An article by Bob Rehorst and Wouter Kuijl that was posted on The Diplomat’s website on March 24 says that with Dushanbe unable to repay outstanding loans to Beijing, a deal to cede 1,158 square kilometers of disputed territory in Tajikistan to China was struck between the governments 

Tajikistan’s Catch-22: Foreign Investment and Sovereignty Risks notes that the territory was offered as a form of alternative payment in exchange for the writing off of the country’s mounting debt.  Some analysts reportedly viewed it as a textbook example of “debt trap diplomacy,” and the episode has only served to reignite the debate on the salience of this practice in China’s investment and engagement activities abroad.

The term “debt trap diplomacy” was first coined by geostrategist Brahma Chellaney and is often used to scrutinize Chinese economic deals.  Brad Glosserman, deputy director of the Tokyo-based Center for Rule-making Strategies, described the practice as the use of funds to “overwhelm recipient nations, drown them in debt and then seize collateral, often strategic assets…”  In short, it refers to the predatory use of loans for immaterial and material gains.  The ceded Tajik land can be interpreted as such a strategic asset, which the Tajik government relinquished in order to pay its debts to China.

The article notes that the Tajik “debt trap” cannot only be ascribed to the predatory nature of Chinese interests, as Chinese-Tajik relations have grown closer during the last decades while European and U.S. investments have all but vanished.  In a post-COVID environment, Tajikistan and the neighboring Central Asian nations are likely to become more dependent on China and its investments, as other modes of income such as remittances – money sent to Tajikistan by its workers laboring abroad – have declined severely.

According to experts, China is primed to become Tajikistan’s primary economic partner, driving away other potential investors through its unparalleled investments.  

According to the article, Tajikistan is arguably of crucial strategic importance to the Chinese state, particularly to China’s planned developments for the Belt and Road Initiative (BRI), because of two key factors.  First, Tajikistan is set to become a central passageway for China’s import of natural resources, most notably gas imports from Turkmenistan.  Second, Tajikistan, as part of the Shanghai Cooperation Organization, is a vital geostrategic partner for China in combating the “three evils” of terrorism, separatism, and religious extremism. Since China has already established a military base in Tajikistan’s Gorno Badakhshan Autonomous Region (GBAO) – aiming to monitor the strategically important Afghan Wakhan Corridor – it is likely that Tajikistan is viewed as a crucial ally in China’s counterterrorism strategy; a point that is made more prescient due to Tajikistan’s geographical proximity to Xinjiang.  Apart from China’s fears of separatist ideology and religious extremism in Xinjiang,  the region has been touted by some Chinese officials as a future transit hub for the BRI. 

Simultaneously, the Tajik state has become increasingly dependent on Chinese loans, and in this regard, the BRI can be perceived as an economic lifeline.  With continuous dependency on loans, and the possibility of removing debt through the surrender of territory, Tajik sovereignty may become more impinged in the near future.  In this regard, not Chinese loans, but Tajikistan’s internal politics may be the largest direct threat to the preservation of Tajik territorial integrity.

In order to overcome damages and stimulate development, foreign direct investments (FDI) appears to be the only viable solution.  However, any FDI made in Tajikistan will almost inevitably end up in the pockets of Rahmon and his inner circle. As such, the economic outlook of the nation is bleak at best, while its debts to China continue to rise.

FDI is both a lifeline and a threat to Tajikistan’s sovereignty and its stability.  Tajik government reportedly may try for the easy way out and continue to request unpayable loans from China’s policy banks and state-owned enterprises.  While it is assumed that the Chinese military base in GBAO is already part of some deal struck between Dushanbe and Beijing, it is not entirely unthinkable that the pattern of handing over territorial integrity to Chinese interests may continue to threaten Tajik sovereignty, the article says.