The Arctic emerges as a geographic battleground

During times of war and chaos, someone profits. As the world continues to reel from the coronavirus pandemic, businesses have shuttered, families have lost loved ones, and governments at the federal, state, and local levels have scrambled to provide adequate resources to the public. Meanwhile, after lying to international health organizations and governments around the world, China seeks to repair its public image and capitalize on a pandemic it allowed to wreak havoc on the world.

Beijing is positioned to recover faster than its competitors, including the United States. Why that is contains a lesson for America going forward, if we don’t want to be back in this position again.

In 2013, Chinese President Xi Jinping announced a plan to expand China’s global footprint in infrastructure projects abroad called the “Belt and Road Initiative.” What followed was a series of projects aimed at connecting over 65 countries with access to financing in excess of $1 trillion. The relationships span the globe, even including ambitions to control the Arctic Circle. The initiative has given China significant access to resources, economic zones, and trade routes. According to the China Africa Research Initiative at Johns Hopkins University, from “2000 to 2017, the Chinese government, banks and contractors signed $146 billion in loan commitments to African governments and their state-owned enterprises.” Foreign Policy reports, “Djibouti, Tajikistan, Kyrgyzstan, Laos, Maldives, Mongolia, Pakistan, and Montenegro … owe more than 45% of their gross domestic products to Beijing over Belt and Road projects.”

And thanks to the Chinese Communist Party’s lack of political or economic competition at home, it has been able to lend money on terms advantageous to Beijing — and only Beijing. Azeem Ibrahim, a professor at the Strategic Studies Institute at the U.S. Army War College, notes, “Beijing is becoming adept at translating outstanding debts into foreign assets.” The Belt and Road program largely relies on low-interest credit facilities collateralized by borrowing countries’ infrastructure or natural resources. Due to the poor credit of the sovereign borrower or low expectation of performance of the asset in question, many call China’s practice a form of “neo-colonialism” or “creditor imperialism” through what’s called “debt-trap diplomacy.” The Institute for Security Studies has gone so far as to call China’s behavior a “predatory system designed to ensnare countries into a straightjacket of debt servitude.”

How this works in practice: Borrowers that are unable to fulfill their loan obligations cede tremendous bargaining leverage to the Chinese when they seek to restructure the debt. If they default, the Chinese government simply seizes control of the asset. For example, the Sri Lankan government entered into a credit deal with the Chinese for a port (which reports indicate was a shaky bet, financially, from the start). When the asset didn’t perform to the terms of the contract, Sri Lanka granted China a 99-year lease on the port, including over 150,000 acres of land surrounding it. Just like that, the Chinese Communist Party gained control over a major waterway of another country.

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