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China In Eurasia

An aerial views shows a part of the new highway connecting the city of Bar on Montenegro's Adriatic coast to landlocked neighbor Serbia near Matesevo in May 2021.
An aerial views shows a part of the new highway connecting the city of Bar on Montenegro's Adriatic coast to landlocked neighbor Serbia near Matesevo in May 2021.

PODGORICA -- Eight years after the contract was first signed, the initial section of a controversial highway project in Montenegro paid for by a massive $1 billion Chinese loan is nearing completion -- but it still faces lingering questions about its future.

Once hailed by China as a landmark deal within the Belt and Road Initiative -- its globe-spanning infrastructure project -- the highway has since become a cautionary tale that fused together the perils of poor-quality Chinese construction and cursory lending practices with endemic local corruption concerns in the Balkan country.

Montenegro initially borrowed nearly $1 billion from the Export-Import Bank of China in 2014 to fund the first portion of a 163-kilometer highway to link the port city of Bar with neighboring Serbia under the promise of bolstering economic activity in the Balkan country, but Podgorica was instead saddled with debts to China that totaled more than one-third of the government's annual budget.

That long chapter looks set to close, with Montenegrin Prime Minister Dritan Abazovic announcing in May that the first 41-kilometer section of the highway would open this summer.

Ervin Ibrahimovic, Montenegro's minister of capital investments, said during remarks broadcast on state television on May 16 that it could be unveiled in July, although he did not specify what still needed to be completed.

But the story of the controversial highway is far from over, with the future of the remaining 122 kilometers of the originally planned road still unbuilt. At the moment, the initial stretch of road fades out into the middle of a large, forested area and no funds are currently available to continue building the remaining portion.

That has led to growing scrutiny and speculation from local activists and international donors about Beijing's objectives in Montenegro and the Balkans, as well as the motives of the previous government that first gave the green light to the highway.

"Any further delay in the opening of the highway is a direct loss for the state and citizens," Dejan Milovac from the watchdog organization The Network for Affirmation of the Nongovernmental Sector (MANS), told RFE/RL.

The original deadline for completion of the highway was November 2019, which was since been pushed back multiple times by the China Road and Bridge Corporation (CRBC), the state company undertaking the construction, which cited the COVID-19 pandemic as the source of the delays.

MANS estimated that the multiple postponements the project has experienced have led to lost revenue from the would-be toll road, with Milovac saying that four successive governments being unaware of when the highway will be completed points to "how frivolously the state approached the project."

Montenegro's Long Road

Despite failing several feasibility studies, the project was inked by then-Prime Minister Milo Djukanovic's government, who took out the massive Chinese loan to fund the highway and enveloped it in a cloud of secrecy.

In addition to the feasibility studies, questions of the profitability and necessity of the highway have followed it since its inception. Djukanovic's government also received construction offers from multiple foreign companies, including the U.S. engineering and construction giant Bechtel, that proposed a more modest and less costly project that ultimately lost out to the CRBC.

The 2014 loan agreement with the Export-Import Bank of China has been made public, but nearly all other documents relating to the Montenegrin highway have been classified as secret by Podgorica.

Amid delays and mounting debt, the engineering project found itself at the heart of a heated debate on Chinese influence in Europe when Podgorica raised concerns that it would be unable to meet its payments to the Export-Import Bank, a state lender, in 2021.

The small Balkan country of just 620,000 people eventually struck a deal with one French and two U.S. banks to restructure the $1 billion Chinese loan and has since made its first debt payment.

The highway, which according to one study could be the world's most expensive road at an estimated $23.8 million per kilometer, has also faced issues over its quality, with former Prime Minister Zdravko Krivokapic visiting the project in December 2021 and criticizing what he said was poor construction.

Krivokapic was ousted in a no-confidence vote in late February and replaced in April by Abazovic, who has been a longtime critic of the highway and first sounded the alarm about debt concerns over the loan during a March 2021 trip to Brussels.

