Trinidad must be cautious about Chinese loans – US Professor

(Trinidad Guardian) T&T’s debt to Chi­na has jumped from $2.2 bil­lion last year to $6.2 bil­lion af­ter Gov­ern­ment part­nered with Chi­na again on two new projects.

That new fig­ure in­cludes the ex­ist­ing debt in­her­it­ed from the for­mer ad­min­is­tra­tions and now in­cludes the $3 bil­lion for new­ly-pro­posed La Brea Dry Dock fa­cil­i­ty and the $1 bil­lion plan for Phoenix Park.

Pri­or to the 2019 Bud­get pre­sen­ta­tion, Fi­nance Min­is­ter Colm Im­bert said T&T owes the Peo­ple’s Re­pub­lic of Chi­na $2.229 bil­lion.

To date, there has been very lit­tle in­for­ma­tion in the pub­lic do­main about these deals.

Many peo­ple have ex­pressed con­cerns that if T&T is not care­ful it may run the risk of falling in­to a crouch­ing eco­nom­ic tiger, hid­den drag­on debt trap sim­i­lar to sev­er­al coun­tries who were un­able to re­pay Chi­na, such as Sri Lan­ka, which hand­ed over its strate­gi­cal­ly lo­cat­ed US $1.3 bil­lion Ham­ban­to­ta port to Chi­na.

The proposed La Brea dry dock

Af­ter lend­ing bil­lions of dol­lars to heav­i­ly in­debt­ed Dji­bouti, Chi­na now has its first over­seas mil­i­tary base in that strate­gic coun­try and var­i­ous na­tions through­out the world who have bartered their coun­tries’ min­er­als, oil, and land for Chi­nese loans. Chi­na is now propos­ing to take over the Ken­neth Kaun­da In­ter­na­tion­al Air­port should the Zam­bia Gov­ern­ment fail to pay back its huge for­eign debt on time.

A to­tal of 68 coun­tries are in­volved in Chi­na’s am­bi­tious US$4 tril­lion Belt and Road Ini­tia­tive, through which Chi­na seeks to boost trade and stim­u­late eco­nom­ic growth across Asia and be­yond. It hopes to do so by build­ing mas­sive amounts of in­fra­struc­ture, roads, port fa­cil­i­ties, new gov­ern­ment build­ings, bridges con­nect­ing it to coun­tries around the globe, fi­nanced by Chi­nese gov­ern­ment do­na­tions, aid, loans, and in­vest­ments.

Crit­ics say Chi­na’s plan is to gain geopo­lit­i­cal in­flu­ence, by en­gag­ing in “debt-trap diplo­ma­cy”; en­cour­ag­ing in­debt­ed­ness in cash-strapped coun­tries and then to take over strate­gic na­tion­al as­sets when debtors de­fault on re­pay­ments.

On Fri­day, Unit­ed States pres­i­dent Don­ald Trump met with se­lect­ed lead­ers with­in Cari­com and one of the top­ics of dis­cus­sion was ex­pect­ed to be the in­vest­ments from Chi­na in­to the Caribbean.

How­ev­er, Trump and the Caribbean lead­ers did not dis­cuss Chi­nese in­vest­ment is­sues.

Ac­cord­ing to in­ter­na­tion­al re­ports, at that meet­ing Trump in­stead pledged US in­vest­ment with the five Caribbean lead­ers who sided with the Unit­ed States in back­ing Venezue­lan op­po­si­tion leader Juan Guai­do as head of state.

On Fri­day, the U S pres­i­dent met with St Lu­cia Prime Min­is­ter Allen Chas­tanet, Do­mini­can Re­pub­lic Pres­i­dent Dani­lo Med­i­na, Ja­maica Prime Min­is­ter An­drew Hol­ness, Haiti Pres­i­dent Jovenel Moi­se and Ba­hamas Prime Min­is­ter Hu­bert Min­nis at his pri­vate Mar-a-La­go es­tate in Palm Beach, Flori­da.

Ac­cord­ing to White House state­ment, Trump promised that a high-lev­el del­e­ga­tion from the Over­seas Pri­vate In­vest­ment Cor­po­ra­tion, the US de­vel­op­ment lender, would vis­it each of the five na­tions in the next 90 days.

