Another One Bites the Dust: Entebbe Int. Airport falls to China's Debt Trap

[Darker45]

Another one has fallen.

The Entebbe International Airport is now reportedly directly taken over by China due to loan default. The only International airport of Uganda, which serves at least 1.9 passengers every year, is the latest victim of China's loan trap.

In 2015, the Ugandan government took a $207 million-loan from the Export-Import Bank of China for the international airport's expansion. As expected, the loan agreement signed by both parties included sneaky and questionable clauses. Uganda's president, Yoweri Museveni, attempted to renegotiate the deal with the Chinese government but to no avail. And now that the country has failed to repay this commercial loan, a clause which basically means the airport will have to be surrendered to China is feared to have taken effect.

The Ugandan Entebbe International Airport is just one among many countries' national assets that had to be directly forfeited in favor of China due to loan default.

This post-modern way of conquest by China will have to stop! But how?

Sources:

1. https://economictimes.indiatimes.com/news/international/business/china-reportedly-takes-over-ugandas-airport-on-account-of-loan-default/articleshow/87957646.cms
2. https://www.ndtv.com/world-news/china-to-seize-entebbe-airport-over-loan-uganda-denies-debt-trap-reports-2628059

[jackg]

There's always the question of why you'd sign something you don't intend to uphold though, and signing away your only international airport doesn't sound great (although the pandemic probably made it harder to repay the loan too).

Airports actually aren't that profitible too so I'm surprised they're usable for collateral (I saw a study saying half of the airports in the UK were subsidised by the government - although it was on sustainability).

[Darker45]

There's always the question of why you'd sign something you don't intend to uphold though, and signing away your only international airport doesn't sound great (although the pandemic probably made it harder to repay the loan too).

There was also the issue of proper scrutiny and due diligence on Chinese loan deals on the part of country leaders before they affix their signatures. The insinuation is that debt deals are signed without carefully looking at the terms and conditions detail by detail, thereby resulting to the loss of sovereign assets.

Personally, however, I consider this as a side issue. If these Chinese loan agreements have questionable and unfair clauses sneaked into them, these Chinese banks are obviously entering into deals without good faith. In other words, all these Chinese loan offers boil down to a single motive, and that is domination.

[crwth]

Big companies come crashing down once they have just added too much to their bank sheets and taking too much risks. I think it's not that bad but with all that's happening in the world with the additional variants like Omicron, it's just makes it more sad for those companies that are in the travel industry. It's going to continue bleeding money and a lot of people would be affected as well.

I don't think it can be stopped, knowing that it has been continuously being done by successful people. It's just a matter of time that other people would try that kind of risk.

[avikz]

China is now richer than US. How? All credit goes to their lenient corporate tax policy and these loan traps. Today, every major electronic company or car company manufactures their product in China. So China is now trying to make good relation with Russia with a hope to form an alliance and become the main superpower of the world.

There is literally no end to such loan traps. Especially poor countries need easy money and China is providing them with easy money. Pakistan is one prime example of China's loan trap. Their economy is destroyed so much so that the government had to sell off assets to repay loan amount. Sri Lanka had to loose control of a port for the same reason.

This will only stop if the loan defaulters form an alliance and seek help from UN or IMF to help them recover their assets. But it's highly unlikely to happen!

[Fesatmas]

Again and again, this is about how China manipulates an airport so as not to escape the debt services it offers. To master it openly would be impossible. And what we know is that China seems to be offering help until it ends up being entangled in a debt that they keep adding until they can no longer pay it. With an agreement, the function can be taken over if the debt is not paid within the specified time limit.

Until now, if you write down all sectors of the country economy that are in debt with China, one chapter of the book is not enough to write it down. The strategy of communism which has become a tradition is to subtly control what they want to take.

[Koro-Sensei]

Little by little this China is getting out of hand. They will really do their best just to get their grip in every country. This is the very example of their bias offers trying to help but in the end, choking you in your own country. This will not stop here but surely in the future some countries will fall to this trap too.

[Lucius]

This post-modern way of conquest by China will have to stop! But how?

It is strange that only China is considered a bad player when it comes to taking over some public or private companies in foreign countries. No one has forced anyone to take loans that they cannot repay, and if I take a loan from a bank and cannot repay it, the bank will confiscate my property and I will become homeless - a harsh reality.

The largest airport in my country is under long-term concession, as are most highways and all major sources of drinking water - and nothing is owned by China. Maybe someone will say that concession and ownership are not the same, but when someone buys you the right to something in a period of 50 years, for some it is almost a lifetime.

This will only stop if the loan defaulters form an alliance and seek help from UN or IMF to help them recover their assets. But it's highly unlikely to happen!

When you say UN, do you mean the incompetent United Nations whose purpose is only to exist and spend huge amounts of money on their salary and luxurious life? How could these parasites help them financially at all?

When it comes to the IMF, do you think El Salvador should have accepted their help instead of choosing Bitcoin? If those countries had invested wisely in the past, today they would have no problem - but many African countries have deliberately fallen into the trap of borrowing money from China, because most of the money ended up in private pockets anyway - I’m sure politicians in Uganda don’t cry for the fact that China took over their airport because they certainly benefited from it.

