New “China Debt” Narrative Pushed by Washington and IMF in Zambia

U.S. Treasury Secretary Janet Yellen’s visit to Zambia was of special importance, as it was used to launch a new narrative on “China debt”, given the collapse of the “debt-trap” accusations. Beijing is now acccused of unwillingness to help resolve the debt crisis that many African nations are suffering from. The intention behind this is two-fold: China should bail out Western bondholders controlling the debt of many nations in distress, and those same nations should abstain from taking loans from China for infrastructure projects.

The latter operation is being pushed by the International Monetary Fund (IMF), whose director visited Zambia at the same time as Ms.Yellen, as a pre-condition for obtaining “relief” and “debt restructuring”. The United States intends to make Zambia a template for this new push to block the Belt and Road Initiative, and to deter China-Africa cooperation, which is soundly based on building infrastructure (transport, power, water management, modern telecommunications, healthcare and education) and modern agriculture and industry. The former colonial powers, on the other hand, in particular Great Britain, have concentrated on the looting of raw materials, carried out under the guise of reforms, privatizations, and investment incentives. The so-called “green” transition is a more recent version of the same.

In the case of Zambia — the world’s fifth biggest copper exporting nation — the looting is probably as bad as it was in the formal colonialist period, as EIR explained in a detailed report by Hussein Askary, which will be published in the upcoming EIR magazine, and is already posted here.

The IMF is demanding that Zambia stop borrowing for important infrastructure projects, which means mainly from China, although it is not named. It is the case that the bondholders’ share of Zambia’s external debt is 30%, while China is also at 30%. However, the credit from China, to Zambia, and other nations, is directed at boosting national productivity through building key infrastructure. These credits are long term and at low interest rates, and often have long grace periods. On the contrary, the sovereign bonds debt was acquired in desperate attempts to fill fiscal and financial gaps in those nations, at very high interest rates and on short-term repayment schedules. This qualitative difference is always ignored in analysis and discussions of debt.

There is a striking irony in Yellen’s arrival at Kenneth Kaunda Airport in Lusaka and the rest of her trip, which China’s Xinhua has reported with humor (illustrated with appropriate cartoons): “Treasury Secretary Janet Yellen called China a ‘barrier’ to Africa’s economy, after landing at a China-funded airport, driving on a Chinese-built highway, and seeing various modern infrastructures built by China.”