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World’s poorest countries pushed to brink of collapse under China debt

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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.

 

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UN Security Council meets on Iran as Russia, China push for a ceasefire

It was not immediately clear when the council could vote on the draft resolution. Russia, China and Pakistan have asked council members to share their comments by Monday evening.

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The U.N. Security Council met on Sunday to discuss U.S. strikes on Iran’s nuclear sites as Russia, China and Pakistan proposed the 15-member body adopt a resolution calling for an immediate and unconditional ceasefire in the Middle East, Reuters reported.

“The bombing of Iranian nuclear facilities by the United States marks a perilous turn,” U.N. Secretary-General Antonio Guterres told the Security Council on Sunday. “We must act – immediately and decisively – to halt the fighting and return to serious, sustained negotiations on the Iran nuclear programme.”

The world awaited Iran’s response on Sunday after President Donald Trump said the U.S. had “obliterated” Tehran’s key nuclear sites, joining Israel in the biggest Western military action against the Islamic Republic since its 1979 revolution.

Russia and China condemned the U.S. strikes.

“Peace in the Middle East cannot be achieved by the use of force,” said China’s U.N. Ambassador Fu Cong. “Diplomatic means to address the Iranian nuclear issue haven’t been exhausted, and there’s still hope for a peaceful solution.”

But acting U.S. Ambassador to the U.N. Dorothy Shea told the council the time had come for Washington to act decisively, urging the Security Council to call upon Iran to end its effort to eradicate Israel and terminate its drive for nuclear weapons.

“Iran long obfuscated its nuclear weapons program and stonewalled our good-faith efforts in recent negotiations,” she said. “The Iranian regime cannot have a nuclear weapon.”

Russia’s U.N. Ambassador Vassily Nebenzia recalled former U.S. Secretary of State Colin Powell making the case at the U.N. Security Council in 2003 that Iraqi President Saddam Hussein constituted an imminent danger to the world because of the country’s stockpiles of chemical and biological weapons, read the report.

“Again we’re being asked to believe the U.S.’s fairy tales, to once again inflict suffering on millions of people living in the Middle East. This cements our conviction that history has taught our U.S. colleagues nothing,” he said.

Iran requested the U.N. Security Council meeting on Sunday.

Iran’s U.N. Ambassador Amir Saeid Iravani accused Israel and the U.S. of destroying diplomacy, said all U.S. allegations are unfounded and that the nuclear non-proliferation treaty “has been manipulated into a political weapon.”

“Instead of guaranteeing parties’ legitimate rights to peaceful nuclear energy, it has been exploited as a pretext for aggression and unlawful action that jeopardize the supreme interests of my country,” Iravani told the council.

Israel’s U.N. Ambassador Danny Danon praised the U.S. for taking action against Iran, saying: “This is what the last line of defense looks like when every other line has failed.” He accused Iran of using negotiations over its nuclear programme as camouflage to buy time to build missiles and enrich uranium.

“The cost of inaction would have been catastrophic. A nuclear Iran would have been a death sentence just as much for you as it would have been for us,” he told the council.

It was not immediately clear when the council could vote on the draft resolution. Russia, China and Pakistan have asked council members to share their comments by Monday evening. A resolution needs at least nine votes in favor and no vetoes by the U.S., France, Britain, Russia or China to pass.

The U.S. is likely to oppose the draft resolution, seen by Reuters, which also condemns attacks on Iran’s nuclear sites and facilities. The text does not name the United States or Israel.

“Military action alone cannot bring a durable solution to concerns about Iran’s nuclear program,” Britain’s U.N. Ambassador Barbara Woodward told the council. “We urge Iran now to show restraint, and we urge all parties to return to the negotiating table and find a diplomatic solution which stops further escalation and brings this crisis to an end.”

the main known facilities of Iran's nuclear programme.

U.N. nuclear watchdog chief Rafael Grossi said that while craters were visible at Iran’s enrichment site buried into a mountain at Fordow, “no one – including the IAEA – is in a position to assess the underground damage.”

Grossi told the Security Council that entrances to tunnels used for the storage of enriched material appear to have been hit at Iran’s sprawling Isfahan nuclear complex, while the fuel enrichment plant at Natanz has been struck again.

“Iran has informed the IAEA there has been no increase in off-site radiation levels at all three sites,” said Grossi, who heads the International Atomic Energy Agency.

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World leaders respond to U.S. strike on Iran

Israeli Prime Minister Benjamin Netanyahu congratulates President Trump and the U. S. on strike on Iranian nuclear sites.

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The reaction of world leaders after U.S. forces struck three Iranian nuclear sites on Sunday Iran time ranged from Israel lauding President Donald Trump’s decision to the U.N. calling for de-escalation and some countries condemning the attacks.

ISRAEL PRIME MINISTER BENJAMIN NETANYAHU, RECORDED STATEMENT:

“Congratulations, President Trump. Your bold decision to target Iran’s nuclear facilities with the awesome and righteous might of the United States will change history… History will record that President Trump acted to deny the world’s most dangerous regime the world’s most dangerous weapons.”

