its goals are to eliminate the Western influence, gain strongholds in Africa, discourage democracy promotion and transparency, and gain support, along with the goals of resource capture. That is why Chinese investors do not include any welfare-oriented goals as a pre-requisite condition before making investments, which is a general practice.
Thus, is resource-financed infrastructure essentially a bad model? Theoretically, no, practically may be. As mentioned, it depends on the entities involved and their motivations. We live in a complex geopolitical world where development-oriented economic motives are highly intertwined with other major political motives. Arm-twisting exists. The concerns about the model are related to ownership, sustainability, and disposability of natural resources. The exchange of resources has always existed through trade and has been economically fairer than the current regime of making resources a part of the debt-related vulnerabilities. There are higher chances that the lender can raise the cost of borrowing, not just financially, but also politically. Poor borrowing countries, dependent on China’s debt-restructuring terms, may have to pay the price by relinquishing their resources, sovereignty, political independence, and their voice in international platforms. While the poor in developing countries are not getting any tangible benefits, the flair of neo-imperialism is spreading across Africa.
Between 2016 and 2022 alone, China invested over USD 26 billion in Bangladesh emerging as the top FDI provider to Bangladesh. …reports Asian Lite News
China has been increasing its engagement with Bangladesh, especially in the past decade, as it tries to make a success of its flagship programme – the Belt and Road Initiative (BRI).
In its hegemonic and expansionist design in Asia and beyond, the BRI is a key tool, and countries like Bangladesh are a pawn in its game for Great Power status.
China signed a memorandum of Understanding (MoU) with Bangladesh in 2016 with the promise of helping Bangladesh transform into a developed nation by 2041 through measures like poverty alleviation, energy independence, and sustained economic growth.
With Bangladesh in need of aid and funds, and Western donors such as the USA, the UK, and France not pitching in due to their concerns regarding human rights violations, backsliding of democratic processes, corruption, and weak institutions, China found an opportunity in this vacuum to ensnare Bangladesh in its BRI, and effectively in its debttrap playbook that China has employed in other countries including Sri Lanka, Pakistan, and several African countries.
Today, there are over 240 Chinese companies dominating all the crucial sectors of Bangladesh’s economy including power, transport, digitisation, railroads, energy generation, and renewable energy.
Between 2016 and 2022 alone, China invested over USD 26 billion in Bangladesh emerging as the top FDI provider to Bangladesh. In 2023 alone thus far, China has already invested USD 800 million in Bangladesh in sectors including Plasma centre, garments, and manufacturing.
Concerns regarding China’s intentions have begun to emerge. In August 2022, Bangladeshi Finance Minister Mustafa Kamal cautioned the world to be wary of China’s debt trap through BRI investments. Bangladesh’s economy itself is inundated with Chinese investments.
For instance, China has built over 21 bridges and 11 highways, seven railway lines, and 27 energy and power generation projects. Chinese companies have also acquired three gas fields in Bangladesh responsible for generating over 50 per cent of Bangladesh’s total gas. Chinese stock exchanges (both Shanghai and Shenzhen) have acquired a 25 per cent stake in the Dhaka stock exchange.
China’s grasp on Bangladesh has tightened through its investments. Bangladesh needs to understand the Chinese playbook of debt-trap diplomacy. The cases of Sri Lanka, Pakistan, and several African countries signify the impending risk. The economic and financial condition of Sri Lanka is very precarious at the moment. The Sri Lankan economy is going through a high rate of inflation, a shortage of essential commodities including fuel and medicines, and a depleted foreign exchange reserve insufficient for import cover of even a few weeks.
The China factor in worsening Sri Lanka’s economic and financial condition cannot be overlooked. Between 2005 and 2015, China emerged as Sri Lanka’s leading source of FDI and development assistance.
China saw the opportunity in investing in multiple mega infrastructure projects in Sri Lanka in order to gain a strategic advantage in the Indian Ocean region and to counter India’s heft in the South Asia region. On the other hand, Sri Lanka readily sought Chinese assistance given the quick disbursement of loans as well as indifference to Sri Lanka’s human rights record and domestic issues.
