World
World’s poorest countries pushed to brink of collapse under China debt
At least a dozen poor countries are buckling under the weight of hundreds of billions of dollars in debt, most of which is owed to China.
A recent analysis, carried out by the Associated Press, found that for a dozen countries, paying back their debt is consuming a growing amount of their tax revenue needed to keep basic services going.
Among the countries analyzed was Pakistan, Kenya, Zambia, Laos and Mongolia and it was found that paying back their debt is also draining foreign currency reserves that these countries use to pay interest on the loans – leaving some with just months before that money is gone.
AP reported that behind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help.
According to World Bank data analyzed by Statista recently, countries heavily in debt to China are mostly located in Africa, but can also be found in Central Asia, Southeast Asia and the Pacific.
And, Statista reports that the new Belt and Road Initiative, which finances the construction of port, rail and land infrastructure, has created much debt to China for participating countries, specifically poor countries.
As of March last year, 215 cooperation documents had been signed with 149 countries on the initiative.
Countries in AP’s analysis meanwhile had as much as 50% of their foreign loans from China and most were devoting more than a third of government revenue to paying off foreign debt.
Two of them, Zambia and Sri Lanka, have already gone into default, unable to make even interest payments on loans financing the construction of ports, mines and power plants.
In Pakistan, millions of textile workers have been laid off because the country has too much foreign debt and can’t afford to keep the electricity on and machines running, AP stated.
In Kenya, the government has held back paychecks to thousands of civil service workers to save cash to pay foreign loans. The president’s chief economic adviser tweeted last month, “Salaries or default? Take your pick.”
The study also found that since Sri Lanka defaulted a year ago, a half-million industrial jobs have vanished, inflation has risen by 50% and more than half the population in many parts of the country has fallen into poverty.
The study found that experts predict that unless China begins to soften its stance on its loans to poor countries, there could be a wave of more defaults and political upheavals.
AP’s report stated that a case study of how it has played out is in Zambia, a landlocked country of 20 million people in southern Africa that over the past two decades has borrowed billions of dollars from Chinese state-owned banks to build dams, railways and roads.
While the loans boosted Zambia’s economy, they also raised foreign interest payments so high that there was little left for the government, forcing it to cut spending on healthcare, social services and subsidies to farmers for seed and fertilizer.
In the past under such circumstances, big government lenders such as the U.S., Japan and France would work out deals to forgive some debt, with each lender disclosing clearly what they were owed and on what terms so no one would feel cheated.
But China didn’t play by those rules, AP reported. It refused at first to even join in multinational talks, negotiating separately with Zambia and insisting on confidentiality that barred the country from telling non-Chinese lenders the terms of the loans.
By late 2020, Zambia was unable to pay the interest and defaulted, setting off a cycle of spending cuts and deepening poverty.
Since then, inflation in Zambia has increased by 50%, unemployment has hit a 17-year high and the nation’s currency, the kwacha, has lost 30% of its value in just seven months. AP also found that 3.5 million Zambians are now not getting enough food.
AP reported that a few months after Zambia defaulted, researchers found that the country owed $6.6 billion to Chinese state-owned banks, double what many thought at the time and about a third of the country’s total debt.
China’s unwillingness however to take big losses on the hundreds of billions of dollars it is owed, as the International Monetary Fund and World Bank have urged, has left many countries on a treadmill of paying back interest, which stifles the economic growth that would help them pay off the debt.
For Pakistan, its foreign cash reserves have plunged more than 50%, according to AP’s analysis, while in nine of the 12 countries analyzed, foreign cash reserves have dropped on average of 25% in just one year.
Based on this, Pakistan for example has only two months left of foreign cash to pay for food, fuel and other essential imports if it does not get a bailout. Other countries, such as Mongolia, have eight months left.
AP found that last month, Pakistan was so desperate to prevent more blackouts that it struck a deal to buy discounted oil from Russia, breaking ranks with the US-led effort to shut off Vladimir Putin’s funds.
In Sri Lanka, rioters poured into the streets last July, setting homes of government ministers aflame and storming the presidential palace, sending the leader tied to onerous deals with China fleeing the country.
China has however disputed the idea that Beijing is an unforgiving lender and said in a statement that the Federal Reserve was to blame.
It said that if it is to accede to IMF and World Bank demands to forgive a portion of its loans, so should multilateral lenders, which it views as US proxies.
“We call on these institutions to actively participate in relevant actions in accordance with the principle of ‘joint action, fair burden’ and make greater contributions to help developing countries tide over the difficulties,” the statement said.