U.N. SECRETARY-GENERAL ANTONIO GUTERRES, STATEMENT

“I am gravely alarmed by the use of force by the United States against Iran today. This is a dangerous escalation in a region already on the edge – and a direct threat to international peace and security. There is a growing risk that this conflict could rapidly get out of control – with catastrophic consequences for civilians, the region, and the world. I call on Member States to de-escalate and to uphold their obligations under the UN Charter and other rules of international law. At this perilous hour, it is critical to avoid a spiral of chaos. There is no military solution. The only path forward is diplomacy. The only hope is peace.”

NEW ZEALAND FOREIGN MINISTER WINSTON PETERS, STATEMENT:

“We acknowledge developments in the last 24 hours, including President Trump’s announcement of US strikes on nuclear facilities in Iran. Ongoing military action in the Middle East is extremely worrying, and it is critical further escalation is avoided. New Zealand strongly supports efforts towards diplomacy. We urge all parties to return to talks. Diplomacy will deliver a more enduring resolution than further military action.”

AUSTRALIA GOVERNMENT SPOKESPERSON, STATEMENT:

“We have been clear that Iran’s nuclear and ballistic missile program has been a threat to international peace and security. We note the US President’s statement that now is the time for peace. The security situation in the region is highly volatile. We continue to call for de-escalation, dialogue and diplomacy.”

MEXICO FOREIGN MINISTRY, ON X:

“The ministry urgently calls for diplomatic dialogue for peace between the parties involved in the Middle East conflict. In keeping with our constitutional principles of foreign policy and our country’s pacifist conviction, we reiterate our call to de-escalate tensions in the region. The restoration of peaceful coexistence among the states of the region is the highest priority.”

VENEZUELA FOREIGN MINISTER YVAN GIL, ON TELEGRAM:

“Venezuela Condemns U.S. Military Aggression Against Iran and Demands an Immediate Cessation of Hostilities. The Bolivarian Republic of Venezuela firmly and categorically condemns the bombing carried out by the United States military, at the request of the State of Israel, against nuclear facilities in the Islamic Republic of Iran, including the Fordow, Natanz, and Isfahan complexes.”

CUBA PRESIDENT MIGUEL DIAZ-CANEL, ON X:

“We strongly condemn the US bombing of Iran’s nuclear facilities, which constitutes a dangerous escalation of the conflict in the Middle East. The aggression seriously violates the UN Charter and international law and plunges humanity into a crisis with irreversible consequences.”

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Pakistan nominates Donald Trump for 2026 Nobel Peace Prize

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Pakistan has formally nominated US President Donald Trump for the 2026 Nobel Peace Prize in recognition of “his decisive diplomatic intervention and pivotal leadership during the recent India-Pakistan crisis.”

The Government of Pakistan in a post on X said: “The international community bore witness to unprovoked and unlawful Indian aggression, which constituted a grave violation of Pakistan’s sovereignty and territorial integrity, resulting in the tragic loss of innocent lives, including women, children, and the elderly.”

Pakistani leaders said at a moment of heightened regional turbulence, Trump demonstrated “great strategic foresight and stellar statesmanship” through “robust diplomatic engagement” with both Islamabad and New Delhi, securing a ceasefire.

“This intervention stands as a testament to his role as a genuine peacemaker and his commitment to conflict resolution through dialogue,” the post continued. “The Government of Pakistan also acknowledges and greatly admires President Trump’s sincere offers to help resolve the longstanding dispute of Jammu and Kashmir between India and Pakistan—an issue that lies at the heart of regional instability.”

“President Trump’s leadership during the 2025 Pakistan India crisis manifestly showcases the continuation of his legacy of pragmatic diplomacy and effective peace-building. Pakistan remains hopeful that his earnest efforts will continue to contribute towards regional and global stability, particularly in the context of ongoing crises in the Middle East, including the humanitarian tragedy unfolding in Gaza and the deteriorating escalation involving Iran.”

Meanwhile, Trump announced on Friday he and Secretary of State Marco Rubio had secured a “wonderful” treaty between Rwanda and Congo.

He went on to discuss his chances at winning a Nobel Peace Prize, claiming he wouldn’t get one, “no matter what I do.”

“This is a Great Day for Africa and, quite frankly, a Great Day for the World,” Trump wrote in the post. “I won’t get a Nobel Peace Prize for this, I won’t get a Nobel Peace Prize for stopping the War between India and Pakistan, I won’t get a Nobel Peace Prize for stopping the War between Serbia and Kosovo, I won’t get a Nobel Peace Prize for keeping Peace between Egypt and Ethiopia (A massive Ethiopian built dam, stupidly financed by the United States of America, substantially reduces the water flowing into The Nile River), and I won’t get a Nobel Peace Prize for doing the Abraham Accord in the Middle East which, if all goes well, will be loaded to the brim with additional Countries signing on, and will unify the Middle East for the first time in “The Ages!”

According to The Nobel Prize’s website, to be nominated for the Nobel Peace Prize, a person must be a “qualified nominator,” which includes national governments, heads of state, previous award winners, and members of specific international organizations. 

The nomination process is confidential, and entries are due by Jan. 31, hence the 2026 nomination.

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