Uganda Proves Why Relying on China Is So Dangerous

November 30, 2021

Some people remember it as the site where Israeli commandos rescued a hijacked plane decades ago, in a hugely successful mission known as "Operation Entebbe." Now, Uganda's only international airport is again the site of controversy. Facing challenges in paying its $200 million loan from China -- funds it used to expand its facility -- Uganda is learning a lesson that the rest of Africa should take to heart: Financial entanglements with an authoritarian bully is beyond dangerous.

Reports have been circulating that Uganda is seeking to amend a loan agreement it signed with China in 2015 to make sure that the Chinese government is not able to take over Entebbe International Airport, located in the nation's capital.

It's no wonder Uganda wants to change the terms of its agreement. Such loans from the Chinese government contain notoriously odd clauses, all of which benefit China and harm the country seeking the loan. One clause that Ugandan officials reportedly wants to change is the requirement for the Uganda Civil Aviation Authority to seek approval from the China for its budget and strategic plans. In addition, another clause stipulates that any dispute will be resolved by the China International Economic and Trade Arbitration Commission, hardly an entity that will resolve disputes in a neutral manner. Gordon Chang joined "Washington Watch" to discuss these developments. In his opinion, "There are these pretty onerous clauses... And apparently, China is not willing to negotiate on those five or six loan clauses."

But the airport loan is hardly the only financial tie -- and vulnerability -- Uganda has when it comes to China. Uganda currently owes approximately $1.6 billion in loans to China for financing extensive infrastructure development projects.

China's Belt and Road Initiative, a massive infrastructure project mainly in East Asia and Africa, is being utilized to exert Chinese influence in the developing world. This is dangerous for the countries taking loans as well as for the free world at large. Chang said, "There are a lot of these projects that don't make economic sense, which is the reason why so many of them go to loan foreclosure." Although the Chinese government frames its loans and projects in developing countries as generous, to the borrowers it may feel more like they are being taken in by a loan shark.

Ironically, even though China lends out money to 70 countries, it borrows money itself from the World Bank. Chang said, "This is outrageous because there is no sense for this, no justification for it... the lending from the World Bank has not stopped. And it is just completely unjustifiable for these multilateral institutions to make loans to China in these circumstances."

Ugandan officials and Chinese officials both deny that the airport will be taken over by China. But skeptics still worry. China regularly bullies other countries and institutional organizations -- what's to stop them from taking over an airport? The dangers of borrowing money from China, or having too many economic entanglements with China in general, is obvious. The Chinese government has only its own interests in mind: to consolidate power at any cost. Chang sums it up by saying, "The agenda here is to control the world."