Abazovic's government has signaled a tougher line than its predecessors in pushing back against CRBC and construction delays. Miroslav Masic, director-general for state roads at Montenegro's Capital Investments Ministry, told RFE/RL that apart from an initial extension to November 2020 due to the pandemic, that the government believes that CRBC's reasons for delays are unfounded. "Everything after that [November 2020] deadline is [CRBC]'s responsibility," he said.

Then Montenegro's deputy prime minister, Dritan Abazovic (left) meets with EU foreign policy chiefJosep Borrell in Brussels in March 17, 2021.
Then Montenegro's deputy prime minister, Dritan Abazovic (left) meets with EU foreign policy chiefJosep Borrell in Brussels in March 17, 2021.

CRBC did not respond to RFE/RL's requests for comment about the delays.

Damage Control

Masic says that the government has already begun a procedure to recuperate costs from CRBC due to the multiple delays in the form of penalties. "Certainly, by the end of the project, these penalties can be issued and an overview of costs incurred due to delays can be made," he said.

Milovac from MANS says the current government is right to claim compensation from the Chinese construction firm, but adds that CRBC is not solely responsible for the controversy and problems associated with the troubled highway project.

Only after the complete publication of all the documents and contracts related to the highway, he says, will it be clear who holds responsibility. "On several occasions, we had delays that were approved by previous ministries without the public being fully aware of the exact reasons for that," Milovac said. "As soon as it was approved, we can assume that the blame was also on [the Montenegrin] side and not only on the Chinese side."

Written by Reid Standish based on reporting by Predrag Tomovic of RFE/RL's Balkan Service in Podgorica
A sign outside the Canadian Embassy in Beijing showing the Ukraine flag on March 3 reads, "We stand together with Ukraine."
A sign outside the Canadian Embassy in Beijing showing the Ukraine flag on March 3 reads, "We stand together with Ukraine."

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

Why The Ukraine War Matters For Asia

The ripple effects of the Ukraine war are spreading across the world and already hitting East Asia, where the conflict is becoming a reflection of future tensions between China, NATO, and the United States, as I wrote here.

Finding Perspective: As the war continues to grind on, former and current Chinese officials and state-run propaganda networks have ramped up their rhetoric to warn about NATO and the United States' footprint in Asia.

Beijing has been closely watching the response to Russia's invasion and drawing potential lessons for any tensions over Taiwan, which China claims as its territory and has threatened to invade if Taipei refuses to submit to its control.

While China remains concerned about a growing U.S. and NATO security role in the Indo-Pacific, the official view coming from Beijing seems to be that the Ukraine war will further delay the United States' refocus on Asia and bog the country down in Europe.

"Joe Biden had hoped to put Russia policy on a 'stable and predictable' footing in order to focus on America's Indo-Pacific strategy. The war in Ukraine undoubtedly will distract America's attention and [siphon] away resources," Senior Colonel Zhou Bo, a retired officer of China's People's Liberation Army, wrote in The Economist.

Washington, meanwhile, seems to be drawing different lessons, with Bloomberg reporting that U.S. officials believe that bolstered European defense spending in the wake of the war and a weakened Russia could allow it to accelerate a security shift toward China.

Why It Matters: While the expansion of NATO to include Finland and Sweden and the Ukraine war will take center stage at an upcoming summit in Madrid in late June, China will also be a leading theme, as the alliance is expected to update its strategic concept to focus more on Beijing.

A NATO official recently told RFE/RL to expect new language and agreement from the alliance about China.

"My sense is that we will be a little bit more precise in talking about China as a strategic challenge to the alliance, [but] not necessarily a military threat," the official said, adding that Beijing and Moscow's growing partnership is also receiving newfound attention. "There will be a desire to make sure that they're not equated -- Russia and China -- but [also] that they are reflected as key strategic players that are driving the changes in our environment. So I expect something a little bit more concrete than what we've done so far."

The exact wording is currently being negotiated among NATO members and the official was quick to note that the alliance would need to find the right balance for all 30 allies, which include some more China-friendly governments like Hungary and Greece, but the official added that the statement would be "noteworthy in terms of getting a sense of where [the alliance is] going."

"There have been a couple of mentions of China, including at the last summit, but it's the first time that a political strategy of NATO actually addresses China, ever," the official said.