Despite numerous warnings from experts about China’s salami-slicing strategy, which aims to ensnare nations in a debt trap while securing territorial rights, real-life cases illustrate its effectiveness. For instance, Sri Lanka found itself in a predicament where it had to lease its Hambantota port to China for 99 years. This was due to its inability to repay the substantial USD 1.4 billion debt owed to Beijing, which had financed the port’s construction. Deplorably, Sri Lanka not only accepted this arrangement but also encouraged China to invest in several projects that proved to be unsustainable.
China preyed on Sri Lanka’s economic vulnerabilities, loopholes, and corrupt practices for its political and economic calculations. When the debts became unserviceable on Sri Lanka’s part with its economic downfall, China shifted the blame to Sri Lanka for the depletion of its foreign exchange reserves and long-term economic mismanagement vis-a -vis unsustainable project proposals and borrowings.
Similarly, China is effectively colonising Pakistan through its debt-trap diplomacy.
The International Monetary Fund in its report in 2022 has raised a red flag with regard to China-Pakistan Economic Corridor (CPEC).
It stated that in 2022, contingent liabilities pose a significant risk to Pakistan’s debt sustainability with over 30 per cent of Pakistan’s total foreign debt being owed to China.
Pakistan’s latest Economic Survey 2021-22 gives a glimpse of how much indebted Pakistan is to China. China is Pakistan’s largest bilateral creditor with loans of over USD 14.5 billion. However, this does not cover the true extent of Chinese lending to Pakistan. For instance, lending has been made under various other categories such as China’s State Administration and Foreign Exchange (SAFE) which has lent over USD 7 billion to Pakistan.
Moreover, a significant part of Chinese lending is for CPEC which underlines the strategic intent behind lending. Such a project is central to China’s vision of building a Sino-centric world by creating infrastructural projects and pulling these countries into its political orbit. All of this works well for China’s ploy of salami-slicing Pakistani territory.
China’s BRI finds the best host in Africa with all the African countries barring a few being enmeshed in China’s flagship project.
Notably, in a number of African countries China is involved not only in large-scale infrastructure, industrial, and connectivity projects, but additionally in peace and security projects as well. It lures the African countries into its BRI ambit by presenting an attractive template that promises a high rate of return alongside no pre-conditions with the type of political regime or their nature of governance. It also does not care about elite capture or rent-seeking in these countries.
China’s focus remains on expanding the purview of its own influence in the emerging Great Game in the turbulent geopolitical global order.
China is well-known for its ‘flag-following-trade’ policy in Southeast Asia and the broader Indo-Pacific region. Its Belt and Road Initiative (BRI) holds significant sway in Bangladesh, raising concerns about debt-trap diplomacy and territorial encroachments.
China’s strategic investments in key sectors, similar to its approach in Sri Lanka and Pakistan, emphasize the need for vigilance.
The growing reliance on Chinese funding, evident in Bangladesh’s economic entanglement, requires a prudent understanding of China’s strategies.
Sri Lanka’s predicament serves as an example of how economic vulnerabilities can lead to long-term repercussions, and Pakistan’s involvement in the China-Pakistan Economic Corridor (CPEC) is another cautionary tale.
China’s expansionist behaviour, coupled with Africa’s integration into the BRI, underlines the urgency for nations to protect their sovereignty from China’s calculated manoeuvres within a rapidly shifting global order
Hence, Bangladesh must wisely avoid becoming a pawn in China’s grand geopolitical strategy to safeguard its sovereignty and interests.
Africa goes Lanka way. Between 2000 and 2020 alone, China lent a total of US $59.87 billion to African countries and has become a largest creditor to Angola (US $42.6 billion), Ethiopia (US $13.7 billion), Zambia (US $9.8 billion) and Kenya (US $9.2 billion), which are now struggling to meet their debt obligations … a special report by Dr Sakariya Kareem
In the wake of developing African economies struggling to repay their debts to China, outgoing World Bank President David Malpass recently remarked that the debt that these countries owe to China was unsustainable and lacked transparency in terms and conditions. He warned of increase in defaults in repayments by these countries due to higher food, fertiliser and energy prices, as a result of the war in Ukraine. Between 2000 and 2020 alone, China lent a total of US $159.87 billion to African countries and has become a largest creditor to Angola (US $42.6 billion), Ethiopia (US $13.7 billion), Zambia (US $9.8 billion) and Kenya (US $9.2 billion), which are now struggling to meet their debt obligations.
