29 December 2018   Leave a comment

China has ambitiously funded a number of development projects in poorer countries. Initially, these investments were welcomed as an alternative to the funding that came from rich countries or international development agencies. But the distinctive feature of most Chinese investments is that they use the projects themselves as collateral in case the loans cannot be repayed. This strategy has netted China with some very valuable properties around the world. The most recent project to come under Chinese control is the Kenyan port of Mombasa. According to the Taiwan News (admittedly, not a China-friendly media outlet):

“When the Chinese lender granted the loan to the Kenyan government, somehow the KPA signed on as a borrower. Somehow Kenya’s government agreed that the port “would not be protected by sovereign immunity since the Government waived the immunity on the Kenya Ports Assets” by virtue of KPA signing on as a borrower, according to the Auditor General.

“It is becoming increasingly clear that China’s designs on the nations of Africa are anything but benevolent. Kenya appears to be lining up behind Zambia, which is slated to lose its international airport, as well as its national electricity grid because of defaults on Chinese loans.

“African nations must wake up to China’s new form of colonialism that is chipping away at their critical infrastructure one major asset at a time.”

The Chinese used the same strategy to take control of the port of
Hambantota in Sri Lanka
and the Coca Codo Sinclair dam project in Ecuador. The strategy is known as the Chinese “debt trap” and is causing many poor countries to question whether to accept any aid from China for development projects.

There is an interesting report by Time magazine concerning the relationship of former Trump campaign manager, Paul Manafort, and a Russian oligarch named Oleg Deripaska. According to the report:

“When he joined the campaign in the spring of 2016, Manafort was nearly broke. The veteran political consultant had racked up bills worth millions of dollars in luxury real estate, clothing, cars and antiques. According to allegations contained in court records filed in the U.S. and the Cayman Islands, he was also deeply in debt to Boyarkin’s boss, the Russian billionaire Oleg Deripaska, who was demanding money from Manafort over a failed business deal in Ukraine and other ventures.

Manafort was involved to an uncertain degree in the independence of Montenegro, which was once part of the former Yugoslavia. Russia was centrally involved in that movement, supporting a pro-Russian party because it feared that Montenegro might apply for membership in NATO. The Russian effort failed and Montenegro ultimately did join the alliance, leading US President Trump to make a snide remark last July. According to the Washington Post:

“Earlier this week, President Trump identified a seemingly unlikely threat to world security: Montenegro, a tiny Balkan country of just over 600,000 people.

“Montenegrins are a ‘very aggressive people,’ Trump told Fox News on Wednesday, arguing that their membership in NATO could spark a war. ‘They may get aggressive, and congratulations, you’re in World War III,’ he said.

“Trump was responding to a question from Fox host Tucker Carlson, who asked the president a hypothetical question: ‘Why should my son go to Montenegro to defend it from attack?’ Carlson was referring to Article 5 of the Washington Treaty, which requires NATO members to aid other member states if they are attacked. The article has been invoked only once, following the Sept. 11, 2001, terrorist attacks on the United States.”

The reason why the story is so interesting is that on 19 December, the US Treasury lifted the sanctions on Rusal, an aluminum company owned by Deripaskov, which had a serious dispute with Montenegro over aluminum. Treasury said the sanctions would be lifted because Rusal said that Deripaska’s interest in the firm had fallen below 50%. How the US Treasury verifies such matters in Russia is beyond me. An alternative explanation could be that the Treasury is offering relief to Deripaska in return for silence on some campaign-related matters. Let us hope that Special Counsel Mueller can shed some light on this matter.

Putin and Deripaska in 2008

Posted December 29, 2018 by vferraro1971 in World Politics

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