PRC infrastructure investments in Sri Lanka raise concerns
Deepening ties between Sri Lanka and the People’s Republic of China (PRC) have neighboring countries and others worried that PRC investments in Sri Lankan ports and infrastructure could lead to a Chinese military base on the island nation.
Sri Lanka’s strategic location in the heart of the Indian Ocean increases its profile in the eyes of the PRC, particularly as Sri Lanka’s Hambantota port lies close to sea lanes through which two-thirds of China’s oil imports pass, the online news magazine The Diplomat reported. That oil is essential for China’s energy security, according to The Diplomat. (Pictured: Container ships pass a seaport in Colombo, Sri Lanka.)
India and the United States are among countries that have questioned millions of dollars in investments across Sri Lanka as part of the PRC’s One Belt, One Road (OBOR) infrastructure scheme. The U.S. has called the relationship another example of China’s predatory lending practices — an entanglement that occurred under the leadership of Mahinda Rajapaksa, who served as Sri Lanka’s president between 2005 and 2015. Rajapaksa’s administration faced mounting debts owed to the Asian Development Bank, China, Japan and the World Bank. To balance those payments, Rajapaksa accepted OBOR investments from the PRC, which included a new Colombo International Financial City and upgrades to Hambantota port and its adjoining industrial property, according to The Diplomat.
India and the U.S. tried to counter PRC investments during Sri Lanka’s United National Party administration between 2015 and 2019. While some bilateral and multilateral agreements succeeded, many met with stiff opposition and failed.
Recently, Sri Lanka claimed that the U.S. has offered little financial help to rebuild after a civil war that ended in 2009 and the economic fallout from terrorist attacks and the coronavirus pandemic.
“We turned to all our friends, including the World Bank and India,” Palitha Kohona, Sri Lanka’s ambassador-designate to China, said, according to The Wall Street Journal newspaper. “The one entity that came to our assistance hastily was China.”
Sri Lanka’s government, however, rejected a proposed U.S. $480 million economic aid package and a military agreement from the U.S., claiming that it came with too many conditions, The Wall Street Journal reported in November 2020.
“The international community will come to our assistance but with a demand for fiscal discipline and upholding the rule of law,” Eran Wickramaratne, an opposition member of Sri Lanka’s parliament and former deputy finance minister, told The Wall Street Journal. “China will make no such demands but provide debt at a high cost.”
Some point to Sri Lanka’s leadership as key to the country’s diplomatic interests and relationships.
The Rajapaksa family regained control in November 2019, when Mahinda Rajapaksa’s younger brother, Gotabaya Rajapaksa, became president. In August 2020, the elder Rajapaksa was elected prime minister. That power dynamic has resulted once again in a tightening of ties between Sri Lanka and the PRC, according to The Wall Street Journal.
Despite the Rajapaksa family’s seemingly warm relationship with the PRC, others aren’t willing to concede that they don’t have a chance at securing economic deals.
Indian External Affairs Minister S. Jaishankar’s first foreign visit of 2021 was a trip to Sri Lanka, which was also the first by a foreign dignitary to the country in the new year.
“As such, it signifies the priority both countries attach to strengthening their close cordial relations in all spheres of mutual interest,” a statement from Jaishankar’s office read, according to The EurAsian Times, a news website.
Jaishankar hopes to salvage the planned East Container Terminal (ECT) at Sri Lanka’s port for India and Japan, agreed to by the United National Party administration in May 2019. The new administration called for a review of the agreement, which some speculate is the PRC’s bidding because of a border clash between Indian and Chinese troops at the Line of Actual Control in July 2020.
“The project was cleared. There is enough room for suspicion that Beijing had a role in this matter,” according to The EurAsian Times. “China’s growing assertiveness in India’s neighborhood is known to the world. Call it a coincidence, the Gotabaya Rajapaksa government had ordered the review of the ECT project in July last year [2020], days after Indian and Chinese troops had a violent face-off.”
The project calls for 51% of the estimated cost of U.S. $500 million to $700 million to be paid for by Sri Lanka, with India and Japan splitting the balance.
Image Credit: GETTY IMAGES
