China In Eurasia

PODGORICA -- It took eight years of construction, delays, and controversy, but Maria Kovijanic, who runs a small store along a stretch of a new $1 billion Chinese-funded highway outside the Montenegrin capital, is ready to reap the project's promised benefits.

Valued as one of the world's most expensive roads, the first 41 kilometers opened in July 2022 and cuts through Montenegro's soaring mountains and over its deep gorges, with an estimated 60 percent of the highway made up only of tunnels and bridges. For a toll fee of 3.50 euros ($3.75), a previously arduous journey north has been turned into a roughly 25-minute trip along freshly paved asphalt until the stretch of road peters out at Matesevo, the village where Kovijanic runs her shop.

She says the new, modern road is a game changer for her and other residents that live and own businesses along the highway, with the new section dramatically cutting down travel times and providing an alternative to previously congested and treacherous mountain roads in the small Balkan country of 620,000 people.

"People here like [the highway] because it's a shorter way to Podgorica. Before we were going the long way through the canyon of Moraca," Kovijanic said. "A lot of people died on that road, so we are very happy with this highway."

Under the original plan inked in 2014, the initial 41 kilometers -- which was funded by a loan from the Export-Import Bank of China and built by the China Road and Bridge Corporation (CRBC) -- was to be part of a 163-kilometer highway to link the Montenegrin port city of Bar with neighboring Serbia. The project promised to transform the country into a transport hub for the wider region and bolster economic activity in the process.

But the highway has found itself marred in scandal and still faces lingering questions about whether the remaining 122 kilometers of road will ever be completed.

The road project has also brought long-term economic risk by saddling Montenegro with debts to China that totaled more than one-third of the annual state budget, with the controversial venture being a prime example of what critics say are cursory Chinese lending practices fused with local corruption.

Despite this controversy, polls have shown that only a minority in Montenegro see China or the financial risk brought by the highway as a concern, with many instead hoping that both will provide an economic boost to the country.

"[The highway] is expensive, yes, but we needed this route," Kovijanic said. "If they [are able to] connect this highway with Serbia, [it] will be the best."

Grappling With A Price Tag

Once hailed as an early success of Beijing's Belt and Road Initiative -- the globe-spanning infrastructure initiative launched in 2013 by Chinese leader Xi Jinping -- the highway has since become a cautionary tale for how ambitious construction projects can go wrong.

The loan was taken out by a previous government led by current President Milo Djukanovic, who continues to be a dominating force in the country's politics.

Because Podgorica didn't hedge against currency swings and failed to include a turnpike in its original plans, the cost of the project continued to soar over the years, leading to the current debt problem and the ballooned $1 billion price tag attached to the first stretch of the highway.

The project was also controversial from the start among local civil-society groups and the country's opposition, with the Network for Affirmation of the Nongovernmental Sector (MANS), a Balkan watchdog organization, raising corruption and transparency concerns over how construction contracts were distributed to Chinese and local companies.

Questions over total cost and how the project would generate revenue have also followed the highway since its conception. Under a new government in 2021, Montenegro's Capital Investments Ministry published two previously confidential international feasibility studies, which suggest that the estimated cost of the first phase of the highway was greatly exaggerated. One of those studies, compiled by British consultancy Scott Wilson Group, said it should cost $570 million, a little more than half of the current cost.

This debt incurred from the highway also brought Podgorica to the edge of collapse and the country's leadership has since received relief and restructuring from a group of European and U.S. banks as Montenegro begins to repay its debt to China.

Environmental concerns also followed its construction, with CRBC accused of damaging sections of the riverbank along the UNESCO-protected Tara River traversed by the highway, which Montenegro's Nature and Environmental Protection Agency (NEPA) said was raised with the Chinese builders, but ignored.

That laundry list of concerns looks set to follow the highway now that it's open.

While many locals along the road say that the highway was busy in the summer, nearly six months after its launch the traffic appears to be light. Many roadside signs that show icons advertising shops, water, gas, and other services in rest stops are also now crossed out, highlighting a lower-than-expected demand.

