I was wondering if anyone is concerned about the recent deal Italy signed with China, and what, if any thoughts folks have about it. If you don’t know anything about it, I’ll link to this Reuters (bare bones) article that doesn’t get into any of the politics and just talks about parts of the deal.
The article goes on to list some of the projects and deals on the table, which I won’t cut and paste here. So…anyone concerned by this? To give this some perspective, Greece signed a similar deal and has subsequently voted in the EU to not censure Chinese human rights violations. They also lost control of one of their major ports to China due to one of these win/win (with Chinese characteristics) deals. Just wondering if anyone has any concerns that Italy, who is in a whole 'nother league (they are a G-7 nation after all) is doing a similar deal when they are having financial issues of their own. Also, what folks thoughts are on this.
No opinion, but your post made me inquire about the “belt and road”, and I found it really interesting. I now understand a bit while you would feel concerned about it.
A lot of the wealthier countries seem to feel these Chinese investments are really debt traps for poor nations, even referring to them as the ‘payday loans’ of infrastructure investment.
I’m not sure, I think only time will really tell. Unfortunately that could prove too late for some nations. Losing control of a port is pretty important, even for nations starved for infrastructure money. But everything comes at a cost, so it’s a hard call for these nations.
Even in Cambodia, communist and very friendly with China, cracks are showing. Heavy Chinese investment in the port city of Sihanoukville is starting to draw the ire of the local population.
Honestly, this post of yours might have been good a few years ago, but there is no question today that they are debt traps…they have actually already sprung on several countries. China ALREADY has taken control of several countries infrastructure or forced basing rights on countries that have defaulted. And then there is the fact that a lot of the ‘infrastructure’ projects are quite corrupt and, invariably, use Chinese (not local) labor, and really don’t benefit most of the countries who have taken the ‘loans’ (they generally benefit the elite rulers in one way or another).
I was just curious if folks were worried or even thought about it (or I guess knew about it). This time it’s a much more prominent nation, especially within the sphere of the EU…not that Greece already voting aligned with China isn’t worrying itself with the EU’s voting structure. But Italy is in a much larger league than Greece or some of the other EU countries who have accepted some level of ‘help’ from China, though I suppose that also means they are in at least a marginally better position to avoid the trap and be able to repay the loans.
I would be worried if I were an Italian, but then again they are being looted by their country’s government in any case. This is not a meaningful change to their current situation.
It’s sad that more and more countries are turning to this state-dominated mercantilist model, but that is the natural outcome of a society that has shunned capitalism, which itself is the natural outcome of political centralization. Decentralized Italy was a beautiful model for the world and represented a real step forward in property rights and human flourishing.
I’m not sure if these are the expected concerns. From the OP it seems the concerns should be self-evident.
Other than only being able to do that little stunt once, what mechanism is in place to prevent the loanees from just taking control of the infrastructures and telling the Chinese and their workers “thanks, now take a hike” ?
I mean it’s not like China is going to send a gunboat to the Mediterranean Sea to cow Italy into submission, like we did to China back in the day ; and even if they retaliated via tariffs and such Italy would still be able to freely access Chinese trade goods through the EU.
What mechanisms are in place for anyone who is giving someone else (or some other country) a loan? And, again, the Chinese have ALREADY done this more than once. My WAG is that countries who take out large loans from the Chinese don’t do what you are saying because that would mean that the other projects China is ‘helping’ them out on would probably collapse…plus, no future loans. Possibly not just from China but other countries might be reluctant to loan money to someone who is just going to say ‘thanks, now take a hike’ when the loan comes due and they can’t pay.
The thing is, China doesn’t just come out and say ‘if you can’t pay we’ll take your port’. They give you the money, then when you can’t pay they will give you some options…figure out a way to pay, do something for us, give us this 99 year exclusive ‘lease’ on your port or something of equal value. It’s up to the individual countries to decide what they want to do. Several, such as Greece, have decided to give them their exclusive lease. Some have given them basing rights for Chinese warships or troops. A few have seen the trap and canceled the projects.
No, they won’t send a gunboat to Italy to force them to comply. I suppose Italy could just take the money then when (or if in this case) they can’t pay it back they could tell the Chinese to pound sand, but that sort of puts Italy on the list of countries it’s not safe to loan money to or invest in. What is more likely is that China gives them a range of things they would accept in lieu of payments or to mitigate the payments and let the Italians decide what works for them.
As a Chinese, I feel nothing to worry about… Italians have shown in the WWⅡ that they are good at taking sides, as the Italian prime minister said: “do it first and you get the benefits of the front-runner.” Now that Italy has two rightwing parties bent on confronting the franco-german axis, a diplomatic rift with the eu is inevitable. By the way, I never felt that we actually controlled Sri Lanka and that we couldn’t station the fleet there, which would have alarmed India.