Uganda is the latest victim of the “debt trap” of the Xi Jinping regime to refurbish the airport

Uganda appears to be the latest victim of China’s “debt trap”, The strategy of Xi Jinping’s regime Maintain the resources of developing countries By providing loans for infrastructure construction that cannot be paid.

The alarm went off at the end of November when it happened Uganda, A poor East African country, If it defaults on the $200 million loan owed to Beijing, it can hand over to Entebbe International Airport Expansion and improvement of facilities in 2015.

Diary announced Daily monitoring It caused a sensation in Uganda. The Chinese flag was flying over the airport, and others displayed a banner that said “Welcome to Entebbe International Airport, China” It is widely shared on social media.

Although both the Chinese and Ugandan civil aviation authorities deny the possibility that the airport will eventually be controlled by China, The disclosure once again triggered the review of the impact of the investment and loan plan China seeks to build a huge network of transportation, energy and telecommunications infrastructure, called “One Belt One Road” Initiative.

In recent years, these investments have been particularly active in Africa and neighboring Asian countries.

exist Kenya Yes Ethiopia, Politicians, public watchdogs and the media are all questioning Beijing’s expensive railway. Change of Government Zambia Revealed this year Previously undisclosed debt to China, The new leadership turned to the International Monetary Fund for financial support.

other A typical case is the transfer of a major port in Sri Lanka to a Chinese government company in 2016. After the country was unable to repay the loan to fund the project.What is symbolic in Latin America is Coca Codo Sinclair Dam, Ecuador.

A similar but more complex scene is being staged Uganda.

Entebbe Airport Expansion Project China Communications Construction Corporation, State-owned, Since March 2016.

According to the plan, after review Wall Street Journal, This Export-Import Bank of China It will lend to Uganda, and Uganda will pay for the Chinese company’s construction of new passenger and freight complex facilities, as well as the repair of two runways and related taxiways.Approximately three-quarters of the refurbishment project is completed and connects the airport with Independent highway funded by China, Head to Kampala, the capital of Uganda. The project is expected to be completed by the end of 2022.

In the loan program, the project will be loaned in two phases, with loans of US$200 million and US$125 million, with an interest rate of 2%. 27-year payback period, The total expenditure is 417.91 million U.S. dollars.

When Uganda agreed to the deal, the escrow agreement mentioned in the 17-page proposal received little public attention.The loan agreement itself is not public.

In October of this year, a parliamentary group led by opposition politicians revealed that the agreement stipulates that All income and expenses generated by the airport operator, Uganda Civil Aviation Authority, Accounts that will be controlled by the Export-Import Bank In the Kampala branch of the Standard Bank of South Africa Group Co., Ltd., partly controlled by the largest bank in Beijing ICBC (ICBC).

In other words, The transaction gave the Chinese government-controlled bank financial supervision power, which is usually reserved by the national treasury and parliament. At the same time, it has the right to influence which creditors receive payment first.

The agreement also Restrict the Ugandan government’s ability to use the revenue generated by the strategic airport For Central Africa and fast-growing traffic.

“Export-Import Bank Now he must approve any budget expenditures” Member of Parliament from Uganda’s aviation authority Joel Ssenyonyi (Joel Ssenyonyi) said he was the head of the parliamentary group and revealed the details of the loan. “very scary”.

In an uproar, when the local media condemned the airport’s risk of being controlled by China, the parliament summoned the Ugandan Minister of Finance. Mattia Cassia.

The official said it was wrong to accept these terms, but The Chinese negotiator proposed an “accept or waive” agreementHe said that the loan will be repaid and the airport will not fall into the hands of the Chinese. The first loan will expire in April.

Official Uganda says Beijing has rejected their efforts to secure better terms for Entebbe airport debt, Especially the deletion of what they call “toxic” contract clauses related to escrow and waiver of sovereign immunity.

The case put pressure on the President of Uganda, Yoweri MuseveniHe has been criticized for being too close to Chinese leaders and accepting too many loans.

There are at least four other loans in Uganda from the Export-Import Bank for projects with similar credit terms to those of the airport, According to the opposition. The President’s Office stated that Museveni himself had tried to renegotiate problematic loan terms.

The increasingly stringent scrutiny of Chinese loans has made Chinese loans themselves Xi Jinping Suspend debt to low-income borrowers affected by COVID-19 in 2020 and 2021.

The President also pledged last month that China’s presence in Africa is an “equality association.” During a virtual speech to regional leaders gathered in Senegal Triennial meeting of the Forum on China-Africa CooperationAnalysts said that Xi Jinping seems to have played down regional loans and infrastructure construction, instead emphasizing commercial projects and cooperation in the fight against the epidemic.

In this context, some Western governments and academics believe that Chinese loans are a kind of Political risk Yes finance Not only for the countries that received them, but also for the development of Beijing.

According to a report Yun SunNon-resident fellow of the Brookings Institution, China may be forced to cut loans because “This is not financially feasible, and it is politically problematic.”

continue reading: