Victorian Premier Dan Andrews Will Not Back Down From Belt and Road Despite Risks

May 26, 2020 Updated: June 10, 2020

Victorian Premier Dan Andrews has reiterated that he will not back down from the Belt and Road agreement with China despite warnings that it has been a debt trap for other nations and that it poses significant national security risks.

Speaking on ABC Radio’s Statewide Drive program on May 25 Andrews said: “I’m not going to apologise for a trade policy that is all about growing Victorian jobs.”

U.S. Secretary of State Mike Pompeo weighed into the debate when he spoke to Sky News on May 24.

Pompeo acknowledged that every nation has sovereign rights to make decisions for themselves but warned that Australians should know “that every one of those Belt and Road projects needs to be looked at incredibly closely.”

“There’s often money loaned at concessional rates, or conditions placed in the debt documents, or government concessions that have to be made to the Chinese Communist Party,” he said.

Pompeo said the Belt and Road builds up the risk to the people of those nations and it builds up the risk of the CCP to do harm in other ways as well.

Belt and Road Has Been A ‘Debt Trap’

Initiated in 2013, the Belt and Road Initiative is promoted by the CCP as a 21st-century version of the Silk Road, but it has ensnared developing nations in debt.

The Centre for Strategic and International Studies (CSIS) explained that the Belt and Road is financed heavily by the Chinese regime through predatory loans or deals.

Belt and Road projects have become popular with poorer nations and countries that need infrastructure development but cannot afford the construction on their own.

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Workers inspect railway tracks, which serve as a part of the Belt and Road Initiative freight rail route linking Chongqing to Duisburg, at the Dazhou railway station in Sichuan Province, China, on March 14, 2019. (Reuters)

London-based Oxford Business Group published a report on April 20 that noted that by early January this year, over 2000 projects linked to the Belt and Road were either planned or underway across the world. These projects were valued at over $3.8 trillion, making China one of the largest lenders in the world.

Germany’s Kiel Institute tracked 5,000 Chinese loans and grants made to 152 countries. In a study published in 2019, they wrote: “China does not provide details on the direct lending activities of its ‘Belt and Road’ initiative.”

The report noted that one reason for this is that China’s state-owned banks often don’t transfer money to the accounts of the partner government: “Instead, the loans are disbursed directly to the Chinese contractor firm that implements the construction project abroad—a closed circle.”

Writing in The Strategist last year, the Australian Strategic Policy Institute’s (ASPI) analysis publication, David Wren said that China’s loans are often compounded by high-interest rates, short repayment times, and are frequently secured by collateral over commodity export revenue—which can lead BRI partners into a debt trap.

These nations then make some concessions to the CCP to ease its debt burden. Wren cites Tonga as a notable example.

When Tonga could not make a $14 million principal payment on a loan in 2019, China deferred the “payment for five years in return for Tonga signing up as a participant in the BRI.”

Worse still, the Oxford Business Group noted that in 2017, after it was unable to service a $1.3 billion loan, Sri Lanka had to hand over a 70 percent control for the strategic Hambantota Port to a Chinese state-owned firm for a 99-year lease.

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A general view of the port facility at Hambantota, Sri Lanka, on Feb. 10, 2015. (Lakruwan WanniarachchiAFP/Getty Images)

Victorian Government Needs to Rethink BRI: Defence Expert

Writing in The Strategist on May 22, ASPI Director of Defence, Strategy, and National Security Michael Shoebridge questioned the Victorian government’s increasing involvement in the Belt and Road.

In the article, Shoebridge said the BRI is a “zombie project” and he tried to puzzle out the Victorian government’s rationale for being involved with the Belt and Road, saying that it needs to be “re-thought in light of the world we are now living in.”

At present, the Andrews government has signed a Memorandum of Understanding or MoU (pdf) in 2018 with the Chinese regime and FrameWork Agreement (pdf) in 2019.

The Victorian government signed a Memorandum of Understanding with China in 2018, and a Framework Agreement in 2019. These are slated to last 5 years.

These will help to increase bring more Chinese infrastructure companies to participate in Victorian projects and explore “industrial cooperation in areas of high-end manufacturing, biotechnology, and agriculture technology.”

Despite the warnings from the federal government and the U.S. government, the Victorian government has maintained its position.

“This agreement is about creating opportunities for Victorian businesses and local jobs—opportunities that will be more important than ever as we rebuild from the coronavirus pandemic,” a spokesperson for the Andrews government told The Epoch Times on May 26.