Montenegro's $1 Billion Highway Faces Uncertain Future After Years Of Delays

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.

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