The crisis is worrying as most African countries with Chinese loans are witnessing a repayment crisis and are seeking deferment of interest payments and re-negotiating loan terms. In fact, Zambia has already defaulted on its debt and debt restructuring talks have made little progress due to the hesitancy of Chinese state owned banks. Kenyan officials and ministers have reiterated that they would ask China to extend the repayment period on $5 billion worth of loans, as the debt is “choking” the country’s economy. Djibouti’s total debts to China equate to around 43% of its GDP and recently announced it was suspending payment on $1.4 billion in Chinese loans. US Treasury Secretary Janet Yellen has reiterated on multiple occasions that China has become the biggest obstacle to progress in these countries.
According to researchers at Chatham House, huge Chinese lending to Africa has created a dilemma for China as it struggles to recoup its money and at the same time present itself as a friendly nation. They warned that China could resort to more unilateral actions by appropriating significant native assets such as ports, railways or power networks in response to defaults.
The lack of transparency in these agreements is another major problem. According to a study by the Center for Global Development, a Washington-based think-tank, in collaboration with AidData, all of the contracts of China Development Bank and 43% of the deals signed by Export-Import Bank of China included confidentiality clauses about the terms of the loans. Moreover, AidData reported that half of China’s lending to developing African countries is not reported in official debt statistics.
Further, the loans provided by China come at higher rates of interest than western sources. At around 4%, these loans are close to commercial market rates and about four times that of a same type of loans from the World Bank or Western country. Moreover, the repayment period in case of a Chinese loan is generally less than 10 years, as compared to around 28 years for other concessional loans provided by other institutions to developing African countries. Findings also showed Chinese loans require borrowers to create special accounts with cash balance that China can seize in case of default.
The announcement by China last year that it is forgiving 23 loans for 17 African countries, is probably just a goodwill gesture and could have been motivated by accusations of ‘debt-trap diplomacy’. According to Deborah Brautigam, Director of the China Africa Research Initiative at Johns Hopkins University’s School of Advanced International Studies, this is not a loan cancellation per se, but the cancellation of the remaining unpaid portion of interest-free loans that have reached maturity. Brautigam’s research shows that this applies only to Chinese government interest-free loans and not interest-bearing commercial loans. It is reported that the amount of these loans was not even 1% of China’s total lending to the continent. China’s decision does little to alter Africa’s growing indebtedness.
China’s debt diplomacy is not only a threat to natural assets of the African countries but also a threat to these countries sovereignty. Unsustainable debt and the constrictive terms of Chinese loans have come under increased scrutiny in recent years as more governments have signed deals with China. Concerns have particularly focused on some clauses that allow Chinese entities to seize property or assets when there are defaults. The problem has become even more acute due to steep increase in interest rates in the US and other major economies over the last year and relative fall in value of the currencies of these African countries, making loans offered in dollar and other currencies expensive. Moreover, the economic recession due to the pandemic and Russia’s invasion of Ukraine has undermined the ability of many African nations to service their sovereign debts. According to Chatham House, at present 22 low-income African countries are either already in debt distress or at high risk of debt distress.
Uncertainty in Debt Restructuring from Creditors is Delaying Sri Lanka’s IMF Bailout Package; Chinese Debt under Focus … writes Kaliph Anaz
Although Sri Lankan authorities are claiming that negotiations with creditors regarding USD 2.9 billion IMF package is “progressing well”, they are yet to spell out where exactly the government’s debt restructuring efforts stand. Debt restructuring is one of the pre-requisites of IMF’s bailout package for Sri Lanka. It is getting delayed given Sri Lanka’s dire situation. Sri Lanka seems to be missing the December deadline, but Governor of the Central Bank of Sri Lanka Nandalal Weerasinghe expressed optimism that if Sri Lanka missed the December deadline to report to the IMF, “we still have time until January”.
Ranil Wickremesinghe.(photo:Twitter)
No doubt Sri Lanka is working hard to obtain financing assurances from its diverse creditors. Observers assess that the loans obtained from China, the island nation’s largest bilateral lender, is under sharp focus, some even believing that a delay in concrete commitment from China is acting as impediment.
