This was interesting. I follow this subject closely. Especially when y'all talked about Debt Trap Diplomacy…
“Debt-trap diplomacy is an international financial relationship where a creditor country or institution extends debt to a borrowing nation partially, or solely, to increase the lender's political leverage. The creditor country is said to extend excessive credit to a debtor country with the intention of extracting economic or political concessions when the debtor country becomes unable to meet its repayment obligations. The conditions of the loans are often not publicized. The borrowed money commonly pays for contractors and materials sourced from the creditor country.”
Some of China's Belt and Road Initiative projects have shown signs of this policy. And this isn't new in human history. The Dutch, British, Germans, Americans…have all done this to varying degrees in the past 500 years. But even further back than that, the Chinese dynasties (Ming), Persians, the Romans, etc...have all done this. The Chinese call it “Paying Tribute.” Many growing empires have done this.
The problem with this though, it's usually not public. Because Debt Trap Diplomacy is very distasteful to most, it's done with little transparency, so it is hard to prove and easy to deny…right up to the point where the creditor country starts building military installations in debtor countries…then it's too late.
Debt is a terrible vulnerability. So it's important that nations choose carefully who their friends are, who they take money from and who they do business with.
Great discussion @jj-finance and @josediccus.
What stuck with me while reading your response it the lack of transparency. It does make sense as these agreements between nations are rarely publicized which I find to be unacceptable for a country to enter into an agreement with another on behalf of its people and not make them aware of the deal. When it backfires the ones that suffer the consequences most are the ordinary people.
We are in an advanced age in humanity and our leaders should do better and do better. At the end of the day though corruption is behind these silly agreements at the expense of citizens.
Many thanks for watching.
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I agree, it undermines the democratic systems. That said, enhancing democratic systems is not a priority of authoritarian governments.