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Hambantota: Whenever Sri Lankan President Mahinda Rajapaksa turned to his Chinese allies for loans and aid for an ambitious port project, the answer was yes
. the port would not work. Yes, although other frequent lenders like India had refused. After years of construction and renegotiation with the China Harbor Engineering Company, one of Beijing's largest state-owned companies, the Hambantota Port Development Project has distinguished itself by failing as planned. With tens of thousands of ships pbading through one of the busiest shipping lanes in the world, the port only attracted 34 ships in 2012.
Then the port became China.
Rajapaksa was dismissed in 2015, but Sri Lanka's new government struggled to pay the debt it had incurred. Under heavy pressure and after months of negotiations with the Chinese, the government sold the port and 15,000 acres of land in 99 years in December.
The transfer gave China control of the territory a few hundred miles off the coast. a rival, India, and a strategic foot along a critical commercial and military waterway.
This case is one of the most striking examples of the ambitious use of loans and help to gain influence around the world.
The debt deal also intensified some of the most severe accusations regarding President Xi Jinping's Belt and Road Initiative: the global investment and lending program is a trap for For vulnerable countries around the world. interviews with Sri Lankan, Indian, Chinese and Western officials and the badysis of documents and agreements from the port project is a striking illustration of how China and China • During the Sri Lankan elections In 2015, substantial sums paid by the Chinese port construction fund were paid directly to the campaign aid and activities of Rajapaksa, who had accepted the Chinese terms. She has been seen as an important ally in China's efforts to deflect India's influence in Southeast Asia.
At least $ 7.6 million was transferred from China Harbor's account to Standard Chartered Bank to Rajapaksa's affiliates. of an active internal government investigation. The document details the bank account number of China Harbor – whose property has been verified – and the information gleaned from the interrogation of the persons to whom the checks were issued
• Although the Chinese authorities purely Sri Lankan officials have stated that from the outset the information and strategic possibilities of the port's location were part of the negotiations
• The initially moderate conditions for port lending became more onerous than Sri Lankan leaders schedule and add more funding. And while Sri Lankan officials were desperate to get rid of debt in recent years, Chinese demands were focused on the transfer of equity to the port.
• The agreement erased about $ 1 billion of debt for the port project. is now more indebted to China than ever before, since other loans have been maintained and rates remain much higher than those of other international lenders.
Rajapaksa and his collaborators have not responded to multiple requests for comments made for several months for this article. The leaders of China Harbor also did not want to comment. But on Sunday, Rajapaksa issued a denial, saying, "No contribution has been made by China to my 2015 presidential campaign".
The Sri Lankan Ministry of Finance estimates a gloomy picture: this year, the government is expected to raise $ 14.8 billion in revenue, but its expected debt repayments, to a range of lenders around the world, are as much as 12 billion. , $ 3 billion. "
" John Adams sadly stated that one way to subjugate a country is by either the sword or the debt. Brahma Chellaney, an badyst at the Center for Policy Research, a think tank in Delhi
Indian officials, in particular, are concerned that Sri Lanka is struggling so much that the Chinese government may be able to sway debt relief in exchange for the use by the army of badets such as the port of Hambantota – although the final rental agreement prohibits military activity without the invitation of Sri Lanka.
"The only way to justify the investment in Hambantota According to Shivshankar Menon, who served as Secretary of Foreign Affairs of India and then as a National Security Advisor at the time the port was under construction.
An Engaged Ally
Relations between China and Sri Lanka have long been friendly, but it is during a more recent conflict – the brutal civil war of 26 years in Sri Lanka with ethnic Tamil separatists – that China became indispensable
Rajapaksa, elected in 2005, presided over the last years of the war, when Sri Lanka He is increasingly isolated by accusations of human rights violations. human rights
Sri Lanka relies on China for economic support, military equipment and political cover to the UN in order to block potential sanctions
country emerged from chaos , Rajapaksa and his family have consolidated their hold. At the height of Rajapaksa's tenure, the president and his three brothers controlled many ministries and about 80 percent of the government's total expenditures. Governments like China have negotiated directly with them.
Thus, when the president launched a vast port development project in Hambantota, his sleepy hometown, the few roadblocks that stood in his way proved to be ineffective. the wisdom of a second major port, in a country one-quarter the size of Britain and a population of 22 million inhabitants, when the main port of the capital prospered and had room to develop. Feasibility studies commissioned by the government had concluded that the port of Hambantota was not economically viable.
"They approached us for the port early and Indian companies said no," said Menon, the former foreign minister. "It was an economic duo at the time, and it's now an economic failure."
But Rajapaksa gave the green light to the project, then boasted in a statement that he had defied caution – and that China was on board. Lanka Ports Authority began designing what officials believed was a prudent and economically viable plan in 2007, according to one official involved in the project.
The first major loan that he took on the project comes from the Export-Import Bank of the Chinese government, or Exim, for $ 307 million. But to get the loan, Sri Lanka had to accept Beijing's favorite company, China Harbor, as a builder of the port, according to a cable from the US embbady of the time, leaked to WikiLeaks
. projects around the world, rather than allowing an open bidding process. In the region as a whole, the Beijing government lends billions of dollars, which are reimbursed at a higher price to hire Chinese companies and thousands of Chinese workers, according to officials in the region.
Nihal Rodrigo, former Sri Lankan Foreign Minister and Ambbadador to China, said that discussions with the Chinese authorities at the time clearly showed that information-sharing was an integral part, if not public, of the agreement. Rodrigo characterized the Chinese line as "We are waiting for you to let us know who comes and stops here."
New York Times News Service
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