Montenegro’s billion-dollar highway faces uncertain future after years of delay

PODGORICA – Eight years after the contract was signed, the first section of a controversial highway project in Montenegro funded by a massive $1 billion Chinese loan is nearing completion – but it still faces lingering questions on his future.

Once hailed by China as a landmark deal under the Belt and Road Initiative – its global infrastructure project – the expressway has since become a cautionary tale that has fused the dangers of a Chinese-built shoddy and superficial lending practices with endemic locals. corruption problems in this Balkan country.

Montenegro originally borrowed nearly $1 billion from the Export-Import Bank of China in 2014 to finance the first part of a 163-kilometre highway linking the port city of Bar to neighboring Serbia as part of promise to boost economic activity in the Balkan country, but Podgorica was instead saddled with debts to China that totaled more than a third of the government’s annual budget.

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

Ervin Ibrahimovic, Montenegrin Minister of Capital Investments, mentioned during remarks broadcast on state television on May 16 that it could be unveiled in July, without however specifying what remained 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 route still unbuilt. At present, the initial stretch of road fades into the middle of a large forested area and no funds are currently available to continue building the remaining portion.

This has led to growing scrutiny and speculation from local activists and international donors about Beijing’s goals in Montenegro and the Balkans, as well as the motives of the previous government that first gave the go-ahead. to the highway.

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

The original deadline for the highway’s completion was November 2019, which has since been repeatedly pushed back by China Road and Bridge Corporation (CRBC), the state-owned construction company, citing the pandemic of COVID-19 as the source of the delays.

MANS said the project’s multiple postponements resulted in a loss of revenue from the potential toll road, with Milovac saying that four successive governments not knowing when the highway will be completed indicate “how well the state has approached the project. frivolously”. “

The long road to Montenegro

Despite the failure of several feasibility studies, the project was signed by the government of then Prime Minister Milo Djukanovic, who took on the huge Chinese loan to fund the highway and shrouded it in a cloud of secrecy.

In addition to the feasibility studies, the questions of profitability and necessity of the motorway have followed it since its creation. Djukanovic’s government also received construction bids from several foreign companies, including US engineering and construction giant Bechtel, which proposed a smaller, lower-cost project that ultimately lost to the CRBC.

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

Amid delays and mounting debt, the engineering project found itself at the center of a heated debate over Chinese influence in Europe when Podgorica raised concerns about its inability to meet its payments. to the Export-Import Bank, a state lender, in 2021.

The small Balkan country of just 620,000 people finally struck a deal with a French bank and two US banks to restructure the $1 billion Chinese loan and has since made its first debt repayment.

The highway, which according to a study could be the most expensive road in the world at around $23.8 million per kilometer, has also encountered quality problems, 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 is a longtime highway critic and first sounded the alarm over debt concerns over the loan during a a trip in March 2021 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 of national roads at Montenegro’s Ministry of Investments, told RFE/RL that apart from an initial extension until November 2020 due to the pandemic, the government believes the reasons for the delays in the CRBC are unfounded. “Everything after that [November 2020] the deadline is [CRBC]is our responsibility,” he said.

Next, Montenegro’s Deputy Prime Minister Dritan Abazovic (left) meets with EU foreign policy chief Josep Borrell in Brussels on March 17, 2021.

CRBC did not respond to RFE/RL’s requests for comment on the delays.

Limit the damage

Masic says the government has already started proceedings to recover the costs from the 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 the costs incurred due to delays can be made,” he said.

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

Only after all documents and contracts related to the highway are fully released, he says, will it be clear who is responsible. “On several occasions we have had delays that were approved by previous ministries without the public being fully aware of the exact reasons,” Milovac said. “As soon as it was approved, we can assume that the blame was also on [the Montenegrin] Chinese side and not just the Chinese side.

Written by Reid Standish based on reporting by Predrag Tomovic of RFE/RL’s Balkan Service in Podgorica

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