Montenegro on the ropes of the agreement with China
Montenegro’s requests for financial aid were rejected by the European Union, which had repeatedly warned against a Chinese road contract worth $ 1 billion (840 million euros).
The former Yugoslav Republic has been aiming for EU membership for several years and hoped that a bailout of the agreement for the still-to-be-completed A-1 motorway would be soon, according to media reports. The media also note that Montenegro’s debt to China – a quarter of the country’s total debt – has highlighted concerns about Chinese influence in the Western Balkan region in Europe.
EU foreign policy spokesman Peter Stano reportedly said the European Union “will continue to support them [Montenegro], but we do not reimburse the loans they contract with third parties ”.
To repay the loan, financial analysts and Western politicians fear that China, through its state lender Export-Import Bank of China, will seek to control a country’s strategic natural resources as a payment in case default of payment.
Montenegro’s A-1 motorway, also known as the Bar-to-Boljare motorway, will travel 165 km through mountainous terrain from Bar on the Adriatic coast in the east to the Serbian border. The A-1 is part of the management plan for a highway from Bar, through the Montenegrin capital Podgorica and into Serbia to the Serbian capital Belgrade.
The so-called Belgrade-Bar highway is seen as an economic lifeline for Montenegro, a mountainous country in desperate need of good transport infrastructure to support its economy. Serbia has reached an agreement with China Communications Construction Company – CCCC – worth 450 million euros in 2017 for the construction of the Preljina-Pozega section of its route, called A-2 and which covers nearly 260 km.
The Chinese loan to Montenegro would represent around 85% of the construction cost of the A-1, the construction of which began in mid-2015 and is not yet completed.
The unrest in Montengro began in mid-2018. A Reuters report at the time said the first 41 km through the mountains north of the capital Podgorica raised concerns about rising costs. The government has raised taxes and frozen some public sector wages in an attempt to get rid of cash.
Milojko Spajic, Minister of Finance of Montenegro, said in a recent interview Financial Times newspaper in London that this first 41 km stretch costs 20 million euros per kilometer, making it one of the most expensive motorways per kilometer in the world. Spajic said Montenegro would seek financial assistance from several Western financial institutions, including the European Investment Bank and the European Bank for Reconstruction and Development – EBRD.