Still, many Montenegrins believe that the highway can improve their lives.

Milan Kalezic, who runs a tourism driving service in Podgorica, says that the stretch of road will be a boost for his industry by allowing easier and more direct access to ski resorts and better connections to smaller villages in the mountains, which could lead to greater community-based tourism in the country.

"Now with the new highway, sometimes I take guests [to villages accessed by the highway] just for the food," Kalezic said. "Sometimes I go by myself [or] with my family just to have dinner."

Down The Road

Emerging from years of delays, scandals, and a debt crisis, the big question surrounding the highway is whether it can be completed as originally conceived.

At the opening ceremony in July 2022, which was attended by representatives from CRBC and the Chinese Embassy in Podgorica, Prime Minister Dritan Abazovic spoke highly about the project's potential.

"This investment will undoubtedly open up new directions of development and give the strongest impetus to the domestic economy," he said. "The highway is the beginning of the permanent connection of Montenegro with the world."

The highway itself is divided into three sections, and the current government has said that it hopes to finish building the full length of the highway and is reportedly exploring funding options with European lenders.

An estimate released last year by the Capital Investments Ministry said the 23.5-kilometer-long second section of the road -- which would run from Matesevo to Andrijevica in eastern Montenegro -- would cost approximately $590 million.

Vladimir Shopov, an expert on China's role in the Balkans at the European Council on Foreign Relations, says that both Podgorica and China will be looking to keep some distance from one another for the near future following years of scandal.

Many questions still remain from this period. The 2014 loan agreement with the Export-Import Bank of China has been made public, but nearly all other documents relating to the highway have been classified as secret by Podgorica, which many experts believe is due to binding clauses in the Chinese contracts.

"There is a transparency trap here," Shopov said. "Very few people actually know everything that exists in the contracts."

While that raises potentially further worrying implications for Montenegro should it face more economic strain again in the future, Shopov says that he doesn't rule out new infrastructure or investment from China in Montenegro down the line.

"Despite all the bad press, the Chinese don't back away," he said. "Montenegro also has few alternatives."

Written by Reid Standish with photos by Amos Chapple

Hoping to boost his country’s economic prospects and deepen its energy links with China, Turkmen President Serdar Berdymukhammedov arrived in Beijing on January 5 for a two-day state visit.

Few details have been made available about the trip, but the visit marks Berdymukhammedov’s first official visit to China since succeeding his father, Gurbanguly, as president in March 2022 in a managed election.

Chinese state media have said that Berdymukhammedov will meet with Chinese leader Xi Jinping and that delegations from both sides will discuss issues ranging from Afghanistan to investment through Beijing’s Belt and Road Initiative infrastructure project.

But energy ties, particularly natural gas pipelines to China, look set to dominate the Turkmen leader’s visit.

Turkmenistan has the world’s fourth-largest gas reserves and China plays a central role in the Central Asian nation’s foreign policy and in powering its economy.

This growing dependency on China is reflected in Turkmenistan’s trade with Beijing. The vast majority of the $10 billion in annual bilateral trade is made up of Turkmen exports, mostly of natural gas.

This dynamic looks set to increase further, with yearly trade turnover increasing some 53 percent in 2022 and Ashgabat looking to renew Chinese support for an additional pipeline transporting Turkmen gas across Central Asia to China.

Analysts, however, caution that Berdymukhammedov has few cards to play in talks with Beijing, especially as Turkmenistan continues to grapple with a lingering economic crisis in the form of rampant inflation, rising poverty, and increased food insecurity.

Many details around the two countries’ energy ties remain opaque, but the Turkmen side may be looking to shore up the terms of its arrangement with Beijing in hopes of stabilizing its uncertain finances, analysts say.

“We don’t know all the terms, lengths, or prices when it comes to gas [contracts] with China,” Luca Anceschi, a professor of Eurasian Studies at the University of Glasgow, told RFE/RL. “The hope for Turkmenistan is to get some continuity with China and make sure that the flow of gas stays steady.”

