EU Rejects Montenegro's Request for Debt Support from China... Concerns Over Debt Trap

"Loan Received from a Third Party, Not Repaid"
Montenegro Faces Risk of Part of Its Territory Being Used as Collateral

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The European Union (EU) announced that it has rejected Montenegro's request for $1 billion (approximately 1.1272 trillion KRW) in debt support related to China. Since 2014, Montenegro has joined China's Belt and Road Initiative (land and maritime Silk Road) project and has received massive loans from China. It is reported that if Montenegro fails to repay the $1 billion debt by July this year, it will have to hand over part of its territory, which is held as collateral, to China.

According to foreign media including CNN, on the 12th (local time), the EU Commission announced that it would reject Montenegro's earlier request for $1 billion in debt support related to China. The EU Commission stated in a press release, "The EU is already providing the largest financial support to Montenegro compared to other countries," and drew a line by saying, "We cannot repay loans borrowed from third parties."

Montenegro's debt to China began after Montenegro signed a Belt and Road project contract with China in 2014. At that time, the Montenegrin government borrowed $1 billion, about 85% of the construction cost, from the Export-Import Bank of China to build a highway between the Adriatic Sea and Serbia. Including other debts borrowed from China, it is known that China holds about 25% of Montenegro's total debt.

If the Montenegrin government fails to meet the loan repayment deadline scheduled for July and declares default, China will have the right to claim part of Montenegro's territory, which was previously set as collateral for the loan. The U.S. political media outlet Politico reported that China might lease ports long-term, as in the cases of Sri Lanka or Pakistan, and could also build a naval base in the western Balkans, close to the heart of Europe.

According to major foreign media, voices within the EU are calling for support for Montenegro through other means. This is reportedly due to concerns that China's influence could spread deep into Europe. The UK think tank European Council on Foreign Relations (ECFR) pointed out in a report released last February that "China is on the verge of gaining leverage over policies and politics in the western Balkans."

This content was produced with the assistance of AI translation services.