While Trump steered clear of the Chi­nese in­vest­ment, the lo­cal arm of the US Em­bassy brought in an ex­pert in the field of Chi­nese mi­gra­tion of in­vest­ments to speak to sev­er­al lo­cal busi­ness bod­ies over the past week.

Dr Evan El­lis is a re­search pro­fes­sor of Latin Amer­i­can Stud­ies at the US Army War Col­lege (US­AWC) Strate­gic Stud­ies In­sti­tute (SSI) and has been study­ing Chi­nese in­vest­ment in the Caribbean and Latin Amer­i­ca for the past 16 years.

In an in­ter­view with Guardian Me­dia on Fri­day, El­lis warned the Gov­ern­ment to be “cau­tious” be­fore sign­ing any deals for in­vest­ments.

He spoke specif­i­cal­ly of the La Brea Dry Dock and Phoenix Park In­dus­tri­al Es­tate.

“Again, it’s the Gov­ern­ment’s mon­ey but it’s the peo­ple’s mon­ey that’s be­ing spent and the ques­tions that rais­es some con­cern for me is whether or not that is a com­pet­i­tive fa­cil­i­ty based on where the ma­jor ship­ping lines, such as Mediter­ranean Ship­ping or Cosco would pre­fer to do their dry dock,” he said.

“I would raise it as an open ques­tion and not nec­es­sar­i­ly as a con­clu­sion but it’s very im­por­tant that the Gov­ern­ment do a good busi­ness case if it does in­vest $500 mil­lion of the peo­ple’s mon­ey.”

With re­gard to the pro­posed in­vest­ment in­to Phoenix Park, El­lis said that af­ter fol­low­ing Chi­nese ac­tiv­i­ties for 16 years, there are ques­tions to be raised.

“I un­der­stand that there is a de­sire for the gen­er­a­tion rapid­ly of jobs, the prob­lem though is on the one hand the Gov­ern­ment is talk­ing about spend­ing the peo­ple’s mon­ey which would go up­front to the Chi­nese firm, Bei­jing Con­struc­tion and En­gi­neer­ing Group (BCEG),” he said.

El­lis said that there was a pre­sump­tion of con­fi­dence on the promis­es made in the agree­ment, that BCEG will bring in 60 oth­er com­pa­nies and pro­duce thou­sands of jobs.

“The Gov­ern­ment needs to make sure those promised jobs come,” he said.

El­lis said he worked with com­pa­nies in El Sal­vador and Pana­ma where the con­tracts and agree­ments were not scru­ti­nised enough and it left those two na­tions fi­nan­cial­ly ex­posed.

“It is par­tic­u­lar­ly im­por­tant that be­fore the Gov­ern­ment spends $1 bil­lion of the peo­ple’s mon­ey they need to make sure those com­pa­nies are com­ing in and what would be the con­di­tions that they ex­pect from the Gov­ern­ment to make that at­trac­tive,” he said.

Guardian Me­dia con­tact­ed the Chi­nese em­bassy for clar­i­fi­ca­tion on the range and scope of the in­vest­ment in the coun­try but was told that the em­bassy had not re­ceived au­tho­ri­sa­tion from its head of­fice to give out that da­ta.

This was the same re­sponse the Em­bassy gave sev­er­al times when Guardian Me­dia sought more in­for­ma­tion.

On March 13, Guardian Me­dia con­tact­ed Trade Min­is­ter Paula Gopee-Scoon re­quest­ing a meet­ing and more in­for­ma­tion on the Chi­nese in­vest­ments. She asked for a meet­ing to be set up for March 19. She al­so di­rect­ed Guardian Me­dia to set up the meet­ing with her as­sis­tant. Guardian Me­dia al­so sent ques­tions to the as­sis­tant but re­ceived no re­sponse. On Tues­day, Guardian Me­dia con­tact­ed the Min­is­ter and her as­sis­tant to fol­low-up and was once again di­rect­ed to put off the meet­ing un­til March 26. Gopee-Scoon is ex­pect­ed to re­spond to ques­tions then.

 

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