Today's Editorial

8 February 2018

Lanka’s port for sale

 

 

Source: By PK Vasudeva: The Statesman

 

 

Sri Lanka’s handing over of Hambantota Port to China on a 99-year lease on 9 December 2017 has enormous ramifications for the island as well as the region and beyond. Unable to repay about $ 8 billion debt it owed to Beijing, Colombo has handed over the port and an industrial zone surrounding it to China. Under an agreement signed by Sri Lanka Ports Authority and the Chinese government-controlled China Merchants Port Holdings Company, the latter will now control 70 per cent of the stake in Hambantota Port.

 

Through the grant of equity to China, Sri Lanka believes it has solved its debt problem. Chinese management of the port and investment zone, the Sri Lankan government claims, will give the island’s economy a shot in the arm by promoting industrial development and tourism. The port and related road and airport infrastructure are indeed top class and Colombo may have bought itself time. However, this route towards chipping away at debt comes at a heavy cost. It will not only undermine Sri Lanka’s sovereignty but also endanger its own security. What other assets will Sri Lanka sell to China when the next debt-servicing bill arrives?

 

China’s operation of Hambantota port has serious implications for India’s security. Chinese presence so close to India’s southern coast is a matter of grave concern. Importantly, there is a concern in Delhi that the People’s Liberation Army-Navy (PLAN) ships and submarines will dock at Hambantota. To reassure India, Colombo has made the Sri Lankan security forces responsible for Hambantota port’s security. It has also clarified that it will not allow this port to be used by the Chinese navy. Delhi, however, cannot but remain uneasy, as former Sri Lankan president Mahinda Rajapaksa had allowed Chinese submarines to dock at Colombo, after assuring India that he would never do so.

 

Countries in South Asia and elsewhere, which are taking huge loans at high rates of interest from China for infrastructure projects, should draw lessons from the Sri Lankan experience. Chinese funds for projects don’t come free and like Sri Lanka, they too are likely to be drawn into the quicksand of debt sooner than later. When a debtor country is unable to service its debt obligations, Beijing demands its pound of flesh, which is in the form of ownership of the port as in the case of Sri Lanka, ceding of land as with Tajikistan, or the setting up of a naval base as in Djibouti. Countries that are lining up to join China’s ambitious Belt and Road Initiative (BRI) should look before they leap into debt with China, as Beijing offers no free lunches.

 

The project has faced protests not only from the Opposition parties of Sri Lanka but also from members of the government. Minister of Justice Wijaydesha Rajapakshe was sacked for opposing the deal and Arjuna Ranatunga, a minister looking after ports, was shifted for saying that the deal undermines national sovereignty.

 

India is worried over the strategic impact of having a Chinese-controlled port in the Indian Ocean and has voiced concerns that it may become a hub for the Chinese navy. That is why it has proposed to Colombo in the past that it is ready to spend around $ 300 million to buy out Sri Lanka’s debt to China in return for a 40-year lease over Hambantota airport, which has become known as the “world’s emptiest international airport”. India plans to buy the world’s emptiest airport in an effort to limit China’s influence in the Indian Ocean.

 

Designed to accommodate one million passengers per year, Mattala Rajapaksa International Airport ~ a vanity project by Sri Lanka’s former President Mahinda Rajapaksa that opened in 2013 ~ is a complete dud and receives just a dozen passengers a day. Yet India is set to pay $ 300 million for a joint venture granting it a 40-year lease over the nearly 2,000-acre space in southern Sri Lanka that was once so empty it was used to store rice.

 

India’s future plans for the airport are hazy. It may open a flight school and use the space as a marriage palace or a tourist spot but no concrete proposals have been formulated. There seems little chance that it will turn into a profitable venture. That is not the “point of the deal,” David Brewster, an expert in Indian Ocean strategies at the Australian National University, recently wrote for The Interpreter. Instead, the reason for the purchase appears to be the airport’s proximity ~ just half an hour’s drive away ~ from a shipping port in Hambantota, which is run by China.

 

As China seeks to spread its reach cross-continent via the BRI, India, the US, and Japan all hold concerns that China wants to use the Sri Lankan port as a naval base. But its ability to do so is severely hampered without access to an airport. “A key element in any overseas naval base, and even a logistics facility, is easy access by air for people and supplies. A naval base also requires maritime air surveillance capabilities. Control over Hambantota airport will give India considerable control over how the port is used,” wrote Brewster. It is difficult to conceive of the Chinese navy developing a significant facility at Hambantota without also controlling the airport. In short, India is spending $300 million buying an airport just to block a Chinese naval base. India’s fear of China’s rising influence in the Indian Ocean is not unfounded. A 2015 US Defence Department report confirmed Chinese missile submarines were operating in the Indian Ocean.

 

The year before that, after having cultivated a close relationship with Sri Lanka, which has unnerved India, China began docking warships and submarines at a Colombo port. Despite Sri Lankan assurances, Indian observers express concerns that Beijing could operationalise Hambantota as a resupply node for the PLA-N in the future. Moreover, changes in Sri Lankan politics could permit even closer ties between Beijing and Colombo.

 

The current Sri Lankan government, led by President Maithripala Sirisena, has exercised more caution, rejecting a Chinese request for a submarine visit earlier in 2017, which is a welcome sign for India. Delhi should sign a similar agreement with Sri Lanka on Hambantota as it has re-signed with Seychelles on 25 January that will allow New Delhi to build military infrastructure on Assumption Island, expanding its strategic reach in the Indian Ocean and thus thwarting an easy Chinese approach.

There is need to concentrate on the Indo-Pacific region along with the continental issues. A point that merits importance while China is developing bases in Aden, Djioubuti, Gwadar, a base south of Male, a base in Myanmar as also Bangladesh. We too must look for a base in Vietnam ~ possibly Cam Ranh ~ which would enable our maritime assets to project themselves in the region to guard our oil installations out there and break out of our oceanic fortress mindset.

 

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