In the middle of the 19th century, a developing nation was coerced by what was then an economic powerhouse into relinquishing sovereignty over strategic coastal territory. The period following the First Opium War (1839–1842) ushered in an era of unequal treaties, in which Great Britain coerced China into granting commercial privileges and legal and territorial concessions—for example, Hong Kong and later Kowloon, with ramifications that lasted a century.
In the early decades of the 21st century, a similar pattern is emerging: A rising economic powerhouse coerces developing nations into borrowing money from it to build infrastructure out of proportion to the economic or trade needs of that nation. The result has been similarly catastrophic for recipient countries, but this time it is China that is reaping the rewards. In the case of Sri Lanka, which was unable to repay China’s loan for an unnecessarily large port, the consequence was the relinquishing to China of the strategic port of Hambantota in a 99-year lease.1 And so begins a new era of unequal, opaque treaties—often to the detriment of developing nations.
1. Port of Hambantota: With ballooning debt the Sri Lankan government was forced to hand over the Port of Hambantota to China for the next 99 years, giving China a new strategic foothold in an essential commercial and military waterway.
2. Border Control in Tajikistan: China is directly involved in Tajikistan border security through building outpost and—in certain parts of the country—taking over border control completely. Public Utilities in Zambia: Zambia continues to struggle to repay Chinese loans as China moves to take over the Zambian national power utility ZESCO.
3. BUILD Act: The 2018 Better Utilization of Investments Leading to Development (BUILD) Act represents a large overhaul of U.S. development finance efforts and establishes the U.S. International Development Finance Corporation (DFC). The DFC will replace the existing Overseas Private Investment Corporation (OPIC) and raise its budget cap from $29 to $60 billion.
4. Japan-U.S. Mekong Power Partnership: Falling under the umbrella of the Japan-U.S. Strategic Energy Partnership, the Mekong Power Partnership facilitates regional power infrastructure growth. In August 2019, the U.S. Department of State announced an additional $29.5 million toward energy development in the lower Mekong region.