Debt lure diplomacy: EU rejects Montenegro’s request to assist repay China’s $ 1 billion mortgage


The European Union is not going to assist Montenegro repay its mortgage of almost € 1 billion to China that the Western Balkan state borrowed to construct a freeway, which has since change into one of many street works the most costly on the planet. “We don’t repay the loans they take out from third events,” says the European Fee, referring to an unfinished freeway challenge that has plunged the candidate for EU membership right into a debt disaster. Montenegro’s senior officers have urged the EU in current weeks to assist the nation repay the mortgage, which accounts for 1 / 4 of the nation’s complete debt, and have highlighted China’s affect within the Western Balkans.
An EU spokesperson mentioned it “doesn’t repay accomplice loans they’ve contracted with third events”, though he expressed concern “concerning the socio-economic and monetary results of a few of Chinese language investments in Montenegro ”. He added that Brussels was able to work with the nation, which is a candidate for EU membership, to consolidate its money owed on an enduring foundation. “We offer a mixture of grants, ensures and preferential loans from worldwide monetary establishments such because the European Funding Financial institution and the European Financial institution for Reconstruction and Improvement,” the EU government mentioned, noting that the funding was on “very favorable phrases”.
The small Balkan republic will battle this 12 months to begin financing a billion euro mortgage from China that it took out in 2014 to construct the primary section of the freeway connecting the port of Bar on the coast Adriatic Sea from Montenegro to neighboring landlocked Serbia. The Deputy Prime Minister of Montenegro, Dritan Abazovi? mentioned final month that Brussels ought to due to this fact assist the nation refinance the mortgage, taken out by the earlier Montenegrin authorities, to forestall the EU candidate from turning into depending on China. Montenegro, with a inhabitants of 622,000, had a debt of 4.33 billion euros or 103% of GDP final 12 months and its compensation capability has been weakened by the COVID-19 pandemic which is undermining its predominant supply of earnings – tourism.

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