13 March 2019
As China’s Belt and Road Initiative (BRI) reaches its fifth year, tales of corruption are plaguing the scheme. The BRI has focused on strategically located countries, rich in natural resources and with weak political institutions. China has exploited corrupt regimes’ desire for investment, facilitating and protecting corrupt regimes.
Beijing’s lack of regard for international business practices, allows corrupt regimes to easily divert cash from BRI investments. Investment into corrupt regimes also gives said regimes protection from one of the world’s most powerful nations, this is because it is beneficial for China to see such regimes succeed in return for their support of Chinese influence and infrastructure in that particular country. Meanwhile, BRI-sponsored grand infrastructure projects appease citizens – sustaining and legitimising corrupt practices. Targeting and supporting fundamentally corrupt and politically shambolic regimes is also beneficial for Beijing, it allows them to expand the BRI and exert greater control, the lack of transparency also allowing China to benefit financially from corrupt practices.
Kenya’s Nairobi-Mombasa railway is a vivid example of how Beijing has utilised corruption for its own advantage. The Chinese-funded railway project was vastly overpriced, costing about three times the international standard, standing at $3.6 billion. It has since been revealed that corruption is to blame for much of the overspend, with at least two Kenyan officials being arrested on corruption charges on accusations of selling land for the project at hugely inflated prices to the Chinese. James Shikwati, who runs an African Think Tank on public policy, argues that unlike Western investors, China adapts to its hosts’ business practices. If a country is susceptible to corruption, China facilitates it – a concept he refers to as “water taking the shape of the bottle”.
In terms of the Nairobi-Mombasa railway, corruption is helping Beijing to advance their strategic objectives by acquiring important assets. Kenya now seems unable to repay the loans to China and it seems increasingly likely that China will take over control of the strategic Mombasa Port as a way to cancel out the debts. A leaked copy of the contract between China and Kenya revealed that if the loan for the railway was not repaid, national assets, normally protected by sovereignty could be seized. It is a clear example of how Beijing targets countries prone to corruption in order to work in their favour and increase their geopolitical control.
It is thought that the BRI has also helped fund corruption in Malaysia. When former Prime Minister, Najib Razak, was ousted from power in May 2018, the extent of his dealings with China were revealed. Razak had granted Beijing unprecedented access to Malaysia, allowing a massive corruption scandal to engulf the authorities. It was revealed that Chinese officials had offered to bail out a Malaysian government development fund, known as 1MDB, that was at the centre of a multibillion-dollar graft scandal. Beijing told visiting Malaysians that China would use its influence to get the US and other countries to drop their probes of allegations, even offering to bug the homes of investigating Wall Street Journalists. Documents also show that Malaysian officials suggested to the Chinese that infrastructure projects be financed at above market value, allowing them to generate money for other needs and to pay off the 1MDB debts.
The above examples are proof that Beijing is exploiting corrupt regimes in order to boost its BRI. Not only does China leave countries riddled with debt, it does not require its partners to meet international standards when it comes to corruption, human rights and financial stability. By engaging with corrupt regimes, Beijing is able to bypass red tape in its infrastructure projects, resulting in projects being completed more quickly, advancing China’s influence across the BRI. The result is an international initiative that allows dishonest corporate practices and debased regimes to flourish.
Beijing’s exploitation of corrupt practices should be a cause for concern for Djibouti. Beijing owns 80% of Djibouti’s public debt, which brings a multitude of questions over whether Beijing has also been overpricing projects in Djibouti. There is international concern that Djibouti will be forced to hand over the Doraleh Container Terminal to the Chinese at the Port of Djibouti – part of a worrying trend occurring throughout the BRI of vulnerable countries handing their strategic assets to China. Djibouti is best to scale back its interaction with the Chinese BRI in order to avoid potential corruption scandals and to prevent its public debt from spiralling further.