But China’s approach to lending is widely considered more transactional and criticized as “opaque” and analysts see Beijing’s desire to access oil, minerals and other commodities as the driving force behind Chinese lenders being less prone to applying strict conditions in helping governments finance roads, bridges and railroads – so as to unlock those resources.
Just last month, US Treasury Secretary Janet Yellen told lawmakers: “I’m very, very concerned about some of the activities that China engages in globally, investing in countries in ways that leave them trapped in debt and don’t promote economic development.”
“We are working very hard to counter that influence in all of the international institutions that we participate in,” she said.
Since 2017, China has become the world’s largest official creditor, surpassing the World Bank, IMF and 22-member Paris Club combined, Brent Neiman, a counselor to Yellen, said late last year.
Politico meanwhile reported earlier this month that China’s financing of projects in other countries between 2000 and 2017 totaled more than $800 billion, most of that in the form of loans.
But for some poor countries struggling to repay China, they now find themselves stuck in a kind of loan limbo: China won’t budge in taking losses, and the IMF won’t offer low-interest loans if the money is just going to pay interest on Chinese debt.
World
Israel presses Iran assault as Tehran nears succession decision
Trump told reporters aboard Air Force One that he was not interested in negotiating an end to the conflict that has sent energy prices skyward, hurt business and snarled global travel.
Israeli forces expanded their bombardment of Iran overnight, striking fuel depots near Tehran, while Bahrain said an Iranian attack had damaged one of its desalination plants, signalling a widening assault on vital infrastructure across the region.
As the fighting escalated on day nine of the U.S.-Israeli assault on Iran, Tehran moved closer to naming a new supreme leader after the killing of Ayatollah Ali Khamenei, with every indication suggesting his powerful son could take charge.
Israel’s military threatened to kill any replacement for Khamenei, while U.S. President Donald Trump said the war might only end once Iran’s military and rulers had been wiped out.
The governments of Saudi Arabia, Kuwait, the United Arab Emirates and Bahrain reported Iranian drone attacks in their countries on Saturday and early Sunday, with a huge fire engulfing a government office block in Kuwait.
Kuwait’s interior ministry said two of its officers were killed “while performing duties”.
Bahrain said on Sunday that an Iranian drone attack had caused “material damage” to a desalination plant, though the country’s electricity and water authority said the strike had not disrupted water supplies.
Video from Tehran showed thick, choking black smoke hanging over the city early on Sunday after strikes on oil storage facilities, had lit up the night sky with plumes of orange flame.
An Israeli source said the fuel was used to manufacture and develop weapons and to operate military bases. Iran’s oil distribution company said four of its employees were killed in the blitz, adding that rationing would be introduced temporarily in some areas “to ensure fair and sustainable supplies”.
Shortly after the attack, which appeared to mark a new phase in the war, Israeli Prime Minister Benjamin Netanyahu said his government would press on with the assault and strike Iran’s rulers “without mercy”.
“We have an organised plan with many surprises to destabilise the regime and enable change,” he said in a video statement. “We have many more targets.”
Trump told reporters aboard Air Force One that he was not interested in negotiating an end to the conflict that has sent energy prices skyward, hurt business and snarled global travel.
“At some point, I don’t think there will be anybody left maybe to say, ‘We surrender’,” Trump said.
It was the first time an Arab country has said Iran targeted a desalination facility during the conflict. On Saturday, Iran said a U.S. attack had struck a freshwater desalination plant on its Qeshm Island, disrupting water supplies in 30 villages, calling it “a dangerous move with grave consequences”.
Saudi Arabia has told Tehran that continued Iranian attacks on the kingdom and its energy sector could push Riyadh to respond in kind, people familiar with the matter told Reuters.
In an apparent attempt to cool anger across the Gulf, Iran’s President Masoud Pezeshkian apologised to neighbouring states for its attacks on U.S. bases in those countries on Saturday.
His comments faced backlash from some hardliners in Iran, prompting his office to reiterate Iran’s military would respond firmly to attacks from U.S. facilities.
The clerical body charged with choosing Iran’s next supreme leader could meet as soon as Sunday to name a successor to Ayatollah Ali Khamenei, who was killed in an attack early in the conflict, Iranian media reported.
A majority consensus over the successor has more or less been reached, said Assembly of Experts member Ayatollah Mohammadmehdi Mirbaqeri, according to the Mehr news agency.
Another member of the council, Ayatollah Mohsen Heidari Alekasir, said in a video that a candidate had been selected based on Khamenei’s guidance that Iran’s top leader should be “hated by the enemy”.
Two Iranian sources told Reuters last week that the clear favourite was Khamenei’s son, Mojtaba Khamenei, who amassed power under his father as a senior figure in the security forces and the vast business empire they control. Choosing him would send a signal that hardliners were still firmly in charge.
