After narrowly avoiding the 'debt trap', Montenegro continues to do business with China

He told Radio Free Europe (RFE) that China has been implementing a strategy of patient positioning in the Western Balkans for the past ten years, using various tools to provide leverage.

"The most risky thing for the targeted countries is the 'debt trap'. Montenegro came closest to falling into this political and economic trap with the Bar-Boljare highway project," says Šopov.

The highway was being built by the Chinese CRBC, with a loan from the Chinese Exim Bank, the repayment of which threatened to plunge Montenegro into "debt slavery."

Despite this, China has remained a key partner of Montenegro in the construction of infrastructure works. This is accompanied by numerous donations to institutions, agreements in culture and education, student exchanges, study tours of journalists to China...

Official China claims that none of its activities are politically motivated or pose a threat to Montenegro.

 

The Chinese company CRBC (China Road And Bridge Corporation) worked for seven years on the 41-kilometer first section of the Bar-Boljare highway. The completion of the work was delayed by three years, the part of the route in the Tara riverbed was ecologically devastated, and the contract was uThe section, which cost over $900 million, was built with a loan from the Chinese Exim Bank. Before the first installment was paid in 2021, a hedging arrangement was concluded with Western banks in order to protect Montenegrin public finances from the currency risk that the loan carried.

 

When a senior US official called on the Montenegrin government to continue to be cautious in dealings with China, the Chinese embassy told US officials that they should watch their dealings with Montenegro.

The Washington-based Center for Global Development wrote in 2018 about Montenegro as being highly vulnerable and at risk of debt bondage to China.

In March 2023, Chinese Ambassador to Montenegro Fan Kun called Montenegro's potential debt bondage due to its debt to the Exim Bank a prejudice.

This is not the only arrangement the state has with this bank.

During 2010 and 2012, Montenegro purchased four cargo ships, with a loan from EXIM Bank, the repayment of which was guaranteed by the state with 93.7 million dollars and which are now mostly being repaid by the government.

The ships were built by the Chinese company Poly Technologies.  

 

 

 

Three Chinese companies applied for the pre-qualification tender for the construction of the second section of the highway, in the north, but that tender was canceled in early February.

Although part of the ruling majority claimed that the tender was canceled because only non-European companies applied, this was not confirmed by the government.

Then, at the end of February, a new tender was announced on the website of the European Bank for Reconstruction and Development (EBRD) to select a designer and contractor for the 23.5-kilometer section, the construction of which will cost about 600 million euros. The EBRD will support the construction with 100 million.

 

Shandong is working on the largest project in Montenegro

The Chinese company Shandong is also engaged in the currently largest construction project, the reconstruction of the Tivat-Budva road. The deadline for the reconstruction of the 16-kilometer route, worth 54 million euros, was January 2026.

In addition, the ecological reconstruction of the Pljevlja Thermal Power Plant worth 60 million euros is being carried out by "Dongfang Electric Corporation", and "Shanghai Electric Power Engineering" has completed the Možura wind farm between Bar and Ulcinj in the south of the country.

 

At the same time, the Chinese company "Shandong Luqiao Group" will begin the reconstruction of the bridge on the Đurđevića Tara in May, which is financed by a donation from the Chinese Government in the amount of seven million euros.

This is a bridge that was built in 1940 and was the inspiration for the partisan film "The Bridge", which was extremely popular in China.

 

Shopov: Through the Western Balkans to Europe

Beijing is pursuing an expansionist strategy to increase its global influence and power, focusing on its immediate neighborhood, Southeast Asia, the South China Sea, and Western Europe, while the Western Balkans are part of a broader Chinese strategy, Shopov says.

He adds that the Chinese authorities are trying to gain a significant position in countries that are in the process of joining the EU and are NATO members, perceiving them as the EU's periphery from where they can act towards the union:

"An example is the focus on Serbia and the connection with Hungary, the railway route from Greece to Central Europe through North Macedonia and Serbia, and the Adriatic maritime route, which explains China's interest in seaports in countries like Montenegro and Croatia."

He concludes that creating economic dependence in countries where China operates is an instrument for expanding its influence towards Western Europe.

According to the Central Bank, from 2006 to 2019, Chinese investments were around ten million euros, rising to 71.2 million in 2020. In the following years, they fell to 6.5 and in 2022 to less than one million euros.

 

Along with economic projects, there is also 'soft power'

The Framework Agreement on Economic and Technical Cooperation between China and Montenegro, signed 12 years ago, has enabled donations worth millions.

Hybrid vehicles, multimedia equipment for schools, medical and financial assistance during the pandemic, IT equipment... are part of China's donations to Montenegro.

Trips to China have also been organized for Montenegrin educators, employees in local and state administration, businessmen... Two Confucius Institutes, at a state and private university, promote the Chinese language and culture.

Montenegrin and Chinese higher education institutions have signed several memorandums of understanding. The latest, from 2024 with Shandong Jiaotong University, envisages "the exchange of teachers and students, the transfer of knowledge and modern technologies".

 

The Ministries of Science of the two countries will have 15 joint scientific research projects this and next year.

The Chinese embassy in Podgorica did not respond to RFE/RL's inquiry about the amount of donations so far, the number of study trips, scholarships and other allocations.

Šopov states that China has changed its approach, and has moved from attempting to "capture" political and academic elites in the Western Balkans to a strategy of influencing local communities and entities:

"This includes cooperation with local authorities, schools, cultural groups... Cooperation with the media is also increasingly present, which indicates the use of soft power in the areas of culture and familiarization with Chinese values."

 

 

Formal media cooperation began in 2019 with the signing of an agreement between the Public Service Radio Television of Montenegro (RTCG) and the China International Television Corporation.

The Public Service then expanded its cooperation with the China Media Group, which brings together the most important media in China.

The main media in China are state-owned and directly controlled by the authorities.

A 2023 report by Reporters Without Borders states that China is "the largest prison for journalists in the world" with more than 100 detained journalists.

The organization's latest report from May 2024 states that China is among the 10 most dangerous countries in the world for media workers.

However, media freedoms in China have not been an obstacle for dozens of Montenegrin journalists to visit China on study visits in previous years and learn about its development opportunities.

After the visit, the mainstream media published affirmative reports about the beauty of ancient buildings, technological development...

Several participants unofficially confirmed to RFE/RL that during their stay in China they were constantly escorted by the organizers and had very limited freedom of movement.  

 

 

 

Montenegro was on the verge of falling into a “debt trap” a few years ago when problems arose with the repayment of loans for the construction of the Bar-Boljare highway section. European banks came to the rescue and the Montenegrin state did not fall into China’s “debt trap”. There was speculation in the media that in the event of default on the debt for the Chinese loan, China would take over the Montenegrin port of Bar. However, since the public was never informed of the contract that the Montenegrin authorities signed with the Chinese bank, there was no official confirmation of this information.

Although they went through this crisis situation, the Montenegrin authorities continued to cooperate with Chinese companies on infrastructure projects, mainly based on loans from Chinese banks, under conditions that are, for the most part, unknown to the public. Analysts agree that Montenegro (like other Western Balkan countries) is actually just one of the countries from which China wants to get closer to the European Union, and that its economic affairs are ultimately aimed at achieving and strengthening geopolitical influence, and the authorities continue to cooperate with Chinese companies under non-transparent conditions.