Opposition legislator from the Tamil National Alliance Shanakiyan Rasamanickam accused China of stalling Sri Lanka’s IMF deal and “forcing down” unnecessary projects by “paying bribes” to Sri Lankans. “If China is truly Sri Lanka’s friend, ask the Chinese to help with the [debt] restructuring and the IMF programme.” Referring to Rajapaksa-era mega infrastructure projects in Hambantota and Colombo funded by the Chinese, the Batticaloa MP said: “That is not China being Sri Lanka’s friend, that is China being Mahinda Rajapaksa’s friend.”
However, responding to the allegations, the Chinese Embassy claimed that working teams of different Chinese banks have visited the island, and “bilateral negotiations are on”. The Embassy contended that his understanding was “incorrect and incomplete.”
Months after opting for a pre-emptive and disorderly default on its USD 51 billion foreign debt, Sri Lanka reached a staff level agreement with the International Monetary Fund (IMF) in September. The government said the programme would put Sri Lanka’s battered economy on a path to recovery and reform, making the bankrupt country eligible to borrow again from international sources.
However, the IMF made its support contingent on Sri Lanka obtaining adequate financing assurances from all its creditors. While private lenders, mainly holders of International Sovereign Bonds, account for the largest chunk of Sri Lanka’s external debt, China, India, and Japan are the top three bilateral creditors, and play a crucial part in the ongoing negotiations.
(ANI)
In this scenario, research study published by the China Africa Research Initiative at the Johns Hopkins University School of Advanced International Studies in Washington D.C., authored by Sri Lankan Economists Umesh Moramudali and Thilina Panduwawala argued that China will have to play “a major role” in Sri Lanka’s debt restructuring process with USD 7.4 billion or 19.6% Sri Lanka’s outstanding public debt owed to China at the end of 2021.
The Chinese investments under the BRI and bilateral projects with other countries have always been seen with suspicion for their lack of economic feasibility as well as debt creating potential. Now as Sri Lanka is negotiating with China for debt restructuring and China has claimed to have shown readiness for restructuring its debt to Sri Lanka, “It will be the first time a major Asian Belt and Road Initiative borrower is going through the process… China’s approach to Sri Lanka’s debt restructuring and the extent of debt relief offered will set a precedent for China’s role and behaviour in other countries as well,” said the research report.
However, the uncertainty and lack of clarity regarding the extent and time frame of China’s restructuring of its debt to Sri Lanka is delaying its bailout package from the IMF. Meanwhile observers are wondering about the restructuring framework whether Sri Lanka is adhering to the principle of “comparative and equitable treatment” of all creditors, and the “salutary effect” the process might have on the Sri Lankan economy.
One of the silver linings is that the World Bank approved Sri Lanka’s request to access concessional financing on December 5, 2022 from the International Development Association (IDA). This type of financing, which is offered at low interests, will enable the country to implement its government led reforms programme to stabilize the economy and protect the livelihood of millions of people facing poverty and hunger. It is a development which marks Sri Lanka going reverse in economic stature. Ali Sabry, Minister of Foreign Affairs of Sri Lanka, rightly said, “The reverse graduation to IDA will enable us to access resources to help sustain institutions to become more resilient and responsive to the needs of the people of Sri Lanka.”
The International Bank for Reconstruction and Development, a member of the World Bank group, in response to the country crisis has repurposed USD 325 million and a further USD 70 million from other regular bank operations towards crisis response for basic service needs. This has also helped leverage support from other multilateral development institutions, bilateral donors, UN agencies around a common crisis response mechanism.
MI6 chief Richard Moore alleged that Beijing is “trying to use influence through its debt and data traps to get people on the hook…reports Asian Lite News
MI6 chief Richard Moore has warned of China’s “debt traps and data traps” in his first live broadcast interview, BBC reported.
Mr Moore — known as “C” — told BBC Radio 4’s Today programme these traps threatened to erode sovereignty and have prompted defensive measures.
In a wide-ranging interview before he gave his first major public speech since taking on the role as head of MI6, Moore warned that China has the capability to “harvest data from around the world” and uses money to “get people on the hook”.
Speaking about the threat posed by China, Moore described its use of “debt traps and data traps”.
He said Beijing is “trying to use influence through its economic policies to try and sometimes, I think, get people on the hook”, BBC reported.
Explaining the “data trap”, he said: “If you allow another country to gain access to really critical data about your society, over time that will erode your sovereignty, you no longer have control over that data,” the report said.