Read more

● I interviewed Alicia Garcia-Herrero, the chief economist for Asia-Pacific at the investment bank Natixis, about what lessons Beijing is drawing from the Ukraine war and the limits on its support for Russia. Read the entire discussion here.

● The United States, the European Union, and other Group of Seven (G7) advanced economies recently called on Beijing to "resolutely" urge Russia to stop the war in Ukraine, adding to previous warnings against economic or military assistance for the Kremlin.

● Taiwan is also learning lessons from the Ukraine war. Taipei kicked off the first stage of its annual military exercises on May 16, drawing on lessons from the war in Ukraine as part of its asymmetric warfare strategy to repel a simulated attack from the Chinese mainland by placing a growing emphasis on portable Javelin and Stinger missiles, which have played an important role in destroying Russian tanks.

Expert Corner: What's Behind China's COVID-Zero Strategy?

Readers asked: "China's Covid-zero strategy is creating blowback from the public and hurting the economy. Why is Beijing sticking with this stance and what could change it?"

To find out more, I asked Isaac Stone Fish, author of America Second: How America's Elites Are Making China Stronger and a visiting fellow at the Atlantic Council:

"It's hard to know why Beijing is persisting with its inhumane strategy of forced lockdowns for tens of millions of people. China's health system, its reliance on less effective vaccines, and the large numbers of unvaccinated elderly play a role. But the strategy also reflects the power struggle happening at the top of the Chinese Communist Party, as Chairman Xi Jinping's second term draws to a close. Who this strategy embarrasses or emboldens may find their standing weakened or improved as Beijing prepares for its once-in-five-years transition this fall."

Do you have a question about China's growing footprint in Eurasia? Send it to me at StandishR@rferl.org or reply directly to this e-mail and I'll get it answered by leading experts and policymakers.

Three More Stories From Eurasia

1. Buyer's Remorse?

A former Chinese ambassador to Ukraine delivered an unusually critical assessment of Russia's invasion last week that recognized the clear signs of Russia's military setbacks and the threat posed to European security by the Kremlin.

The Details: In remarks delivered to an internal forum at the state-run Chinese Academy of Social Sciences, Gao Yusheng, a 75-year-old career diplomat who served as ambassador to Ukraine from 2005 to 2007, described Moscow's military campaign as headed toward defeat and that Russia was undermined.

Gao argued that Russia had been in a "continuous, historical process of decline" since the collapse of the Soviet Union. "The so-called revitalization of Russia under [Russian President Vladimir] Putin's reign is based on a false premise. Russia's decline is evident in all areas...and has had a significant negative impact on the Russian military and its combat capabilities," he said.

According to Gao, the odds are stacked so heavily against Putin that "it's only a matter of time before Russia is fully defeated."

Gao also added that Putin's desire to control and influence former Soviet countries had led Moscow to be "repeatedly infringing upon others' territory and sovereignty. This is the greatest threat to Eurasia's peace, security, and stability."

It's a surprisingly honest assessment to come from a former Chinese official -- although it tracks with closed-door opinion among Chinese policymakers about Russia -- and it's out of step with Beijing's official line, which paints Moscow as a growing partner and Putin as a growing ally of Xi.

It's also unclear whether Gao intended for his remarks to be made public. Phoenix News Media, a partially state-owned television network, published an edited transcript of his remarks, but the article was taken down within hours after posting on May 10.

2. The Show Must Go On

The Chinese Embassy in Prague put pressure on the Czech Foreign Ministry and a local art gallery to stop the opening of an exhibit from Chinese dissident artist Badiucao in the Czech capital, I reported.

What You Need To Know: Speaking in broken Czech, a woman on an unlisted line that connected back to the Chinese Embassy's Cultural Department, called Michaela Silpochova, curator at the DOX Center for Contemporary Art in Prague that was hosting the artwork of Badiucao, the pseudonym used by the Chinese artist, to try and get her to stop the show.

After repeated requests to identify herself, the woman said she was affiliated with the Chinese Embassy. Czech Foreign Minister Jan Lipavsky, who spoke at the opening of the show on May 12, also said that his office received calls about the exhibition.

