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India, China at cross purposes in Sri Lanka, both face Lankan anger

  • Published at 04:28 pm April 2nd, 2018
India, China at cross purposes in Sri Lanka, both face Lankan anger
Massive infrastructural development projects in South Asia sponsored by China and India – involving billions of dollars – are attracting sharp criticism. China – with its far bigger investments and outreach – has been facing greater political resistance to its transport connectivity and energy sector related projects in Myanmar, Pakistan and Sri Lanka. However, Sri Lanka is where the two most populous Asian countries have crossed each other’s path. Now it is India’s turn to face indirect criticism from political circles in Sri Lanka over its involvement in developing the controversial Mattala airport. Many in Sri Lanka are voicing dissent – questioning the wisdom of handing over “national assets” of the island nation to China and India in the guise of regional economic development. There has been stinging opposition to the China-sponsored construction of the Hambantota port and development projects involving an investment of $1.5 billion. The project was part of a grandiose dream of former Sri Lankan President Mahinda Rajapaksa. In addition to the port, the Chinese had built a new airport at Mattala near Hambantota and a sports facility. The Chinese-built structures are linked by pristine new roads that Chinese companies have built. According to the opaque provisions of the agreement between China and Sri Lanka – the terms of which were never publicly disclosed, let alone debated – Sri Lanka provided sovereign guarantees for meeting repayment commitments to the Chinese, incorporating a debt-for-equity swap in case of non-payment.

Sri Lankan’s dilemma

Now as things stand, Sri Lanka’s indebtedness to China has mounted sharply over the years to stand at over $8 billion. Even partially repaying the high-interest loans have proved difficult for the new Sri Lankan government headed by President Maithripala Sirisena. The major reason being – the Hambantota port is hardly being used by ships which prefer to call at Colombo port. The same dilemma applies for the Mattala airport which runs only one flight a week to Dubai. In diplomatic circles, the buzz is that Western companies are none-too-keen to use the Chinese-built infra-facilities set up as part of One Belt and One Road Initiative (OBOR), unless there is no alternative. Therefore, Colombo’s recent decision to hand over the Hambantota port facilities to China on a 99-year lease, retaining only a 20% share for itself, came as no surprise. China also took charge of around 6070 hectares of land and announced plans to set up a special economic zone (SEZ) – to turn the area into an economic hub to be run with Chinese finance.

Questioning the Chinese motive

India, Japan and the United States had expressed their fears that in the guise of building a port, China was really setting up a naval base at Hambantota with military implications. China strongly denied this. But once the administration of the port passed under its control, there was nothing to stop the Chinese from reducing public access to its facilities and running it the way they wanted to. India has stepped in – never having swallowed the Chinese rhetoric about not using Hambantota as a key strategic port in the Indian Ocean conveniently placed in relation to Djibouti and Gwadar. It has offered to help develop the Mattala airport, where reportedly rice is being stored at the hangars, not planes. Significantly, the decision has not been debated in India at length either and the reasons for India’s going in remain obscure.

Sri Lanka’s Sino-Indian complex

The argument heard in diplomatic circles is that India is “buying out” Sri Lanka’s debt component to China with an initial investment of around $280 million or so. To start with – Delhi will help build a flying school, run the airport jointly with the local Sri Lankan company that administers Colombo airport. China had already spent over $250 million to build the Mattala facilities. However, most analysts see the dangers of a big power confrontation developing in the region. China has never strongly denied reports about setting up a naval base in the area. Given this background, India could be interested in involving itself with a “lame duck” airport only with the interest of monitoring closely the movement of Chinese ships or other vessels in what it regards as its own backyard. Such maneuverings were bound to raise local political tensions and temperatures that would first hurt the Sri Lankans and their immediate interests. In broad terms, these worries form the core of anxieties in a section of Sri Lankan observers, who feel that things could go wrong especially at times when delicately poised trilateral relations come under sudden strain. So far, Indian authorities have not publicly reacted to such apprehensions at this stage. Howerver, this has not eased mounting concerns at Colombo. Prominent opposition MP Dullas Azahapperuna told reporters that handing over “national assets” to China and India – in the name of development – could prove to be a high-risk business. It could lead to “dangerous consequences.” Three opposition MPs were recently arrested for demonstrating outside the Hambantota port. Meanwhile, influential Indian think tanks have advised Delhi to avoid specifically the high-handed approach adopted by the Chinese in relation to their ambitious OBOR scheme – projected cost $700 billion to over $1 trillion in phases. Eminent analysts feel that India should strengthen and further develop the win-win model of regional co-operation that exists between it and Bangladesh. India has substantially improved the level of its internal infrastructure through better road and railway transit agreements and coordination of coastal vessel movements through effective planning and talks with Bangladesh. In return, Bangladesh has also increased its outreach to Nepal, Bhutan and major Indian states, not to mention its earnings through transit fees. Apart from a rise in national income and trade, fuel or time savings, there has been new job creation on both sides.
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