The Belt and Road Initiative (BRI), often referred to as the New Silk Road, is a plan created by China to attempt to invest in countries around the world to provide infrastructure, support, and funding to those who need it. However, is this project really all it seems? Is the Belt and Road Initiative as transparent and true as China claims it is? Should the EU join to fund such a project? Keep reading to find out!
Unfortunately, China has been historically known to debt trap developing countries.
They do this through lending them FAR more than they can repay in projects. This forces developing countries to rely heavily on China while China gains influence in that country.
Gerstel 18 writes that “The IMF has scrutinized multiple aspects of the BRI, repeatedly warning of unsustainable debt levels, predatory lending, and the lack of project transparency.” A recent CDG report found that a total of 23 key BRI recipient countries are at a high risk of debt distress due to BRI loans.
If the European Union were to join and attempt to help fund the BRI, their money would be going to fund the BRI and those developing countries in China. This is EXTREMELY harmful because the EU would be losing massive amounts of money if the developing countries are unable to pay them back, and China has control over these countries, so the EU gets no return on their money.
This has the potential to lead to a recession.
Trading Economics finds that 14 out of the 28 EU countries have a debt-to-GDP ratio of over 64%. This is important because the World Bank found that each additional percentage point of debt above 64 percent slows economic growth by 2 percent each year. Ross 19 writes that when economic growth stalls, trade decreases. If the EU loses any more money, it will stall economic growth and has the possibility of throwing the EU into a recession. This could possibly lead to a GLOBAL recession. Since the EU is connected to so many countries, once it goes into a recession, it will heavily impact the world.
Bradford 13 warns that as many as 900 million people could fall back into poverty in the event of an economic shock”
The massive amounts of coal needed to fund such a project would be devastating to the environment.
A 2017 report published by the World Wildlife Fund (WWF) noted that there will be considerable overlap between BRI projects and sensitive environments.
NY Times finds in 2018, Chinese firms will build 1,600 coal plants in over 62 countries in order to man the massive infrastructure projects on the Belt and Road. Chinese companies are involved in at least 240 coal projects in 25 of the Belt and Road countries, including in Bangladesh, and Pakistan. China is also financing about half of the proposed new coal capacity in Egypt, Tanzania, and Zambia.
This is super detrimental to our environment. Most Chinese-financed, coal-fired power plants built overseas use low-efficiency, subcritical coal technology, which produces some of the highest emissions of any form of power generation.
If the EU joins, this will increase coal plants in developing countries and rapidly push us towards climate change.
New York Times 18 said that even a half-degree increase in temperature can lead to serious environmental damage. The report finds that limiting global warming to 1.5°C would require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities.
Poorly planned infrastructure has the risk of locking in undesirable environmental practices for decades to come, it added. Loss of biodiversity appears to impact ecosystems as much as climate change, pollution and other major forms of environmental stress.
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