The show opened without problems, but it is part of a growing trend of Chinese officials looking to censor Badiucao and Chinese artists abroad in general.

In addition to taking aim at Xi and a host of domestic political issues inside China, Badiucao also unveiled new art about China, Russia, and the Ukraine war, including a piece that features Putin exposing himself in a trench coat with a nuclear warhead in place of his genitals and another that depicts a nurturing Xi breastfeeding Putin as an infant.

3. 'Not A Luxury, But A Necessity'

China is overwhelmingly concerned with security in Afghanistan and is not rushing to invest. That's the overall conclusion from expert testimony on May 12 to the United States-China Economic and Security Review Commission, an independent U.S. government agency that reports to Congress.

What It Means: Beijing's anxieties over the security in Afghanistan and the broader region have been growing with renewed violence inside the country and a growing number of attacks on Chinese interests in neighboring Pakistan.

Pakistan hosts the China-Pakistan Economic Corridor (CPEC), a multibillion-dollar flagship undertaking within Beijing's massive Belt and Road Initiative. China has signaled ambitions before about extending the CPEC into Afghanistan, but the deteriorating security situation in both countries has put any expansion on hold.

For the moment, the expert panel said, China is treading cautiously in Afghanistan and security is its main interest, leading it to court working ties with the Taliban, which Jennifer Brick Murtazashvili of the University of Pittsburgh said were "not a luxury, but a necessity."

Those concerns show no signs of fading. As my colleagues at RFE/RL's Radio Azadi have reported, resistance to the Taliban is flaring up in northeastern Afghanistan, with reports of deadly fighting increasing, as well as claims of war crimes against civilians.

Similarly, Islamic State-Khorasan, the local affiliate of the extremist group, has carried out new attacks across the country and potentially beyond its borders, with RFE/RL's Tajik Service reporting that the Taliban was investigating whether rockets had been shot into Tajikistan from Afghan territory.

Across The Supercontinent

Welcome to the Party: A group in Kazakhstan involved in defending the rights of ethnic Kazakhs in China's Xinjiang region announced it will create a political party in the Central Asian country called Naghyz Atazhurt (Real Fatherland), RFE/RL's Kazakh Service reported.

At an Almaty press conference, the group's leader, Bekzat Maqsutuly, said that the government wasn't doing enough to assist ethnic Kazakhs in Xinjiang who want to move to Kazakhstan.

Spy Line: Speaking to the Financial Times on May 7, CIA Director Bill Burns said that Beijing had thus far been left "unsettled" by the aftermath of Russia's invasion, adding that China was also alarmed by "the fact that what Putin has done is driving Europeans and Americans closer together."

Bypassing Bosnia: My colleague Amos Chapple visited Croatia's Peljesac Bridge, which has been constructed in part by the China Road and Bridge Corporation. It will soon allow travelers to skirt around border checkpoints, but not everyone is excited about the spectacular structure.

The Heartland: Nearly one in 25 people in a county in Xinjiang has been sentenced to prison on terrorism-related charges, in what is the highest known imprisonment rate in the world, the Associated Press, which received the leaked government data, reported.

One Thing To Watch

Michelle Bachelet, the United Nations' high commissioner for human rights, will soon make a trip to Xinjiang to report on the persecution and internment of Uyghurs, Kazakhs, and other Muslim minorites.

But hopes are low about what the trip will yield, with multiple Uyghur organizations criticizing Bachelet, who has been restrained in discussing the vast internment system in Xinjiang and is yet to release a long-delayed report about the situation in the region.

Fearful of Chinese interference, some activists have even called the trip a "propaganda exercise."

That's all from me for now. Don't forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

If you enjoyed this briefing and don't want to miss the next edition, subscribe here. It will be sent to your in-box on the first and third Wednesdays of each month.

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About The Newsletter

In recent years, it has become impossible to tell the biggest stories shaping Eurasia without considering China’s resurgent influence in local business, politics, security, and culture.

Subscribe to this weekly dispatch in which correspondent Reid Standish builds on the local reporting from RFE/RL’s journalists across Eurasia to give you unique insights into Beijing’s ambitions and challenges.

To subscribe, click here.

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