European Commission spokesman Peter Stano said on Monday that the European Union would not help Montenegro repay a loan it took from a Chinese bank for the construction of a highway.

The Montenegrin government took the loan of almost a billion Dollars from the Chinese ExIm Bank to cover most of the cost of the highway which is being built by the China Road and Bridge Corporation.

“We do a lot with Montenegro and other partners in the region to help them on their way to align with EU standards, with reforms and all the other things and we continue to stand by them but we are not repaying the loans that they are taking from third parties,” Stano told a daily news briefing.

“We will not try to explain motivation of Montenegrin authorities. The EU is largest provider of financial assistance to Montenegro, the largest investor and trade partner. We work very closely with them when it comes to development of economic issues, infrastructure, to boost economic development, speed up the process of EU integration and to ensure the post-coronavirus recovery,” he said.

“When it comes to actions by partner countries in taking loans or entering into economic relations with other parties, every country is free to establish their own investment objectives. Talking specifically about Montenegro and China the EU has concerns over the socio economic and financial effects of some of China’s investments which can have effects in the country. There is a risk of macro-economic imabalances and debt dependency. The motivation for undertaking such steps, taking such loans needs to be checked with the Montenegrin authorities,” Stano added and recalled the EU economic and investment plan for Western Balkans which he said would mobilizing up to 9 billion Euro for investments in transport, energy, green and digital transition, sustainable development and jobs.

The Financial Times reported that Montenegro asked the EU for assistance to pay off the billion Dollars loan for an incomplete highway project that has imperiled the country’s finances. “The saga of the incomplete road project, which is being built by the China Road and Bridge Corporation, is part of a larger geopolitical battle for influence on the EU’s periphery. How Brussels responds to Podgorica’s request — and whether it will bail the country out of a project long deemed unviable — will help to shape the bloc’s relationship with the region,” the FT said.

It quoted Finance Minister Milojko Spajic who said that “Montenegro is small enough that it should be an easy decision” for the EU. “For infrastructure we’re currently relying on China . . . The situation is dramatic from a geopolitical standpoint,” he said, adding that its important tourism industry relied on visitors from non-EU countries such as Russia. “We have to connect ourselves closer to our EU allies. We need alignment with the economy,” he said and added that Podgorica would seek financial help from a range of western organisations, including the European Commission, the European Investment Bank and the European Bank for Reconstruction and Development.

The FT quoted an unnamed EU official who said that “politically we want to help . . . But the size of the loan is disproportionate to the size of the economy, so the mechanics are not obvious yet.”