Indian unease at China’s regional road,port infrastructure deals
LATE last month, the Sri Lanka government handed over control of the strategically important Hambantota port that juts out into the Indian Ocean on a 99-year lease to a Chinese company. Considered important for China’s much vaunted Belt and Road Initiative (BRI), the Hambantota deal has given a new spin to the fierce contestation that has been taking place between India and China, including on the cold and frosty Himalayan plateau.
New Delhi dislikes its South Asia neighbours to do business with China as it fears it could become a precursor to military partnerships that could diminish India’s influence. These fears may or may not be misplaced, but the neighbours are slowly learning to do business with the Asian powers. This has not been easy.
The earlier Sri Lanka government of Mahinda Rajapakse was perceived unkindly by the Indian government when it allowed Chinese investments in the Colombo port city and in other projects. What riled India more was that a Chinese submarine paid a visit to the Colombo port. Rajapakse lost the elections and he blamed India .
Hambantota and other infrastructural projects that were initiated to reconstruct post-war Sri Lanka by taking a hefty $8 billion loan from China, was his legacy. Soon the new government of President Sirisena and Prime Minister Ranil Wikremesinghe realised their government or economy did not have the depth to service its debt. It was then that this clamour began to rescue the port and the economy lest it went into a spiral of debt.
The choice to return to the Chinese for help to restructure its debt into equity was due to the failure of the government to raise funds from elsewhere. Some thought that if India was so keen to prevent Colombo being enticed by China then they should have put money where their mouth is. Quite obviously, India did not have the funds to walk the talk. It failed to show them the money and hence had little moral authority to question how Sri Lankan leadership was sorting out its debt issues.
This was evident when some influential Sri Lankan voices opined similar views on India, when the local media questioned them about the growing Chinese influence on the island.
In this controversial deal, for $ 1.1 billion, Sri Lanka has given a 70% stake in the port authority to the Chinese company and 6 000ha of land, which will be used for setting up a special industrial zone.
Taking cognisance of Indian sensitivities, the port would only be used for commercial vessels and naval ships would not be permitted there. The Sri Lankan navy will provide protection.
Despite its manifest security and commercial implications, India has not reacted officially to the Sri Lankan decision to give ownership of such an important port to a Chinese company. Perhaps it has something to do with the concession that New Delhi has had for long years, to operate a tank farm in the equally strategic Trincomalee port.
However, without naming Sri Lanka’s sale of its port, India has used it as an example of why it is opposing the BRI of China. The BRI conference in Beijing earlier this year was boycotted by India as it claimed the grand project could undermine the sovereignty of participating countries.
China has invested $61bn in an ambitious 3 200km road corridor called China Pakistan Economic Corridor (CPEC) that would link the Gwadar port in Pakistan to that of Kashgar in its Xinjiang province. After the project is completed, Pakistan may have to pay $8bn as debt. Questions have been raised whether a the country would have the ability to absorb such a big investment. Besides issues of regional development, there is plenty of chatter on what China expects from this grand project.
Exposés in Pakistani newspapers reveal CPEC is not just for road connectivity or helping China to ferry oil from the gulf , but a lot more. China would not just help Pakistan fight terror, but also use the agreement to grow food for its people on Pakistani soil.