India was first approached by Sri Lanka for developing the Hambantota port but it took too long in taking decisions. Our Government did not see it as a viable project it was seen as a secondary port to Colombo hence they went to the Chinese. Within a week papers were signed, money started flowing in ships and container started arriving and work started in earnest.” said Shantanu Roy Chaudhary, Research Scholar at Oxford University he was speaking at a panel discussion on China’s External Engagement hosted by Nehru Memorial Museum& Library recently.
Roy Chaudhary stressed the strategic importance of Hambantota port “40% of world’s oil supply and 64% of the world’s oil trade travels through the Indian Ocean and Sri Lanka sits directly above the sea lines of communication and transportation hence it has immense value in the eyes of Chinese both for strategic and for economic reasons.”
Roy Chaudhary pointed out the extent of China’s economic presence in Sri Lanka “Since the middle of 2000’s Chinese FDI in Sri Lanka has risen exponentially and in 2015 it amounted to 35% of the total FDI in Sri Lanka. I was first there in 2014 and comparing then to now I find the entire Skyline of Colombo City has completely changed with skyscrapers, transport lanes, highways and port city being built and all of that mostly is done by the Chinese.”
He explained how the Chinese drew a hard bargain with Sri Lanka and that a a degree of resentment exists in the country against Chinese domination “When the new government came in they came in with a policy that Sri Lanka would stop being under the thumb of China so they decided to pause a lot of the projects. Colombo port City project was paused however they eventually realized that for every day that project was stopped they were losing $350,000 hence they went back to China to renegotiate. In doing so the Chinese came down hard and increased the interest rate which has put Sri Lanka further into debt. Due to this Sri Lanka had no choice but to handover the Hambantota port along with 15,000 acres of surrounding land to the Chinese.”
Roy Chaudhary underlined Mahinda Rajapaksa’s role in China getting such a deep foothold in Sri Lanka “Rajapaksa came to power in 2005, he hailed from the Hambantota district and he wanted to revolutionize this district. Besides the 99 year lease of the Hambantota port Rajapaksa has quietly granted the Chinese companies operating rights to four of the seven container ports on 35 year lease. A lot of these deals with the Chinese have been done without the approval of the Parliament. There is a very famous New York Times article which claims that Chinese were funding Rajapaksha’s election campaign a lot of money is said to have flown to him as well so he had to reciprocate.”
He raised a few apprehensions regarding China’s ‘debt trap diplomacy’ “If country after country fails to pay the Chinese and the latter asks for similar concessions which can be used for strategic purposes that would naturally have huge implications.”
Roy Chodhary was of the opinion that the Belt and Road Initiative (BRI) is likely increase China’s influence globally “BRI has immensely boosted China’s presence all over the world, according to World Bank the initiative aims at developing infrastructure, boost trade and investments between China and some 65 other countries that put together account for 30% of global GDP, 62% of global population and 75% of known energy reserves.