Montenegro: Continuing Controversy over Bar-Boljare Roadway

Difficulties continue to mount for Montenegro’s controversial Bar-Boljare motorway project. As of July 2021, the project is tens of billions of dollars over-budget and years behind schedule. Only 25 out of a projected 125 miles of roadway have been completed. Given the difficult terrain through which the roadway is being built—which requires 40 bridges and 90 tunnels, at a reported cost of $40 million per mile, it has become one of the most expensive projects of its kind in the world. Making matters worse, the Montenegrin government has essentially run out of money to finish the project. 

Financed by China’s Export-Import Bank, with construction contracted to the China Road and Bridge Corporation (CRBC), the roadway project is ultimately supposed to connect the Port of Bar with the Serbian capital of Belgrade, providing an overland commercial transportation corridor for goods, as well as providing a faster (and safer) option for tourists making their way to the Adriatic Coast.  

The Bar-Boljare Roadway Project has been mired in controversy and charges of corruption since its inception. Initially conceived by the government of longtime Montenegrin ruler Milo Djukanovic (named “Person of the Year in Organized Crime and Corruption” by an international watchdog group in 2015) early French and American feasibility studies determined that the project was not economically justifiable. The American engineering and construction firm Bechtel expressed interest in a less ambitious version of the roadway which was turned down the Montenegrin government. Estimates suggested that the highway would need 22-25,000 vehicles per day to make the highway profitable, while traffic on the busiest section of the proposed roadway, from Podgorica to Bar, currently carries only 6,000 vehicle per day. 

The Bar-Boljare Roadway Project, however, soon found a new champion in the form of China, which for the past decade has become an ever-more important economic and geo-political actor in the region. Thus, despite the earlier negative views of the project by European and American auditors, a Chinese-funded studied employing University of Montenegro economists found the proposed roadway economically viable. Predictably, however, the report written by the Montenegrin economists has never been made public. 

Controversy over the project only increased as the terms of the agreement with the Chinese became known to the Montenegrin public. Thus, according to the terms of the one billion dollar (US) Chinese loan—one quarter of Montenegro’s GDP–negotiated in 2014, if Montenegro is unable to make payments on time, China has the right to seize Montenegrin land (with the exception of military or diplomatic properties), and in case of a dispute, a Chinese arbitration court has been given the right to adjudication. 

Moreover, despite hopes that the project would provide employment opportunities for the local population, some two-thirds of the workers employed on the project have been brought in by the CRBC and live in their own settlements adjoining various construction sites. The CRBC has been granted other beneficial conditions as well, such as being freed of the requirement to pay import and customs duties on equipment and materials brought into the country.   

Apart from the many problematic aspects of the Montenegrin government’s agreement with China, numerous other elements of the project are drawing criticism as well. Montenegrin environmental groups, for instance, complain that the project is doing irreparable ecological damage to the Tara River Valley, part of which is a UNESCO World Heritage site.  

As of July 2021, the new Montenegrin government of Zdravko Krivokapic was in negotiations with Western banks to obtain a lower-interest loan that would not be subject to the currency fluctuations of the Chinese loan (the loan negotiated between Beijing and the Djukanovic government had been negotiated in U.S. dollars, while Montenegro itself uses the Euro). Obtaining western loans–and thereby freeing Montenegro from the more economically-onerous Chinese loans—would have several benefits, not the least of which would be re-orienting the Montenegrin economy towards western institutions, with all of the improvements in democratic accountability and transparency that such a re-orientation would entail.  

It is at the strategic level, however, that the Bar-Boljare Roadway Project is drawing the most concern, because it is yet another example of the extent to which China is becoming an increasingly active and important player in southeastern Europe. Over the past decade, with the possible exception of the European Union, China has become the most important infrastructure investor in the western and southern Balkans. In 2016, China acquired a 51% share of the Greek port of Piraeus (with options to increase its total control), and the CRBC recently completed neighboring Croatia’s most important infrastructure project, the Peljesac Bridge connecting north and south Dalmatia. 

China is also a key investor in the Belgrade-Budapest high-speed rail connection, scheduled for completion by 2024. The Belgrade-Budapest rail link would complement modernized rail links (currently only in the planning stages) between Belgrade-Nis-Skopje and Piraeus, providing China with another major artery along which to export goods to the European Union.  

Viewed from this perspective, China’s interest in Montenegro is understandable. Beijing’s ultimate interest is likely acquiring the Montenegrin Port of Bar, which has considerable underutilized capacity as a cargo port, and would nicely compliment Chinese control of such facilities at Piraeus.  

There are, of course, diplomatic, political, and strategic implications to China’s increasing role in southeastern Europe. As the China specialist Mladen Grgic has noted, Chinese loans are “politically cheap but financially expensive.” States receiving Chinese development loans do not have to satisfy the numerous requirements imposed by lending organizations such as the World Bank, the International Monetary Fund, or the European Bank for Reconstruction and Development regarding transparency in tender and procurement procedures, or potential environmental impact, but they are associated with the wide-range of unfavorable financial complications associated with Chinese debt-diplomacy.