Rajapaksa grants China a port project awarded first to India and Japan
China Harbour Engineering will build the Eastern Container Terminal in the Port of Colombo. Indians will still build the Western Container Terminal. The Sri Lankan president says he has to balance relations between Beijing and New Delhi. In the background loom fears over Beijing's “debt trap".
Colombo (AsiaNews) – The government of President Gotabaya Rajapaksa has picked a Chinese company for a port project in Colombo initially awarded to India and Japan.
China Harbour Engineering will build the Eastern Container Terminal. In May 2019, the previous administration of President Maithripala Sirisena had signed a memorandum of understanding with India and Japan for the construction of the same facility.
In February Rajapaksa decided to exclude India and Japan from the project, arguing that his government would develop the project on its own. Last Tuesday, he opened the doors to Chinese participation.
President Rajapaksa justified the move with the need to balance relations between Beijing and Delhi.
In late September, the Indian conglomerate Adani Group won a US$ 700 million contract to develop the Western Container Terminal, also in Colombo.
Sri Lanka is short in foreign exchange reserves and has a serious debt problem. China is helping with a line of credit of a billion dollars.
According to local and foreign observers, Rajapaksa is making concessions to Beijing on domestic infrastructure projects to get fresh loans.
He has also decided not to call for changes to the 99-year lease for the Hambantota Port, which has been run by a Chinese company since 2017 as part of a deal to repay debts to China.
For Beijing, Sri Lanka is a key part of its Belt and Road Initiative, given its geographical position along sea routes between East Asia, the Middle East and Europe.
Chinese President Xi Jinping launched the global infrastructure plan in 2013 in order to increase China’s trade and geopolitical role.
However, for China’s Belt and Road partners, this has led to a "debt trap", placing in a position in which they might be forced to sell off their assets to China, especially infrastructure like ports, in the event of non-repayment of loans and related interest.
According to AidData, 40 of the 50 largest loans granted by Chinese state banks have received such “collateral” guarantees from client governments.
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