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China's $1 Billion Sweetheart Road to Nowhere in Montenegro

Anders Corr

11-14 minutes

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Commentary

Montenegro, a tiny Balkan nation of under a million inhabitants and about $5.5 billion in GDP (2019), borrowed $1 billion from China to pay China, to build its first highway, that is now stalled after reaching only 24 percent of its planned length. If that makes your head spin, it's because China is running circles around this poor little country in Europe's southeast. And you know what? That country reminds me of America.

Plans for the 170-kilometer (106-mile) highway include 90 tunnels and 40 bridges, all to be built by a Chinese infrastructure company. Now that Montenegro can't pay back the loan, construction stopped, Europe refused to bail the country out, and clauses in the contract could give China "sovereignty of certain parts of the land," according to a recent investigation by Hans von der Brelie in EuroNews.

The road will be a windfall for land-locked Serbia, as it goes from Montenegro's deepwater port in Bar to the country's border. Serbia frequently takes pro-China positions, and allowed joint military exercises in 2019. The new road could certainly be useful for moving Chinese tanks across Montenegro for the next games. I can see why China and Serbia liked the project.

The Diplomat in April described a Serbian "love affair" with China that includes a major investment from a Chinese tire company that renamed the country's soccer league the "Linglong Tire SuperLiga." Do what you want with our sovereignty, but please at least leave our football alone. Nope. (In Chinese: Bù, 不). Serbians and Montenegrins better learn that word, and quickly. Americans too.

The failing deal with China created a major embarrassment for Montenegrin President Milo Đukanović, who inked the contract. He charged ahead with his own little silk road of asphalt despite advisories against it from France, the United States, the European Investment Bank (EIB), and the International Monetary Fund (IMF). There are allegations that Đukanović is a "thief" through his links to the road's subcontractors, who got $400 million "blindfolded," according to a local non-governmental organization.

A lorry driver in the country whose land was expropriated for the project, went on record with EuroNews to say that $100 million was stolen, which is 10 percent of the total loan. This is higher than the 2 to 7 percent finder's fees I heard about for cronies of the Philippine President, who inked similarly useless deals there.

Chinese and illegal workers are allegedly employed on the Montenegro project. The state-owned China Communications Construction Company (CCCC) is building the Montenegro highway through a subsidiary. In case of financial problems and the triggering of collateral in the sovereignty of land such as Bar harbor, arbitration would be conducted according to Chinese law in a Chinese court. If so, you can kiss your country goodbye, Montenegro. China's judges will fold it up like the card table on which you lost your Mom's farm.

The construction of the section of a highway connecting the city of Bar on Montenegros Adriatic coast to landlocked neighbor Serbia, (Bar-Boljare highway) near the village of Bioce, north of Montenegrin capital Podgorica, which is being constructed by a state-owned Chinese company, on April 8, 2019. (SAVO PRELEVIC/AFP via Getty Images)

"All over the Western Balkans, Chinese investment has slowed down EU compatible reforms," according to von der Brelie. "China's silk road ambitions are not always in line with EU standards of good governance, environmental protection, rule of law and transparency. Their influence is creating a wedge between the EU and the Balkan states."

Montenegro is the latest example of a long line of such disastrous international infrastructure deals that Beijing brokered, apparently through the corruption of local heads of state. Corruption can be of the legal variety, including through lobbying, crony consulting and subcontractor deals, and campaign contributions.

But Beijing can also try to corrupt through illegal boxes of cash wrapped up like presents. Literally. Two paragraphs from an FBI sentencing document in 2019 are instructive as to how China attempted to corrupt officials in Chad and Uganda. They're worth reprinting in full:

"[Patrick] HO orchestrated and executed two bribery schemes to pay top officials of Chad and Uganda in exchange for business advantages for CEFC China, a Shanghai-based multibillion-dollar conglomerate that operates internationally in multiple sectors, including oil, gas, and banking. At the center of both schemes was HO, the secretary-general of a non-governmental organization based in Hong Kong and Arlington, Virginia, and registered as a charitable entity in the United States, the China Energy Fund Committee ("CEFC NGO"), which held "Special Consultative Status" with the United Nations ("UN") Economic and Social Council. CEFC NGO was funded by CEFC China.

"In the first scheme (the "Chad Scheme"), HO, on behalf of CEFC China, offered a $2 million cash bribe, hidden within gift boxes [Classy!], to Idriss Déby, the president of Chad, in an effort to obtain valuable oil rights from the Chadian government. In the second scheme (the "Uganda Scheme"), HO caused a $500,000 bribe to be paid, via wires transmitted through New York, New York, to an account designated by Sam Kutesa, the Minister of Foreign Affairs of Uganda, who had recently completed his term as the president of the UN General Assembly. HO also schemed to pay a $500,000 cash bribe to Yoweri Museveni, the president of Uganda, and offered to provide both Kutesa and Museveni with additional corrupt benefits by "partnering" with them and their families in future joint ventures in Uganda."