Trump has justified the biggest U.S. military operation in the Middle East since the 2003 invasion of Iraq by saying Tehran posed an imminent threat to the United States, without providing evidence. He has also said Iran was too close to being able to build a nuclear weapon.
The U.S. and Israel have discussed sending special forces into Iran to secure its stockpile of highly enriched uranium at a later stage of the war, Axios reported, citing four people with knowledge of the discussions.
Asked about the possibility of sending ground troops to secure nuclear sites on Saturday, Trump said it was something they could do “later on.”
The U.S.-Israeli attacks have killed at least 1,332 Iranian civilians and wounded thousands, according to Iran’s U.N. ambassador, Amir Saeid Iravani.
Iranian attacks have killed 10 people in Israel. At least six U.S. service members have been killed, with Iran saying on Sunday it had struck U.S. bases in Kuwait.
Lebanon has also been pulled into the conflict after the Iran-backed militant group Hezbollah fired rockets and drones into Israel last week.
At least four people were killed when Israel hit a hotel building in central Beirut early on Sunday, with Israel saying it had targeted Iranian commanders operating in the Lebanese capital. It was the first such strike in the heart of Beirut, prompting fears Israel would expand its attacks to areas beyond where Hezbollah traditionally operates.
World
Trump wants say on Iran’s next leader as war intensifies
U.S. President Donald Trump claimed the right to join Iran in deciding its next leader as the war escalated on Thursday, with U.S. and Israeli jets hitting areas across the country and Gulf cities coming under renewed bombardment.
In a phone interview with Reuters, Trump said Mojtaba Khamenei, the son of the late Supreme Leader Ali Khamenei – a hardliner who has been considered a favorite to succeed his father – was an unlikely choice.
“We want to be involved in the process of choosing the person who is going to lead Iran into the future,” he said.
Trump also encouraged Iranian Kurdish forces to go on the offensive.
“I’d be all for it,” said Trump, whose administration has had contact with Iranian Kurdish groups since the U.S.-Israeli strikes began. He would not say whether the United States would provide air cover for any Kurdish offensive.
The attack is a major political gamble for the Republican president, with opinion polls showing little public support and Americans concerned about the rise in gasoline prices caused by disruption to energy supplies. Trump dismissed that concern.
ISRAELIS WARN TEHRAN RESIDENTS
On the war’s sixth day, Iran launched a series of attacks on Israel, the United Arab Emirates and Qatar. Fire crews in Bahrain extinguished a blaze at a refinery following a missile strike.
Two drone attacks targeted an Iranian opposition camp in Iraqi Kurdistan, as well as an oil field operated by an American firm, security sources said.
The Israeli military warned residents to evacuate areas including eastern Tehran, while Iranian media reported blasts were heard in various parts of the capital. An air attack killed 17 people in a guest house on a road northwest of the capital, Iranian state television said.
“Today is worse than yesterday. They are striking northern Tehran. We have nowhere to go. It is like a war zone. Help us,” said Mohammadreza, 36, by phone from Tehran, with a shaky voice as explosions rang out from what Israel described as its latest wave of strikes on Iranian government targets.
MANY MUNITIONS, IRAN’S ATTACKS DROPPED
U.S. Defense Secretary Pete Hegseth and Admiral Brad Cooper, who leads U.S. forces in the Middle East, said that the U.S. has enough munitions to continue its bombardment indefinitely.
“Iran is hoping that we cannot sustain this, which is a really bad miscalculation,” Hegseth told reporters at Central Command headquarters in Florida. “Our munitions are full up and our will is ironclad.”
Cooper said the U.S. had now hit at least 30 Iranian ships, including a large drone carrier that he said was the size of a World War Two aircraft carrier. He added that B-2 bombers had in the past few hours dropped dozens of 2,000 penetrator bombs targeting deeply buried ballistic missile launchers, and that bombings were also targeting Iran’s missile production facilities.
Iran’s ballistic missile attacks had decreased by 90% since the first day of the war, while drone attacks had decreased by 83% in that time frame, he said.
WARNING SIRENS BLARE IN MULTIPLE NATIONS
Azerbaijan on Thursday became the latest country drawn in, as it accused Iran of firing drones at its territory and ordered its southern airspace closed for 12 hours. Iran, which has a significant Azeri minority, denied it had targeted its neighbor, but the episode underlined how rapidly the war has spread since the surprise U.S. and Israeli airstrikes that killed Khamenei on Saturday.