[naira]

This post-modern way of conquest by China will have to stop! But how?

It is difficult to avoid China's bid in terms of infrastructure development needs. Since it's quite complex when it's needed, China comes as a hero. I remember the country of Zimbabwe which got a loan of $40 million to China which ended up netting its country in return. This is a modern colonial technique deliberately devised by China to limit a country to obedience and give China what it needs to take advantage of. Subsequently, Sri Lanka gave up its ports to cover debts they could not repay to China.

[stompix]

The Entebbe International Airport is now reportedly directly taken over by China due to loan default. The only International airport of Uganda, which serves at least 1.9 passengers every year, is the latest victim of China's loan trap.

Hihi, so they get almost a crew flying once from that airport?
Guess you missed a million or something from that.

Anyhow in this case, if the number of passengers is indeed below 6k a day they are better of giving it to the Chinese even for free, at this low traffic every airport is losing money and needs government subsidies, so Chinese investors will actually have to bear more costs with this one, slap them with taxes for the land and they will give it back for free.

When it comes to the IMF, do you think El Salvador should have accepted their help instead of choosing Bitcoin? If those countries had invested wisely in the past, today they would have no problem - but many African countries have deliberately fallen into the trap of borrowing money from China, because most of the money ended up in private pockets anyway - I’m sure politicians in Uganda don’t cry for the fact that China took over their airport because they certainly benefited from it.

Hihi, Salvador is no exception:
https://www.scmp.com/news/world/americas/article/3134008/el-salvadors-president-plays-china-ties-after-us-corruption

On Tuesday night, El Salvador’s Congress ratified a cooperation agreement with China, which had been signed back in 2019. The agreement calls for about US$62 million in investment in a water purification plant, a stadium, a library, and infrastructure along Salvador’s coast.

Beijing then drafted a document describing plans to build a special administrative zone and requested a 100-year lease of a 1,076-square-mile area. The zone was set to be created by Asia Pacific Xuan Hao, which is a Chinese state-owned company that manufactures, amongst other things, laser pointers, laser glare series, sound wave series and private satellite networks. The company initially cited a close relationship with the Chinese military, but removed references to this after Salvadoran media reported on it.

Aside from the port in La Union, Chinese investors also turned their attention to Isla Perico, a nearby island which could become part of a larger port infrastructure project. A vision of creating a commercial trading hub on the island was scrapped, however, when locals vociferously opposed it. Bo Yang, a Chinese-Salvadoran businessman and Vice President of the China – El Salvador Chamber of Commerce, nevertheless bought up part of the island in November 2019

[fiulpro]

It found 42 low-to-middle income countries (LMICs) had debt exposure to China exceeding 10% of their GDP, including Laos, Papua New Guinea, the Maldives, Brunei, Cambodia and Myanmar. Laos had significant proportions of its debt classed by AidData as “hidden”, the report revealed.

That's 42 low to middle income countries that they are targeting. Which does mean that what happened to Uganda is something that can happen to any of them. Considering the situation that China is in its trying to dominate the world and they are actually on the right track. If am correct even the US owes debt to China which does mean that what they are doing right now : printing more money and taking more Loans it could soon mean that the power would shift in a couple of years.

-I do think that Uganda might have to pay a lot to get the airport back if they want but looking at the current situation of covid and the new strain they might be in probelms as well in the future.

What would China do with that airport? They should just be humble and help the country out.

[jackg]

There was also the issue of proper scrutiny and due diligence on Chinese loan deals on the part of country leaders before they affix their signatures. The insinuation is that debt deals are signed without carefully looking at the terms and conditions detail by detail, thereby resulting to the loss of sovereign assets.

People only really ignore terms and conditions if they don't expect them to be enforced though so it's quite strange they wouldn't bother?

Personally, however, I consider this as a side issue. If these Chinese loan agreements have questionable and unfair clauses sneaked into them, these Chinese banks are obviously entering into deals without good faith. In other words, all these Chinese loan offers boil down to a single motive, and that is domination.

Well, other countries' banks could always try to compete with Chinese banks on that. I'm surprised North American and European banks haven't yet, they've normally overleveraged themselves on something by this point.

(although vaccine producers have been blamed for doing similar recently).

Beijing then drafted a document describing plans to build a special administrative zone and requested a 100-year lease of a 1,076-square-mile area.

They've learnt from their own colonisers on that one... Sounds like the agreement the UK had for Hong Kong (1,063.70 sq mi - Wikipedia). That was returned though at the end of its lease, perhaps China plans to extend their lease in places that will agree to it.

[Silberman]

The Ugandan Entebbe International Airport is just one among many countries' national assets that had to be directly forfeited in favor of China due to loan default.

This post-modern way of conquest by China will have to stop! But how?

