Nepal airport becomes economic albatross for Himalayan nation

An international airport in Nepal, financed by China, has become an economic burden for the Himalayan nation, saddling it with debt to Chinese creditors for years to come, according to a US media report. The New York Times said that as the first international flight landed at the airport in Nepal’s second-biggest city Pokhara, "the celebration masked an unsettling reality: The expensive airport, built largely by Chinese companies and financed by Beijing, was a diplomatic victory for China and a windfall for its state-owned firms. For Nepal, it was already an economic albatross, saddling the country with debt to Chinese creditors for years to come,” it said.

Nepal's Struggle to Build an International Airport

The article said that Nepal had sought to build an international airport in Pokhara since the late 1970s but politics, bureaucracy, and finances have stalled the project until China stepped in. "The airport was part of China’s ambitions to establish its sphere of influence as an alternative to American hegemony. To China, few developing nations offered the geopolitical allure of Nepal, its neighbor to the south with close ties to India, an emerging rival for regional dominance,” the NYT article said.

China's Belt and Road Initiative and the Airport

"After the airport’s construction, Beijing began declaring that it had been part of the Belt and Road Initiative, President Xi Jinping’s signature infrastructure campaign, which has doled out an estimated USD 1 trillion in loans and grants around the world. This designation, which Nepal has quietly rejected, has thrust the airport into the middle of a diplomatic tug of war between China and India,” the NYT report added. Further, for Nepal, the airport’s association with Belt and Road is fraught because India has looked askance at the Chinese initiative — a problem for an airport struggling to attract international flights.

Criticism of China's Overseas Development Projects

With several countries, including Nepal, gathering in Beijing on Tuesday for the 10th anniversary of the Belt and Road Initiative, the article added that Beijing’s overseas development projects are "facing criticism for costly and poor-quality construction that leaves borrower nations awash in debt. "The Pokhara airport highlights the pitfalls for countries that import China’s infrastructure-at-any-cost development model, which spins off money for Chinese firms, often at the expense of the developing country,” it said.

China CAMC Engineering's Involvement and Inflated Costs

It said that in Nepal, China CAMC Engineering, the construction arm of a state-owned conglomerate, Sinomach, imported building materials and earth-moving machinery from China. An investigation by The New York Times found that "China CAMC Engineering had repeatedly dictated business terms to maximize profits and protect its interests while dismantling Nepali oversight of its work. This has left Nepal on the hook for an international airport, at a significantly inflated price, without the necessary passengers to repay loans to its Chinese lender, the report said.

The China-funded international airport in Nepal has become an economic burden for the country, saddling it with debt to Chinese creditors. The airport, built largely by Chinese companies and financed by Beijing, was part of China’s Belt and Road Initiative and has thrust Nepal into a diplomatic tug of war between China and India. Critics argue that China’s overseas development projects, including the Pokhara airport, are often costly, of poor quality, and leave borrower nations in debt. Nepal’s experience with the airport highlights the pitfalls of importing China’s infrastructure-at-any-cost development model.