Debt Trap or Crap?

‘Debt-trap diplomacy’ is little more than a fantasy. China is not trying to seize strategic infrastructure by crippling poor countries with unsustainable loans and it is not the driving force behind their problems.

By Dr M Ali Hamza | February 2020

Debt-trap diplomacy is generally understood as a trap where an economically strong country deliberately lends enormous amounts of credit to an economically feeble and smaller debtor country, with an intention to consequently obtaining economic or political compromises when the debtor country is unable to repay the loan. These days this term is accompanied with serious criticism, primarily from the western hemisphere, regarding the foreign policy of the People’s Republic of China. The criticism is about China’s temperament of extending excessive loan to facilitate countries in severe economic crises, with an intention to ultimately control the economic and political decisions of the debtor countries that are said to support China's geostrategic interests, when it becomes unable to honour the debt contracts.

The West has reached this conjecture in light of examples of Sri Lanka, some African countries, and even Pakistan, where China is hugely investing in infrastructural development, and the West is worried about China incapacitating these countries in taking their own decisions. History does not allow the trusting of such plausible concerns of Western countries because, in the past and even in the present, many financially sound countries have taken and tested new ways to increase their own economic gains from underdeveloped countries and underprivileged humans in poor counties.

The Western argument was always supportive of a notion that if a country utilizes its resources to increase its wealth alongside the development of another weak country, there is nothing wrong with it. This argument is considered shallow when used by China. While staying absolutely positive about the concerns of the West, in the phrase “Debt Trap Diplomacy”, the West is ok with debt and diplomacy, but very much alarmed with the word trap and, seemingly, does not want independent countries to get trapped and lose their sovereignty.

Genuinely speaking, the trap was always there. Company Raj shifted to British Raj in India. It was a few million dollars partnership fund against terrorism that forced us to import the external war into Pakistan and made us lose thousands of lives and trillions of dollars. The USA has been extending conditional funding facilities. The conditions were nosey in nature and challenged Pakistan’s sovereignty many a times with the small utterance of Do More. Recently, the country’s strings were pulled and th PM was forced to cancel his scheduled participation in the Kuala Lumpur meeting. The reason was the dollars and facilities bestowed on Pakistan by the Kingdom of Saudi Arabia to meet the reserves needs of the State Bank of Pakistan, and those few hundred thousand Pakistanis working in KSA. Many examples can be found in which economically strong countries have trapped Pakistan under their financial might.

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The writer is a columnist and broadcast journalist. He teaches at UVAS Business School in Lahore and can be reached at

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