A Limited Balancing Act

Berdymukhammedov last met Xi in September on the sidelines of the Shanghai Cooperation Organization (SCO) summit in Uzbekistan. The Chinese leader’s first trip abroad since the start of the COVID-19 pandemic in 2020, the visit marked Beijing’s symbolic focus on Central Asia.

For the Turkmen leader, solidifying and expanding relations with Beijing are a key priority, analysts say.

As energy ties with Russia -- which was the cornerstone of Turkmenistan’s foreign policy following the collapse of the Soviet Union -- came under strain and eventually deteriorated in the mid-2000s, Ashgabat turned to Beijing in hopes of offsetting its reliance on Russian pipelines to access markets.

This culminated in the opening of the China-Central Asia pipeline network in 2009, which boosted ties between the two countries and saw China become the sole buyer of natural gas from Turkmenistan for a period.

Anceschi says this was a turning point that set the stage for Ashgabat’s current predicament.

Natural gas exports account for most of Turkmenistan’s revenues. The country has grappled with market fluctuations and repaying China for the debt it incurred for building the pipeline, which cut into its gas revenues.

“The problem is that Turkmenistan does not have many international partners,” Anceschi said. “But the calculations are different for the regime. The national interest is defined through a narrow elite that oversees this authoritarian and kleptocratic system -- and relying on one large partner like China still allows them to pursue this agenda.”

Still, Turkmenistan has made attempts to better insulate itself from its reliance on the Chinese market.

While China remains the country’s top energy client, Russia has resumed buying some Turkmen gas in recent years. Since Berdymukhammedov succeeded his father, Ashgabat has also accelerated its outreach to the Kremlin, with the Turkmen leader making his first trip abroad to Moscow in June to meet with Russian President Vladimir Putin.

“It’s clear that Serdar [Berdymukhammedov] has prioritized outreach to Russia since coming to power,” Raffaello Pantucci, a senior fellow at London’s Royal United Services Institute and at the S. Rajaratnam School of International Studies in Singapore, told RFE/RL. “It shows what they are trying to do in terms of opening up new routes and trying to diversify their partners.”

Pipe Dreams

Still, analysts say, there are limits on how much Russia, which is also a supplier of natural gas to China, can help Ashgabat balance its dependence on Beijing -- a dynamic that is likely to play out during Berdymukhammedov’s visit.

In 2021, China invested in new wells at Turkmenistan’s Galkynysh gas field. Ashgabat is also hoping Beijing will accelerate the expansion of a pipeline network that could bring more of the country’s gas to the Chinese market.

The current network to China is made up of three parallel pipelines -- known as Line A, B, and C -- that run from Turkmenistan through Uzbekistan and Kazakhstan. Around 80 percent of the gas that flows through the pipelines is from Turkmenistan. Berdymukhammedov is now looking to turn the new section of the network -- Line D -- into reality.

The fourth line will follow a different route through Uzbekistan, Tajikistan, and Kyrgyzstan to China, but it faces a host of logistical, technological, and political roadblocks that have delayed it for nearly a decade.

Still, Ashgabat is eager to forge ahead as the new pipeline would increase exports through the Central Asia-China gas network by 30 billion cubic meters (bcm) to a potential capacity of 85 bcm annually. That would provide additional revenue for the cash-strapped Turkmen government.

Beijing has offered public support for the venture and the China National Petroleum Corporation will reportedly finance its construction.

But China is in no hurry for the pipeline to come online. Turkmenistan’s gas exports to China through the existing pipeline network have yet to be maximized. Beijing also has a diverse set of natural gas suppliers around the world, with Russia also sending gas via pipeline and Australia being a top exporter of liquefied natural gas.

Analysts say this imbalance gives Turkmenistan little leverage as it presses for more favorable pricing on gas and speedier timelines in the construction of future pipelines.

Anceschi adds that, despite these obstacles, China still remains an appealing partner for Ashgabat.

“This level of dependence here may be astounding to an outside observer, but it fits well with the idea that Turkmenistan’s foreign policy is about keeping elites in power,” he said. “They need to have a certain amount of energy revenue while not being too exposed internationally, and this leaves China as the main option.”