Sri Lanka’s Prime Minister Mahinda Rajapaksa, along with Cheng Xueyuan, China’s ambassador to Sri Lanka, visited Colombo Port City on December 7 and officially declared the 269 hectares land claimed from the sea with Chinese assistance part of the Colombo District. The ceremony included issue of a commemorative stamp and a first day cover, followed by fireworks display. The $1.4 billion real estate project was initiated by Chinese President Xi Jinping in 2014 as part of Beijing’s Silk Road to Europe. The erstwhile Sirisena-led Sri Lankan government had suspended the project (which includes apartments, shopping malls, a water sports area, a golf course, hotels and marinas next to Colombo Port) in March 2018 due to irregularities including lack of proper permits and approvals. Sirisena also stated on September 16, 2019 that a Chinese firm contracted to develop Sri Lanka’s tallest tower in 2012 during President Mahinda Rajapaksa had disappeared with $11.09 million (SL Rupees 2 billion plus) state funds.
Sri Lanka’s new government under President Gotabaya Rajapaksa has decided to revive the Colombo Port City Project and Prime Minister Mahinda Rajapaksa favours China for it. Environmentalists and Sri Lankan fishermen oppose the project on grounds it would damage the environment. Sri Lanka’s junior trade minister Sujeewa Senasinghe recently told media that the irregularities were being addressed in a review of the project, saying, “The port city will be started. We will down-size the proposed land. We have to sign the deal again for the better future of the country.” Considering that 269 hectares land has been claimed from the sea for the project, which presently is a fenced-off tract, downsizing of the project will unlikely reduce the land area of the proposed project, as also China’s investment in the project’s apartments, shopping malls, a water sports area, a golf course, hotels and marinas unless FDI is available from alternate sources.
In all probability not many changes are likely in reviewing the Colombo Port City Project other than cosmetic modifications. The same is likely in case of the Hambantota Port lease despite President Gotabaya wanting a review. Whether the Australia- Japan-US trilateral partnership of Blue Dot Network (BDN) that includes infrastructure projects in the Indo-Pacific region will bid for part of the Colombo Port City Project is doubtful since they may prefer exclusive projects. BDN aims to develop infrastructure for energy, transportation, tourism, and technology, as also provide globally recognized evaluation and certification system for roads, ports and bridges with a focus on the Indo-Pacific region. At the same time, BDN does need to develop projects in Sri Lanka given its strategic location.
A recent study titled ‘Silk Road Diplomacy’ by AidData in collaboration Asia Society Policy Institute and Centre for Strategic and International Studies reveals that Sri Lanka was the recipient of Chinese aid to the tune of US$ 12.708 billion of the US$ 126 billion China spent in South and Central Asia in period 2000-2018 in BRI projects. The study also points out that Chinese assistance with strings attached lacks transparency, leading to political capture and corruption. Sri Lanka’s dilemma is it is already debt-trapped by China. The new Sri Lanka government is trying to speed up procedures for FDI and liberalizing the foreign exchange market to attract more dollar inflows to face a balance-of-payments crisis. It is also seeking an IMF loan.
China has been supplying military equipment to Sri Lanka (ammunition, anti-tank guided missiles, rocket launchers and shoulder-fired surface-to-air missiles, deep penetration bombs and rockets, mortar ammunition, night vision devices, artillery, armor, mortars, security equipment, tanks, jets, naval vessels, radars, and communications equipment), aids training of Sri Lankan military, and is helping Sri Lanka establish an Aircraft Maintenance Centre. In 2007, China provided Sri Lanka US$ 1bn military aid in military equipment. In October 2016, China announced it would offer military aid to Sri Lanka to help them purchase Chinese made military equipment.
China’s political warfare prowess is immense and its success with the Mahinda Rajapaksa is on record. China works through insidious obduracy in exerting pressure that is difficult to resist by the debt-trapped country. Chinese nuclear submarines and warships have ‘not’ docked at berths of Sri Lanka Port Authority (SLPA) in Colombo in the past, which is mandated to accommodate military vessels. Instead, they have been docking at the Colombo South Container Terminal (CSCT), which is in violation of the protocol. CSCT is a deep-water facility built, controlled and run by the China through an aid project – virtual ‘Chinese enclave’ within a Sri Lankan administered harbor. Despite Gotabaya’s assurance about Indian sensitivities and promise to remain neutral, Chinese warships and submarines docking at Sri Lankan ports including Hambantota may continue under pretext of rest and recoup, emergency repairs and official port calls.
Together with re-energizing the Colombo Port City Project, Sri Lanka needs to speed up the joint India-Japan project for developing the Colombo East Container Terminal (CECT) at Colombo harbor and also finalize India’s proposal to operate the Mattala Rajapaksa Hambantota Airport in Hambantota, the US$ 210 faculty 241km south of Colombo. This would provide a balance of sorts on beha;f of the Gotabaya-led government. It would also signal reciprocity to Prime Minister Narendra Modi announcing a special line of credit of USD 50 million to Sri Lanka for combating terrorism and another line of credit of USD 400 million for development projects in Sri Lanka during President Gotabaya’s recent visit to India, where Modi had said, “The $400 million line of credit to Sri Lanka will strengthen the country’s infrastructure development. I am confident that this will help boost Sri Lanka’s economy and the line of credit will also speed up mutually beneficial `project cooperation’ between the two nations.”
A recent report titled ‘Humanity at Risk-Global Terror Threat Indicant (GTTI)’ by Oxford University and Strategic Foresight Group (SFG) study has revealed that Pakistan is the most dangerous country in the world looking at the host of most dangerous terrorist groups based in Pakistan and its support to number of terrorist groups in Afghanistan. The report says that the Afghan Taliban and the Lashkar-e-Taiba (LeT) pose the maximum threat to international security. In 2011, Pakistan offered Sri Lanka training of spies for intelligence gathering. Sri Lanka signed a nuclear deal with Pakistan in April 2015, snubbing a similar nuclear deal proposed by India earlier. In January 2018, Qamar Javed Bajwa, Pakistani army chief visited Sri Lanka on invitation of his Sri Lankan counterpart. Shah Mahmood Qureshi, Pakistan’s foreign minister visited Sri Lanka for two days in first week December 2019.
Gotabaya has promised he will not permit the territory of Sri Lanka to be used for anti-India activities. After the Easter Sunday bombings, Sri Lanka should logically not permit free run to Pakistan’s ISI. However, Sri-Lanka-Pakistan military relations are deep and after the decimation of the LTTE, Pakistan’s ISI did become active in Sri Lanka. Moreover, China which backs Pakistan’s anti-India activates, could influence Mahinda Rajapaksa that there is no harm permitting ISI activities where source remains ambiguous. India will need to monitor Sri Lanka-Pakistan relations closely.