Along with the gleaming cities of the Gulf, in easy range of Iranian drones and missiles, Cyprus and Turkey have both been targeted. European nations have pledged to deploy ships to the eastern Mediterranean and hostilities have been seen as far afield as waters off Sri Lanka, where a U.S. submarine sank an Iranian warship on Tuesday, killing 80 crew members.
In Iran, at least 1,230 people have been killed, according to the Iranian Red Crescent Society, including 175 schoolgirls and staff killed at a primary school in Minab in the country’s south on the first day of the war. Another 77 have been killed in Lebanon, its Health Ministry says. Thousands fled southern Beirut on Thursday after Israel warned residents to leave.
NETANYAHU SAYS ‘MUCH WORK STILL LIES AHEAD’
Shares on Wall Street fell on Thursday, weighed by surging oil prices, as the economic impact, opens new tab of the campaign intensified, with countries around the world cut off from a fifth of global supplies of oil and liquefied natural gas and air transport still facing chaos and global logistics increasingly snarled.
On Thursday, Iran’s Revolutionary Guards said they had hit a U.S. tanker in the northern part of the Gulf and the vessel was on fire, the latest of numerous reports of such attacks.
Visiting an air force base in the south of the country, Israeli Prime Minister Benjamin Netanyahu said Israel’s achievements so far in Iran had been “great” but that “much work still lies ahead.”
Iran’s foreign minister said Washington would “bitterly regret” the precedent it had set by sinking a ship in international waters without warning. A commander of the Revolutionary Guards, General Kioumars Heydari, told state TV: “We have decided to fight Americans wherever they are.”
The body of Supreme Leader Ayatollah Ali Khamenei, killed in the first hours of the U.S.-Israeli air campaign in the first assassination of a country’s top ruler by an airstrike, had been due to lie in state in a Tehran prayer hall from Wednesday evening to launch three days of mourning.
But the memorial, expected to draw many thousands of mourners to the streets, was abruptly postponed.
Two sources familiar with Israel’s battle plans said that Israel, having killed many Iranian leaders, was now planning to enter a second phase when it would target underground bunkers where Iran stores its missiles.
World
Pakistani man says Iran forced him into plot to kill Trump, media say
A Pakistani man accused of planning to kill President Donald Trump told jurors on Wednesday that he did not willingly work with Iran’s elite Islamic Revolutionary Guards Corps to devise the plot, media said.
The Justice Department accused Asif Merchant of trying to recruit people in the United States in the plan targeting Trump and other U.S. politicians in retaliation for Washington’s killing of the Corps’ top commander, Qassem Soleimani, Reuters reported.
The Corps has a central role in Iran, with its combination of military and economic power and an intelligence network.
“I was not wanting to do this so willingly,” the New York Times quoted Merchant as telling a court during his trial for terrorism and murder-for-hire charges, adding that he participated to protect his family in Tehran.
Prosecutors rejected Merchant’s claim, citing a “lack of evidentiary support for a true duress or coercion,” according to a letter sent on Tuesday to the judge in the case dating from 2024.
According to the newspaper, Merchant said he had never been ordered to kill a specific person but that his Iranian handler named three people in the course of conversations in the Iranian capital.
In addition to Trump, these were Joe Biden, the president at the time; Nikki Haley, who unsuccessfully sought the Republican nomination for the 2024 presidential election.
Lawyers for Merchant did not immediately respond to a request for comment. The White House did not immediately comment.
The trial started last week, days before Trump ordered strikes on Iran carried out with Israel that killed Supreme Leader Ayatollah Ali Khamenei and top officials in the Middle Eastern nation.
Trump cited an alleged Iranian plot when he spoke to ABC News on Sunday about a joint U.S.-Israeli operation that killed Khamenei, saying, “I got him before he got me.”
Tehran has denied accusations that it targeted Trump and other U.S. officials.
-
Latest News3 days agoProminent Muslim scholar issues fatwa calling for Afghanistan-Pakistan ceasefire
-
Business3 days agoAfghanistan steps in to replace Iran in supplying fruits and vegetables to Russia
-
Business5 days agoMinistry of Public Works: Railway transport operating smoothly across all ports
-
Sport5 days agoACB names squads for white-ball series against Sri Lanka; Ibrahim Zadran appointed T20I captain
-
Latest News2 days agoInternational Women’s Day: Khalilzad urges IEA to allow girls’ education
-
Regional5 days agoIranian sailors recovering in Sri Lankan hospital after US submarine attack
-
Latest News2 days agoAfghanistan’s Virtue Ministry: Over 3,400 women’s rights complaints addressed in 10 months
-
Latest News4 days agoAirstrikes and clashes displace thousands as Afghanistan–Pakistan tensions escalate: UN