“That’s something which, I think, in the UK we are very alive to and we’ve taken measures to defend against.”
Speaking later at the International Institute for Strategic Studies in London, Mr Moore said China was now “the single greatest priority” for his agency and warned that a “miscalculation” by an over-confident regime in Beijing over an issue like Taiwan could pose a “serious challenge” to global peace.
He also said it was essential for the Western countries to stand up to the “full spectrum” of threats from Moscow — from state-sanctioned attacks, such as the Salisbury poisoning, to using political proxies to undermine stability in the Balkans.
Lankan former Army Commander alleged that it has been made a slave of one camp and also have worked to achieve political and military ambitions of another state, and thereby let the country lose it’s integrity and sovereignty.,,,reports Asian Lite News
Sarath Fonseka, Sri Lanka’s former Army Commander and Presidential candidate, has warned that Sri Lanka which has fallen into Chinas debt trap would end up like Uganda, which had to give away their only international airport to China.
Fonseka, who led Sri Lanka’s three-decade long civil war against Liberation Tigers of Tamil Eelam rebels to victory in 2009, said this in a Facebook post titled “Sri Lanka is being engulfed in Chinese debt trap that destroyed Uganda”.
Drawing a parallel between Uganda’s airport and Chinese-funded new airport built in Hambantota in southern Sri Lanka, he added that going beyond the country’s foreign diplomacy, it has been made a slave of one camp and also have worked to achieve political and military ambitions of another state, and thereby let the country lose it’s integrity and sovereignty.
“Just as what happened during the Rajapaksa’s regime, the corrupt political leaders of Uganda, ignoring the national plan and priorities, had gone on with the constructions with commercial loans at high interest rates that attract commissions,” alleged Field Marshal Fonseka.
“Instead of developing the Colombo Harbour, Hambantota Harbour which was not so important project, is now owned by China and it is being used as a naval corridor in the centre of the Indian Ocean,” the former military leader said.
“Hambantota Harbour is being looked at as a Chinese Naval base by India, the US and other Quad countries. This is a serious threat to Sri Lanka’s security. We would be able to see the result of these idiotic decisions during the definite power struggle in the region within next 60 to 80 months.”
The opposition MP, Fonseka, who said with the way how Chinese Ambassador is being reacted like a “mad man for the dirt ship”, the future is very clear and we have to rectify this situation in the future.
Ugandan President Yoweri Museveni had sent a delegation to Beijing hoping to renegotiate the toxic clause, reports Asian Lite News
The Ugandan government has lost its major airport to China for failing to repay a loan, African media reported.
The government has failed to reverse a loan agreement with the Chinese which had repayment conditions of attaching its only airport, Today reported.
Entebbe International Airport and other Ugandan assets were attached and agreed to be taken over by Chinese lenders upon arbitration of the loan, the report said.
According to reports, President Yoweri Museveni had sent a delegation to Beijing hoping to renegotiate the toxic clauses, the report added.
The visit was unsuccessful as China authorities refused to allow any alteration in the original terms of the deal, the report said.
The Uganda government, represented by the finance ministry and the Civil Aviation Authority at the time, had on November 17, 2015, signed an agreement with Export-Import Bank of China (Exim Bank) to borrow U$207 million at two per cent upon disbursement; with a maturity period of 20 years including a seven-year grace period.
Ugandan President Yoweri Museveni (Tanzania State House/Handout via Xinhua/IANS)
The deal signed with the Chinese lenders virtually means Uganda “surrendered” its most prominent airport to China, the report said.
The Uganda Civil Aviation Authority (UCAA) said some provisions in the Financing Agreement expose Entebbe International Airport and other Ugandan assets to be attached and taken over by Chinese lenders upon arbitration in Beijing.
China has rejected pleas by Uganda to renegotiate the toxic clauses of the 2015 loan, leaving Ugandan President Yoweri Museveni’s administration in limbo.
According to the Daily Monitor of Uganda, the Ugandan government waived international immunity in the agreements it signed to secure the loans, exposing Entebbe International Airport to take over without international protection.
Last week, Uganda’s Finance Minister Matia Kasaija apologised to parliament for the “mishandling of the $207 million loans” from the China Exim Bank to expand Entebbe International Airport.
