FRI, MAY 08 2015.
To woo the island nation of Sri Lanka, China lent more than $200 million
to fund a new airport built by then-President Mahinda Rajapaksa near
his hometown. It wasn’t one of the Chinese government’s better
investments. Mattala Rajapaksa International Airport opened in 2013, but
two years later there is only one scheduled daily flight, on Flydubai.
In January, just after Rajapaksa’s re-election campaign ended in an
upset loss, state-owned SriLankan Airlines cancelled its flights to the
airport.
To gain an edge over rival India, China’s leaders have spent years
cultivating the governments of Sri Lanka and other nations in South and
Southeast Asia. In Sri Lanka, located along the shipping lanes to and
from the Middle East and Africa, China offered about $5 billion in loans
over six years to fund such projects as a $290 million expressway and a
$360 million port. In the deal with the highest profile, Rajapaksa
embraced a Chinese plan to invest $1.4 billion in a new port city to be
built on reclaimed land near the port of Colombo, the capital.
Two visits by Chinese submarines last year highlighted China’s success
in elbowing out India. But the Sri Lanka adventure has since soured.
President Maithripala Sirisena has put the new city on hold, saying the
government needs to investigate whether the Chinese-backed project
violated rules protecting the environment and preventing corruption.
“China discounted the possibility of regime change,” says Deshal De Mel,
senior economist at Hayleys, a Sri Lankan conglomerate. The airport
that was so closely associated with Rajapaksa “is one example of a
project they may have thought twice about financing.”
China’s rivals have rushed to capitalize on Beijing’s unpopularity with
the new government. Both India and the US had a stormy relationship with
Rajapaksa, who crushed a decades-long rebellion by the Tamil minority
in 2009. India, which has a large Tamil population, and the US supported
a campaign to have the United Nations Human Rights Council investigate
alleged war crimes by the Rajapaksa regime. The Chinese offered
Rajapaksa military and diplomatic assistance during the war.
Sri Lanka’s new government, which pledges to honour term limits and work
closely with Parliament, has been mending ties with New Delhi and
Washington. The nation’s overtures paid off when US secretary of state
John Kerry travelled to Colombo on 2 May, the first visit by a US
cabinet member in a decade. He praised the government’s commitment to
democracy. “The United States,” he said, “wants to work with Sri Lanka.”
In March, Indian Prime Minister Narendra Modi visited, the first trip by
an Indian leader since 1987, and emphasized the cultural and religious
links between the countries. Modi prayed at a Buddhist temple that has a
tree said to descend from the one under which the Buddha attained
enlightenment. He unveiled plans to help fund power plants and
railroads. During the visit, the two sides agreed on a $1.5 billion
currency swap that would moderate volatility in Sri Lanka’s rupee.
Modi’s “deft diplomacy” helped wean Sri Lanka away from China, Kadira
Pethiyagoda, a visiting fellow in Asia-Middle East relations at the
Brookings Doha Center, wrote in a 1 May column. The setback should teach
China, wrote Pethiyagoda, “that its ‘tried and true’ ” tactics of
commercial trade and military aid cannot succeed on their own.
Yet Sri Lanka needs infrastructure, and China has more money than India.
Sri Lanka has signed on as a founder of the Chinese-backed Asian
Infrastructure Investment Bank, which is based in Beijing and designed
to compete with the World Bank. “Even India is going to China for
financing,” says Dushni Weerakoon, deputy director of the Institute of
Policy Studies in Colombo.
“I don’t think China is just going to pack up and walk away,” says Sarah
Graham, a lecturer in foreign policy at the University of Sydney. While
Sirisena has shown less interest than Rajapaksa in a close partnership,
“the Chinese will gladly engage with Sirisena’s administration.” The
countries are “in the final stage” of talks on a free-trade pact,
China’s official Xinhua News Agency reported on 21 April. Sirisena
hasn’t unfrozen the new city project, but China still hopes it can be
“pushed forward steadily,” foreign ministry spokeswoman Hua Chunying
said at a 6 May press conference. Sri Lanka’s Board of Investment says
the city project is undergoing environmental studies. It didn’t rule out
a role for China.
The experience with Rajapaksa should be a learning moment for Chinese
leaders, says John Lee, senior fellow at the Hudson Institute in
Washington. Developing strategic partnerships “is not something they’re
very practiced at, to be frank,” he says. “They will get better.”
