Sri Lanka, China seal con­tro­ver­sial $1bn port deal

Mer­chants Port Hold­ings takes 70% stake in Ham­ban­tota port

Kuwait Times - - BUSINESS -

Sri Lanka yes­ter­day sealed a bil­lion-dol­lar deal to let a Chi­nese state firm take over a loss-mak­ing port in a move that wor­ries many, in­clud­ing its gi­ant neigh­bor In­dia.

The long-de­layed $1.1 bil­lion sale of a 70 per­cent stake in Ham­ban­tota port, which strad­dles the world’s busiest east-west ship­ping route, was con­firmed by Sri Lanka’s Ports Min­is­ter Mahinda Sa­ma­ras­inghe. The govern­ment used tough laws against in­dus­trial ac­tion to stop work­ers go­ing on strike this week to op­pose the sale to China Mer­chants Port Hold­ings. In­dia is ner­vous about China’s in­fra­struc­ture moves into its tra­di­tional sphere of in­flu­ence. “We have ad­dressed geo-po­lit­i­cal con­cerns,” the min­is­ter said at a sign­ing cer­e­mony in Colombo. “China has ac­cepted that every­thing in this agree­ment will op­er­ate un­der Sri Lankan law.” Ne­go­ti­a­tions over the deal were held up for months amid op­po­si­tion from trade unions and po­lit­i­cal par­ties.

The min­is­ter said this week that sev­eral coun­tries had raised fears about the sale. In­dia and the United States are known to be con­cerned that China get­ting a foothold at the deep-sea port could give it a mil­i­tary naval ad­van­tage in the In­dian Ocean.

Sa­ma­ras­inghe said that Ham­ban­tota, 240 kilo­me­tres (150 miles) south of Colombo, will not be a mil­i­tary base for any coun­try. China Mer­chants built and op­er­ates Sri Lanka’s only ma­jor deep-sea ter­mi­nal in Colombo, which can ac­com­mo­date the world’s largest con­tainer car­ri­ers.

Strate­gic part­ner

Ex­ec­u­tive vice pres­i­dent Hu Jian­hua said the com­pany wanted to make Ham­ban­tota the gate­way to ex­pand­ing economies in South Asia and Africa where it has sim­i­lar port op­er­a­tions. “(The) busi­ness of Ham­ban­tota port will be cross bor­der, across the In­dian ocean, stretch­ing to the Far East, to Europe and to the globe,” Hu said.

“Sri Lanka will be well po­si­tioned to play a strate­gic role in the one-belt-one-road ini­tia­tive of the govern­ment of the Peo­ple’s Re­pub­lic of China,” Hu said. Sri Lanka has signed up to Pres­i­dent Xi Jin­ping’s sig­na­ture for­eign pol­icy ini­tia­tive, which aims to strengthen China’s land and sea trade routes. In­dia has snubbed Xi’s plan and skipped a May sum­mit in Bei­jing that was at­tended by world lead­ers. Sa­ma­ras­inghe said Ham­ban­tota will be purely a com­mer­cial port, but any rou­tine port calls by for­eign navies will be reg­u­lated by Sri Lanka as in the case with the Colombo port. Two Chi­nese sub­marines called at Colombo in 2014 dur­ing the fi­nal year of for­mer pres­i­dent Mahinda Ra­japakse’s ten­ure, an­ger­ing New Delhi.

The new govern­ment of Pres­i­dent Maithri­pala Sirisena turned down a Chi­nese re­quest in May for an­other sub­ma­rine call at Colombo shortly af­ter In­dian Prime Min­is­ter Naren­dra Modi vis­ited the is­land. Sirisena came to power in Jan­uary 2015 promis­ing to loosen ties with China af­ter a decade of hefty fund­ing by Bei­jing un­der his pre­de­ces­sor.

He sus­pended all big ticket Chi­nese funded projects amid al­le­ga­tions of cor­rup­tion. These have re­sumed af­ter mod­i­fi­ca­tions to the con­tracts with the pre­vi­ous govern­ment. Apart from the $1.12 bil­lion sale price, the Chi­nese firm will in­vest an­other $600 mil­lion to de­velop Ham­ban­tota, Sa­ma­ras­inghe said. The port has racked up losses of $300 mil­lion in the last six years, ac­cord­ing to of­fi­cial fig­ures. In ad­di­tion, the govern­ment pays more than $60 mil­lion an­nu­ally to ser­vice the port’s debt.

China’s in­flu­ence in Sri Lanka makes neigh­bor­ing In­dia anx­ious be­cause it con­sid­ers the In­dian Ocean re­gion to be its strate­gic back­yard. Pres­i­dent Maithri­pala Sirisena has been try­ing to bal­ance both Asian gi­ants.

Sri Lankan of­fi­cials have re­peat­edly re­it­er­ated that the port’s se­cu­rity will be han­dled by Colombo in an at­tempt to al­lay the fears that the port could be used by Chi­nese as a mil­i­tary hub.

The agree­ment has ig­nited protests in­side the coun­try too and in Jan­uary, hun­dreds of farm­ers and op­po­si­tion sup­port­ers protested the plan to lease the port, say­ing the pro­posed part­ner­ship was akin to a sell­out of the coun­try. —Agen­cies

COLOMBO: In this March 15, 2016 file photo, a Sri Lankan cou­ple walk on the Galle Face green as the China Port City project is seen be­hind in Colombo, Sri Lanka. —AP

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