This sort of corruption might explain why President Đukanović went against the advice of the United States, France, and international lenders when he inked the road-to-nowhere deal with China. Beijing's corruption of high government officials is not the exception, according to one of my government sources. It is becoming quite common, but rarely revealed in public.

Milo Đukanović speaks at the NATO Parliamentary Assembly Spring session in Tirana, Albania on May 30, 2016. (Hektor Pustina/AP Photo)

Huawei deals that have been inked around the world are so opaque as to also likely be the result of corruption. Most are in Sub-Saharan Africa, Latin America, and Asia. But Beijing's corruption extends into North America and Europe as well, with Montenegro a case in point. The deals will likely be used by Huawei to electronically spy on their clients through signals intelligence (SIGINT). Ironically, combatting China's corruption requires SIGINT of our own. Fight fire with fire.

There's no way to find all of China's global bribery, and combat it effectively, without U.S. and allied SIGINT. The U.S. National Security Agency (NSA) admits quite prominently on its website to conducting SIGINT internationally. It's better that the United States and allied agencies do this to control China's bribery of international leaders, before Beijing uses such bribery to construct something far more dangerous than Montenegro's road to nowhere: the world's 5G architecture. China could use its 5G ascendency to hamper U.S. and allied SIGINT, while enabling Chinese SIGINT. Thinking that China's corruption can be stopped without American and allied SIGINT is naive.

Nobody likes being spied upon, but we do like being watched out for. We appreciate our neighbors' security cameras when they deter (or catch) burglars. Neighbors who both have wide-angle security cameras that cover each others' yards are kind of spying on each other. But good neighbors don't obsessively watch their neighbors either. They don't care about the humdrum mowing, weeding, and taking out the trash. They only bother to examine the recordings if there's a burglary.

Likewise, Americans and allies might in part be pointing their SIGINT at each other, and that's okay. Such mutual understanding, where it matters, will keep all of us more honest. You reveal the corruption of my political bosses, and I'll do the same for yours. Or, vice versa. Let's all expose the burglars in our midst.

But because much corruption is legal, more than SIGINT is needed.

The United States and allies must pass legislation, such as that introduced by U.S. Representative Mike Gallagher, a Republican representing Wisconsin's 8th District (home of the Green Bay Packers), to prohibit "any individual from registering or otherwise serving as the agent of a foreign principal if the individual at any time served as a Member of Congress, a senior political appointee, or a general or flag officer of the Armed Forces." Good for young Mike. Go Pack Go!

Unfortunately, Gallagher's bill, H.R. 1522 – Congressional and Executive Foreign Lobbying Ban Act, promptly languished after its introduction in March 2019, and referral to the House Subcommittee on the Constitution, Civil Rights, and Civil Liberties in April 2019. Mike, aged 35 two years ago, got schooled.

Corrupt politicians in both parties didn't want the bill passed, so it went nowhere. Maybe that's why the U.S. government and allies fail to publicize China's ubiquitous corruption. They might benefit from that corruption when they leave office. Apparently, the option of corruption is more important to our patriotic congresspersons than good governance. Noted. I love that flag on your lapel. Was it made in China?

Former President Donald Trump promised to clear out the swamp. He called for a five-year cooling off period for former congresspersons to become lobbyists. He signed an executive order to stop the revolving door for his own administration members. At least half the nation inhaled with a renewed feeling of good old American hope. I remember a whiff of apple pie, back then.

But it went nowhere. The E.O. was reportedly unenforced. Trump hired former lobbyists for leadership positions. When his people quit, some went back to lobbying. After James "Mad Dog" Mattis left Trump's employment as Secretary of Defense, he signed onto former Secretary of Defense Bill Cohen's consulting group. Cohen has admitted to having clients from China. His group opened a Beijing office in 2006, and one in Tianjin in 2007.

That should be illegal. Shoulda, coulda, woulda.

With our Secretaries of Defense making China-linked money after leaving office, they are vulnerable to quid pro quo corruption while in office. Maybe that's why they haven't converted or defeated China over the past 30 years since the breakup of the Soviet Union. Pretty soon it will be too late, and our military will be unable to defend against the rising red star of Asia.

America the Proud is paralyzed by the corrupting power of money on our politicians, and China is the wealthiest country in the world by GDP purchasing power parity. That means, we're about to get bucked.

A friend of mine recently said, "They're inside the wire." He was referring to China, communism, or both. The phrase keeps haunting me. It means until we fix our own corruption problem, America, Montenegro, and democracy globally, are ultimately defenseless against history's most powerful autocracy. It's like one of those nightmares where you're awake, but can't despite your desperation, move to defend yourself.

Anders Corr has a BA/MA in political science from Yale University (2001) and a Ph.D. in government from Harvard University (2008). He is a Principal at Corr Analytics Inc., Publisher of the Journal of Political Risk, and has conducted extensive research in North America, Europe, and Asia. He authored "The Concentration of Power" (forthcoming 2021) and "No Trespassing," and edited "Great Powers, Grand Strategies."

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.