this post was submitted on 12 Jul 2023
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Im scared for the countries getting caught in Chinas debt trap. With maintenance contracts being forced (for more than 90 years!), billions in outstanding loans in each country there is no way to climb out the hole. Everyone can see these extravaganza projects are not what Africa needs, but what China wants.
Extravagant projects are exactly how China got out of it's poverty hole (and, if you think about it, also how a lot of Europe recovered post-WW2 as well).
Only in the US is infrastructure condemned so strongly.
indeed
There is no China debt trap. That's just concern trolling western trolls invented
African countries are foregoing Western investment because of the number of strings attached. Chinese loans are pretty straightforward: here's some money, here's a (very) competitive interest rate, and here's how the infrastructure will be kept alive even if the country runs out of tax revenue to fund it. Critically, the project's operation isn't hindered by financial mismanagement and can keep delivering economic benefits to the region.
What strings?
IMF loans are cheaper. Every person with two braincells will realize corrupt officials will take the chinese loans with higher interest rates because of the bribes. A 90 year maintenance contract is nonsense and you cant defend it.
https://www.youtube.com/watch?v=8fGcf3GODKE
It isn't quite like that.
China doesn't give money to countries to build these projects. The money is given directly to Chinese State Owned Enterprises to build the projects. That can be a great way to keep costs low, but it also means there is no transfer of knowledge for building these of projects to locals.
Chinese deals are for a very long time, with some going for 100 years. China may also write the deals to trade for commodities instead of money, so there is risk that the commodity price goes up and China makes money on the deal.
Also, China makes a lot of these deals for China's best interests. It could align with the host country's interests, but not always. Of course, it isn't like Western countries don't do the same, but it is something to look out for.
I can see why countries would choose China as a partner to finance and build infrastructure, but it is important to know the fine print of the deal, or in this case, several deals.
Nobody's forcing a country to sign a deal. Why does it matter that the project aligns with China's best interests? The fact that the deal is signed means that both parties agree that it's mutually beneficial... People aren't running a charity.
And again, people assume transfer of knowledge like it happens between China and the US (two very well-educated countries)... But frankly, a lot of African countries are at the stage China was in right after the Cultural Revolution. You can't simply transfer the knowledge of complex HSR technologies when most people don't have the education needed to become a construction worker. There's also the issue of experience: even the US, a country with an extremely highly-educated workforce, can't build proper HSR (see: California HSR's ballooning budget). It's a difficult problem and African countries don't have $100 billion dollars to spend on connecting Merced and Bakersfield.
The length of these deals is also not exactly the strong "gotcha" you seem to think it is. It's a fact that a lot of African governments are rather unstable. With an outsourced maintenance scheme, the project remains viable through regime change. Plus, even stable governments like the US have shown that they have a tendency to aggressively underfund rail (see: Amtrak's tens of billions of dollars worth of maintenance backlogs). The project is useless if it isn't maintained, so why shouldn't these countries sign that maintenance into effect now while they still have the power to do so?
The US has shown how to completely destroy a domestic passenger rail industry... People aren't super keen on replicating that model with short maintenance contracts and "America First" policy.
Africa has plenty of well educated people in a variety of fields, what they don't have is economic opportunities. Sure, Africa probably couldn't sustain the entire project all at once, but they could very likely provide enough educated people to handle several lines.
Africa has a brain drain problem. Anyone well off enough to get a decent education but isn't well connected enough to get into one of the few opportunities that exist immigrates to another country. India used to be the same way, but they're finally starting to create opportunities to keep their people in the country, and the solution wasn't mega projects funded and completed by a foreign country, but direct investment in local jobs. That's also how China is doing it.
So if Africa wants long term prosperity, they don't need a high speed rail service to be built for them, they need to build one themselves, and perhaps hire an outside firm to oversee it. If that means the can only build part of the system, that's what they should do. It'll take longer, but it'll provide jobs and build expertise in the meantime and result in less total debt. They should focus on the most economically important links, and build the rest later.
The problem is that Africa isn't a single entity. I'm absolutely sure that across the entire continent you could build a dream team of engineers... But in each country? That's a bit more challenging, especially when your goal is to connect the continent.
This is even true in Europe, where each country has a different railway power standard that makes connecting their HSR systems very complicated.
But they can all agree to outsource it? Surely it's not that much more work to convince member countries that DIY within the continent is better than outsourcing.
But then you get a bunch of political issues between countries. Hell, different US states can't even agree on anything and they're in the same country.
Outsourcing is easier because everyone wants to get closer to China's economic engine.
I don't see why they want to get closer to China though. From my perspective, China wants access to cheap natural resources, so they have no incentive to actually help Africa prosper.
Hopefully they can form something more similar to the EU where cross-country agreements can work. Relying on China to fill in the gaps will likely just lead to more imperialism.
Europe has a history of, y'know, exploiting Africa.
Yup, so I certainly wouldn't expect them to rush into any deals with Western countries. I'm just saying that cash mimick the structure of the EU when they start building the rail system.
Oh, yeah for sure. I do imagine that this deal looks more promising to Africa (than any Western one) solely because of China's lack of hard power in the region. China can't project power because their navy is tailored specifically for operation in the South China Sea. China's blue water fleet can't do shit. China knows this and Africa knows this. China only has soft power in Africa, so there's a strong incentive to keep everyone happy because they can't just pull an Iraq if someone doesn't pay.
Perhaps. But has the US or anyone in Europe ever actually done that? Usually an invasion is due to terrorism, human rights violations, or violation of international law, not because of unpaid dues. If you look at pretty much every country the US has invaded, the US invested a ton into rebuilding and then left (some cases were handled better than others). I don't think anyone in either region really wants to inherit Africa's problems.
All major powers want access to natural resources, so Africa should recognize the position it's in and be very hesitant to give up anything other than guaranteed trade agreements (i.e. allow sponsors first dibs on X% of total production for Y years or something) in exchange for assisting them in building their own infrastructure (i.e. Africans run the project, sponsors merely share knowledge).
So I sincerely hope the deal between the AU and China (or any other countries they're courting) are beneficial to Africa and not just beneficial to the people in charge.
I don't think the US has the best track record, exactly... Afghanistan was a fucking mess.
Yeah, and it's a mess for a host of reasons. It's a classic case of the US expanding the scope of a mission far beyond what's necessary. What should've been a quick operation to neutralize a terrorist threat became an occupation with the stated intent being "spread democracy" in a region where centralization really hasn't been a thing.
At no point was the goal ever to establish a colony or create a trading partner, the US just wanted one less place for terrorism to breed.
On the other hand, Iraq is doing a lot better now. It's hard to compare whether it's better than with Saddam Hussein, but the region is seeing a lot more stability and local investment. It's possible we'll look back and consider Iraq a messy success story. I'm still don't think invasion was justified, but things have more or less worked out. And then you look at Japan, Korea, and Europe, which are shining success stories of US interventionism. It's very much a mixed bag.
So I understand countries being nervous about working with the US and Europe, but at least they're more of a known quantity. China can be very unpredictable, but it's clear that they're trying to extend their influence. That alone should make them very hesitant to get involved. Just look at when the USSR did something similar; the main difference is that the US eventually left. If China gets a foothold, will they eventually leave or try to expand their control in the region? I think that remains to be seen, but the history with Tibet and reigning in autonomous regions isn't promising.
Indeed, and China also does a lot of loan forgiveness because they want to establish long term mutually beneficial relationships as opposed to just strip mine these countries the way the west does.