EU rebuffs Montenegro plea to help repay $1B Chinese highway loan
'We are not repaying the loans they are taking from third parties,' says European Commission.
Brussels on Monday rejected a call by Montenegro’s government to help finance a $1 billion Chinese loan for an unfinished highway project that has plunged the EU accession candidate into a debt crisis.
Senior government officials have urged the EU in recent weeks to help Montenegro repay the loan, which amounts to one-quarter of the country’s overall debt, and has shone a spotlight on China’s influence in the Western Balkans.
But the European Commission said it was not going to comply with that request: “The EU is already the largest provider of financial assistance to Montenegro, the largest investor and the largest trade partner,” EU foreign policy spokesperson Peter Stano said at a regular press briefing. “We continue to stand by them, but we are not repaying the loans they are taking from third parties.”
The EU’s decision risks opening the door for China’s state-run lender, the Export-Import Bank of China, to control assets owned by Montenegro.
Critics say that Montenegro’s previous government made a poor decision in 2014 when it — against EU advice — accepted the Chinese loan, which covers 85 percent of the cost for a controversial highway project that has yet to be completed.
Other countries like Sri Lanka, Pakistan and Djibouti accepted attractive loan offers under China’s Belt and Road Initiative and now find themselves under financial pressure to repay them, which risks exposing them to Chinese influence.
“The EU has concerns over the socioeconomic and financial effects of some of China’s investments, or the debt that some of China’s investments can have in the country,” Stano said. “Because there is the risk of macroeconomic imbalances and debt dependency.”
A spokesperson for Montenegro Prime Minister Zdravko Krivokapić had no immediate comment on the Commission’s reaction.
Stuart Lau contributed reporting.