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HomeNewsA Pricey Drive Down Montenegro’s Highway ‘From Nowhere to Nowhere’

A Pricey Drive Down Montenegro’s Highway ‘From Nowhere to Nowhere’

MATSEVO, Montenegro – One of the most expensive roads in the world crosses the mountains of Montenegro, flying over deep gorges on towering bridges, before reaching its destination: a muddy field outside a hamlet with a few dozen of houses, many of which are empty.

Mirka Adzic, a resident of the hamlet of Matesevo (population: about fifteen), said she was delighted that there would soon be a modern highway so close to her home because it would save her from taking a dangerous mountain track. , previously the only access to the outside world.

But, as much as she likes the new Chinese-built highway – which is set to open in November at a cost of nearly $ 1 billion after six years of hazardous work, two years behind schedule – she doesn’t quite get it.

Struggling to provide for a family with her husband’s meager salary as a driver for the Chinese construction company that built the road, she is baffled that her country, one of the poorest in Europe, committed so much money to a gargantuan state of artistic engineering. Montenegro is now grappling with debts to China which total more than a third of the government’s annual budget.

Ms. Adzic is not alone. The new Prime Minister of Montenegro, Zdravko Krivokapic, who succeeded the government that signed the road and loan contracts with China in 2014 at the end of last year, has described the highway as a “megalomaniac project” which is “going from nowhere to nowhere” and has put a strain on the country’s finances.

It has also plunged China into the convoluted geopolitical struggles of the Balkans. Montenegro, which infuriated Russia, a close friend of China, by joining NATO in 2017, is now struggling to balance its heavy debts to Beijing with its ambitions to align itself more closely with the West.

Hailed by China as an early triumph of its Belt and Road Initiative, a vast infrastructure program announced in 2013 by Chinese leader Xi Jinping, the Montenegro Highway has merged China’s oversized ambitions with those of Milo Djukanovic, Prime Minister of the Balkan nation when work on the road began.

But with Mr Djukanovic’s party no longer in charge for the first time in 30 years after last year’s elections, the highway has become a lightning rod for accusations of waste, corruption and inflated ambitions. which do not correspond to the economic reality.

“I don’t have any proof yet, but it all points to corruption,” the new prime minister, Mr Krivokapic, said in an interview in Podgorica, the Montenegrin capital. “On the economic side, this highway is probably not profitable.

According to the original plan, the 25-mile stretch built by China was to be part of a 100-mile highway project connecting the port city of Bar on the Adriatic coast to the border with Serbia. The route promised to make Montenegro, a nation of just 600,000 inhabitants, a transport hub for the Balkan region and boost economic activity in the disadvantaged north of the country.

But with the highway running out in the middle of a largely uninhabited forest and no funds available to expand it, the company has generated a wave of speculation about Chinese targets in the Balkans and the motives of the previous government. who signed it.

Dritan Abazovic, deputy prime minister in charge of security, said in an interview that he “had nothing against China”, which “just wants to be present in the region”. But he questioned the advisability of taking a huge loan from China in order to hire a Chinese company that imports Chinese workers and “brings all the money back to China” – a typical practice for companies in China. Chinese infrastructure working abroad.

Abazovic, who traveled to Brussels in March to seek European Union assistance in refinancing the Chinese loan, added: “They have made an incredible deal for China’s interests. On our side, it was a disaster.

Mr Djukanovic, who chaired the accord, in power in Montenegro from 1990 until his party’s electoral defeat last year, called the new government’s complaints “political noise”, insisting in an interview with the fact that China has no interest in interfering in Montenegro’s affairs.

Over the course of his long career, Mr. Djukanovic prospered playing with rival powers, aligning first with Serbia under Slobodan Milosevic, then with wealthy Russian investors, including tycoons close to the Kremlin. He later turned to the United States, which ignored its past in order to get Montenegro to join NATO, while also reaching out to China, which offered loans that neither banks American or European did not consider it wise.

It led Montenegro to independence in 2006, making it the last former Republic of Yugoslavia to become a separate state.