While I do not agree with the methods used by the Chinese government, the easiest way to avoid this is to not make deals like this, after all it is not as if they are demanding to be handed the airport out of nowhere, it was part of the agreement they reached and since the government of Uganda failed to produce the cash then they have to hand over the collateral they used to guarantee the deal, and it should not surprise anyone as this happens all the time in the forum and all over the world as well.

[paxmao]

There's always the question of why you'd sign something you don't intend to uphold though, and signing away your only international airport doesn't sound great (although the pandemic probably made it harder to repay the loan too).

Airports actually aren't that profitible too so I'm surprised they're usable for collateral (I saw a study saying half of the airports in the UK were subsidised by the government - although it was on sustainability).

Which has a very simple answer, the one taking the money is not the same as the one that has to pay the debt. In essence it is illegitimate debt that tyrants use to get the funds and send them to their accounts in tax havens while the country is left to pay the debt. China know this perfectly well and their Gov. is super-happy to use to their advantage the corruption and disarray of others to their own advantage. And i think it is not legit, but a country that is corrupted at large has no defence against this.

[Hydrogen]

I would be more concerned with china buying up and controlling stocks of rare earth minerals in africa. They're said to own the lion's share of cobalt in the region. Which is tied to the mass manufacture of lithium batteries.

Brands like tesla have reportedly taken steps to design their future line of lithium batteries to need little or no cobalt in an effort to insulate themselves from resources which are centralized and heavily regulated. There have been campaigns to tie tesla batteries to child slavery in african cobalt mines, which could be another motive behind the move.

What would be a motive behind wanting to control airports in africa or abroad? If you owned and controlled an international airport in africa, what would you do with it? With the cost of oil on a steep incline, it seems air travel will be significantly more limited or expensive in the future. And so I wonder what their motive is for wanting such a thing. Could airports in africa be the next bitcoin?

[arwin100]

There's always the question of why you'd sign something you don't intend to uphold though, and signing away your only international airport doesn't sound great (although the pandemic probably made it harder to repay the loan too).

Airports actually aren't that profitible too so I'm surprised they're usable for collateral (I saw a study saying half of the airports in the UK were subsidised by the government - although it was on sustainability).

Which has a very simple answer, the one taking the money is not the same as the one that has to pay the debt. In essence it is illegitimate debt that tyrants use to get the funds and send them to their accounts in tax havens while the country is left to pay the debt. China know this perfectly well and their Gov. is super-happy to use to their advantage the corruption and disarray of others to their own advantage. And i think it is not legit, but a country that is corrupted at large has no defence against this.

They know the risk of what action they do and since the government didn't pay what they owe to the government of china then this is the exchange of their own negligence. China is known unto this and they used the Debt trapped methods to acquire more assets and make their country stronger so for other small country out their this should be the reminder to them to not go to the last option and do some agreement regarding on taking some huge debt on china since they will lose a piece of their country if they can't pay them on their set timeline or base on their agreements.

[so98nn]

Oh my God, isn’t that is horrifying thing?
I mean handing over whole airport to another country is like creating safe landing zone for their military troops, armies getting over in and out easily from this black hole!

How come no one is seeing it as something suspicious as this? Considering china is the one who introduced pandemic, it’s military forces are highly active on Indo China border, various naval activities and now this the Uganda incidence.

Man this looks like biggest plot of century to invade in other countries.

[davis196]

So basically China giving loans to African countries is a bad thing?
Then why can't the African countries borrow money from somewhere else?USA,France,UK,International Monetary Fund,World Bank?Is China the only option for borrowing money?
What makes China loans so irresistible for the African countries,since the conditions of that loan seem to be too restrictive for the country,that is borrowing the money?
AFAIK,Uganda is one of the more economically and technologically advanced countries in central Africa.Can't they repay a 200 million dollar loan?The amount isn't that big.
Giving the airport to China isn't such a horrible thing.The government of Uganda can decide to nationalize the airport.This will make the Chinese angry,but the western countries might support such decision.

[Obito]

It was to be expected, China laid it out already and the people that got into their trap willingly got in so it's not that surprising that these trap would get it's prey already. I mean those countries that's going to be falling for this are those developing countries, last I've heard is that China has a lot of debt released in African continent so that means that they'll eventually get a foothold on that continent not to mention their Belt Road Project will be a big economic help to them.

[stompix]

What would be a motive behind wanting to control airports in africa or abroad? If you owned and controlled an international airport in africa, what would you do with it? With the cost of oil on a steep incline, it seems air travel will be significantly more limited or expensive in the future. And so I wonder what their motive is for wanting such a thing. Could airports in africa be the next bitcoin?

Yeah lol, sell all your coins and invest in African airports, current trading symbol is O o.

As for the other part is pretty simple, you need to think out of the box a bit, and the first thing is that you need to see if this was indeed a good idea for them or, like everyone does they have made a mistake, lending money for something that was not worth it, like bad collateral.
The Chinese investors and their government are non-omnipotent beings knowing everything and anticipating the future, they have made a lot of errors in investments, they've lost billions also, look at what happened in Venezuela when they've met corruption on a different level.

It's a numbers game, you need to spend $100 and make sure you make $101, so you can lose 10 if you gain 11 from another source.