Actually you just described what the world bank did to virtually every African nation in the 60s when they were gaining independence. For most nations the interest on the loans they owe exceeds their GPD, so they will be forever enslaved monetarily. The world bank dictates that for example Ethiopia can not sell processed coffee, else the World Bank will bankrupt them and destroy their economy.
What China are doing now is a lot more honest and up front (though I'm not saying it's good). They go to a country and say "We'll build you these roads/bridges/hydro stations" in exchange for mineral/fishing/whatever rights. So the country gets actual improvements for its citizens, and China gets cheap minerals.
"What they did" and "What happened" are very different. The loan was supposed to foster economic growth, which would have enabled paying back the loan. Which didn't happen for sad reasons.
The coffee part is odd - what's that about? What does the World Bank have to do with coffee?
> The coffee part is odd - what's that about? What does the World Bank have to do with coffee?
The world bank holds many countries to ransom by dictating what they can (or can't do).
Guinea wants to get the internationally accepted price for their Bauxite? World Bank says no, else we'll call in your loan.
Senegal wants to get a fair price for it's resources? Nope, let's put a travel warning on them and decimate their tourism for a year or two.
The list goes on and on and on. I just spent 3 years in Africa at ground level in 35 different countries. The longer you spend there the more you realize.
Think about what you're saying, not only are you saying people hope deals fail (when deals that succeed benefit both parties), but also disparaging other countries as being so inept they can't spot a bad deal.
The issues have been analyzed already:
From, [1],
> First and foremost is the realization that actual asset seizures are a very rare occurrence. [...] Instead, we find those debt renegotiations usually involve a more balanced outcome between lender and borrower, ranging from extensions of loan terms and repayment deadlines to explicit refinancing, or partial or even total debt forgiveness (see Figure 1).
To address the Ski Lankan port issue, [2]:
> Privatizing 70% of Hambantota to CM Ports for $1.1 billion was one way in which foreign exchange could be brought into the country, allowing a balance of payments crisis to be staved off. It was not an asset seizure.
It's not about economics, it's about private capital.
Nations and International Institutions loan out money to small countries which seem reasonable, however when they start to slip on payments they're offered relief in exchange for privatizing their resources and government services so capital around the world can extract rent. See Latin America in the last 30 years, and Africa for the last 50.
You're right though - it's just as insulting to say that these countries can't spot the trap. However some of these deals take literal armies of lawyers and economists to understand, and even when they understand, geo-politics can change around a country a lot more than a "first-world" nation.
Don't forget that it's not only about spotting a bad deal when you see it.
We're not talking about a deal between two individuals. To oppose the deals, you need political power. I.e convincing the populus.
These deals are backed with enormous investments in propoganda to neutralize the masses, and corruption to neutralize the politicians.
Thanks for your response; I was mainly aggravated by OP's original post that's essentially propaganda with no backing evidence so commonly found on Reddit.
> however when they start to slip on payments they're offered relief in exchange for privatizing their resources and government services so capital around the world can extract rent.
Fair enough, but consider the following. China's infrastructure is also allowing Africa to expand and build their own ecosystems in fintech [1]. Furthermore, there is actually discussion about Africa leapfrogging in to green initiatives [2], "The paper uses examples of how China managed to improve initially polluting infrastructure to help Africa leapfrog directly into cleaner solutions."
Sure, I'll conceded the worries about network sovereignty, etc. But if you follow the data coming out of Africa, you'll see progress is really being made. Most people making remarks like OP literally know nothing about Africa.
All such financing under the official umbrella of the Belt and Road Initiative.[1] I'm not so sure that China necessarily wants the capital assets under their direct control because at some point they want their investments (read: loans) to return the predictable cash flows that were promised.
China by size the balance sheet, but those balance sheets are pretty much all in China. What the WSJ article refers to is really investment banking, a market from which Chinese banks are still pretty much non-existent.
But the size of Chinese banks balance sheet is probably more of a problem than anything. They were not forced to apply tough international capital and are now over-leveraged. I understand China tried to forced them to deleverage, then got concerned by the impact on the economy, then made them re-leverage. But an over-leveraged bank is like a loaded spring. You don't want to remain to close to it for to long.
they loan billions for poor countries they know they son't be able to bring the loands back
once they don't pay the loan they take control of strategic building/places in those countries.