Now out of power, despite still serving as the largely ceremonial president, Mr Djukanovic has presented the heckling around the China-built highway as another twist on what he sees as a Russian scheme. to assert its influence in Montenegro. The pro-Moscow deputies are not represented in the new government, but, out of hostility towards Mr. Djukanovic, they generally support him.

By attacking the Chinese highway, said Djukanovic, these lawmakers are helping Russia’s ambitions to “stop the enlargement of NATO and also of the European Union in the region”.

Having changed allegiance so many times, Mr. Djukanovic inspires little confidence in Montenegro, especially since his own government has shrouded the highway project in a thick cloud of secrecy. “Sometimes it seems like they’re building a rocket base, not a road,” said Dejan Milovac of MANS, a Montenegrin research group focused on anti-corruption work and longtime critic of the highway.

A 2014 loan deal with Exim Bank of China, a state lender, was made public – and it revealed that China could seize property in the event of default like it did in Sri Lanka, where it took over the main port after the country fell behind. on a Chinese loan. But almost all other documents relating to the Montenegrin highway have been classified.

When Mr Djukanovic first pitched the idea, several foreign companies, including Bechtel, the US engineering and construction giant, expressed interest. Bechtel came up with a more modest and less expensive project, but lost to a larger and much more expensive proposal from China Road and Bridge Corporation.

Robert Gelbard, the Clinton administration’s envoy to the Balkans, recalled advising Djukanovic he should be wary of hiring the Chinese company, telling him that Poland recently canceled its own road contract with another Chinese company and sued it for poor quality work.

Mr. Djukanovic said China Road and Bridge Corporation was chosen simply because it submitted “the best offer”. The company refused to make its staff available for interviews, and its Beijing headquarters did not respond to written questions.

The funding, however, caused serious headaches in Montenegro. A loan from Eximbank to finance the project was denominated in dollars, which made Montenegro, which uses the euro, vulnerable to the vagaries of foreign exchange markets. Interest has been set at 2% per annum, much higher than what European lenders usually charge for infrastructure loans.

“It was a horrible deal, obviously,” said Milojko Spajic, Montenegro’s new finance minister. He recently negotiated a so-called swap deal with European and US banks that effectively converted the Chinese dollar loan to euros with an interest rate of 0.87%. Montenegro made its first payment on the Chinese loan last month and, Spajic said, it will not default.

A 2012 study by a UK company for Montenegro’s Ministry of Transport warned that construction costs would be unusually high due to mountainous terrain. Despite this, his cost estimates were considerably lower than the more than $ 900 million charged by the China Road and Bridge Corporation to build the 25-mile, but particularly difficult, stretch of the highway.

An earlier feasibility study, carried out in 2007, by Louis Berger, an engineering firm in Paris, warned that traffic along the proposed highway would not be “high enough to warrant” an investment “on a purely basis. financial “. But he added that “social, political and economic” factors “should be taken into account before making the decision whether or not to continue with the proposed program.”

Almost $ 280 million, more than half of the total amount paid to local subcontractors, went to a single Montenegro company, Bemax, officially owned by a former cafe owner who, before embarking on construction of roads, had no engineering experience. work, according to MANS, the research group.

Nebojsa Medojevic, Member of Parliament, claimed that Bemax was in fact owned by a close adviser to Mr Djukanovic, Milan Rocen, a former ambassador to Moscow. Mr Djukanovic denied this, saying he had “of course” asked his adviser and made sure the claims were false. Mr. Rocen himself categorically denied owning Bemax.

“We joked about it,” Djukanovic said. “These are just speculations by political opponents. Charges of corruption, he added, “have nothing to do with reality in my case.”

The new government has said it would like to complete construction of the entire length of the highway, preferably with EU funding rather than Chinese, and will not leave it stranded in the empty forest.

With their stretch of road now almost finished, many Chinese workers have left. Those who remain seem skeptical about building the entire highway.

“Montenegro is too poor. They don’t have enough money to continue, ”scoffed Shen Wei, a laborer from central China’s Henan Province, outside an almost empty construction camp. “I just want to go home,” he added.

Alisa Doggramadzieva contributed reporting from Podgorica, Montenegro.

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