• China's debt-trap diplomacy
    19 replies, posted
China is in the midst of a rapid push to gain economic and political ascendancy across the globe — and it is splashing out billions of dollars in concessional loans to developing countries in the process. This money is used to construct much-needed major infrastructure projects, but what happens when these poorer countries cannot pay China back? Experts warn Beijing is using bad loans as a form of entrapment, allowing the nation to gain influence and power across the world. Here's how they say it works. Poorer nations are lured by China's offers of cheap loans for transformative infrastructure projects. Then, when these countries are unable to keep up with their repayments, Beijing can demand concessions or other advantages in exchange for debt relief. This process is known as debt-trap diplomacy. Sri Lanka's Hambantota Port development project serves as a cautionary tale to anyone who thinks China's loans come without conditions. Protests erupted last year when Sri Lanka was forced to hand control of the port over to China — on a 99-year lease — in order to wipe off about $US1 billion ($1.4 billion) worth of its debt to Beijing. China now has control of a key port on the doorstep of regional rival India, and a strategic foothold along a key commercial and military waterway. Are China's cheap loans to poor nations a development boost or a.. I saw this coming a few years back. I imagine it's a pretty effective tactic if you don't care much for the debt and just want a foothold or leverage over a country.
Doesn't the World Bank and the IMF do this as well? Except that they work towards furthering American interests.
The IMF is UN controlled.
China's practising neo-colonialism on poorer and smaller countries, worth noting. They're also gaining some influence in economies of Eastern Europe. Pretty obvious that China wants to have those counties depend on their economies so that they can force their bullshit on them under pressure of ceasing economic support. Those poorer countries have a worrying future, under Chinese influence.
While you're not wrong in theory, the IMF is funded by wealthy, developed nations (mainly the United States and Europe Union member states) who loan money to developing/undeveloped nations under the condition that they adopt neo-liberal economic policies (and sometimes to implement austerity programs during an economic crisis), which ultimately works to serve the interests of these wealthy nations because they are free to expand into and dominate these newly opened and deregulated markets. Politicians aren't putting billions into the IMF without something that benefits themselves or their country in return. Having other nations become economically dependent on your own country is a good way to make money. Also, the US has ~16% of the voting power in the IMF, second is Japan with ~6%. I believe the IMF requires a 85% majority (impossible to pass without U.S. support giving them veto power) of the vote to enact reforms and make certain transactions, so the U.S. indirectly controls the IMF. (This includes votes to redistribute voting power.)
Certainly a mich more devilish tactic than trading glass pearls and firewater for land, slaves and resources.
So pretty much loan-sharking on a national scale?
You can't be this naive. The IMF is mostly controlled by the US and has been used in the past to subjugate poorer nations to modify both their economy and politics.
If they have only 16% of the power of the IMF, then how is that the case?
Can't wait for China to start demanding "protection money" from its neighbors next.
Another user pointed it earlier but incase you missed it: Also, the US has ~16% of the voting power in the IMF, second is Japan with ~6%. I believe the IMF requires a 85% majority (impossible to pass without U.S. support giving them veto power) of the vote to enact reforms and make certain transactions, so the U.S. indirectly controls the IMF. (This includes votes to redistribute voting power.) Also, notice how i said 'mostly' instead of totally.
"Nice capitol you have here. Be a real shame if something were to... happen to it..."
16% isn't mostly though. It is inspiring to see the US support minorities though. I read about this story a few days ago, and it's pretty depressing. I know news has a bias towards negativity, but there seems to have an excessive number of bad stuff reported the last year and it sucks.
I suspect it's a matter of "you guys do what we want, or else we'll reject anything you want." If the IMF requires an 85% majority, as Mono states, and if the United States has 16% control, then that is enough to force anything they don't want to support to fail unconditionally. There's a lot of power in being able to bully a vote into going your way, by threatening to deny everything if the others don't play ball. To say that, in such a case, the United States effectively controls the IMF, is not inaccurate. Indirect power is still power.
They're just now figuring this out?
Mostly, as in, the most voting power compared to other nations.
Ah, I understand now. Still, with the veto power people like China have, 16% rarely makes a difference, and the US tend to veto anything against Israel, with Russia insulating themselves with vetoes too.
But we're talking about the IMF here, not the UN Security Council. I think you have those mixed up.
Fuck, I don't know how I did that. I'm hungover. Sorry 'bout that.
This. For those curious its called "structural adjustment." Honestly , the more you read about stuff like this the more you realize how absolutely stacked the deck is against developing nations. I think its a lot easier for us to have sympathy for the poor within our own countries (how poverty is cyclical, how they need help, etc.) but when you consider the history of the Earth as an international phenomena of winners and losers being decided by ill gotten gains, and how whole nations are stuck in cycles of poverty because of Western intervention in the past (colonialism, warfare, etc.) and in the present .... its just really disheartening.
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