Sixteen bipartisan senators wrote a letter to the Trump administration about their alarm that Pakistan could soon request an International Monetary Fund (IMF) bailout loan to repay China for a series of “predatory Chinese infrastructure financing” projects.
In the letter to Treasury Secretary Steven T. Mnuchin and Secretary of State Mike Pompeo, the senators asked how the Trump administration plans to address the dangers of China’s so-called Belt and Road Initiative (BRI), which they argue seeks to leverage lending into strategic military footholds across Asia.
“As financially strapped countries negotiate with China to free themselves of mounting debt, Beijing has extracted onerous concessions, including equity in strategically important assets,” the senators wrote on Aug. 3. “Further, Beijing has repeatedly used economic pressure to affect foreign policy decisions.”
The letter detailed Beijing’s “debt-trap diplomacy” to nurture dependence from its borrowers — and the threat that poses to U.S. national security. Washington foreign policy experts generally view Beijing’s BRI projects as veiled Chinese military expansion.
The senators called on Mr. Mnuchin and Mr. Pompeo to use Washington’s influence as the largest contributor to the IMF to ensure that future financial bailout packages the body approves prevent the continuation of ongoing BRI projects, or the start of new BRI efforts.
The letter was signed by: Sens. David Perdue, Georgia Republican; Roy Blunt, Missouri Republican; John Cornyn, Texas Republican; Tom Cotton, Arkansas Republican; Ted Cruz, Texas Republican; Steve Daines, Montana Republican; Joe Donnelly, Indiana Democrat; Cory Gardner, Colorado Republican; Charles E. Grassley, Iowa Republican; James Inhofe, Oklahoma Republican; Johnny Isakson, Georgia Republican; John Kennedy, Louisiana Republican: Patrick Leahy, Vermont Democrat; Marco Rubio, Florida Republican; Dan Sullivan, Arkansas Republican; and John Thune, South Dakota Republican.
“It is apparent that … the goal for the [Belt and Road Initiative] is the creation of an economic world order ultimately dominated by China,” they wrote. “It is imperative that the United States counters China’s attempts to hold other countries financially hostage and force ransoms that further its geo-strategic goals.”
The letter noted two specific instances of concern, Sri Lanka’s Hambantota port and Pakistan’s Gwadar port on the Arabian Sea near the Pakistan-Iran border.
Last year, Sri Lanka failed to repay more than $1 billion of Chinese debt. Instead it granted a Chinese state-run firm a 99-year lease on the Hambantota port, which Beijing financed. Lawmakers now fear a similarly scenario could play out at the Gwadar port as Islamabad scrambles to repay Chinese RBI loans.
“Gwadar and Hambantota are important footholds that if converted into naval bases will enable the [Chinese] Navy to maintain a permanent presence in the Indian Ocean,” the letter said.
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