How China Got Sri Lanka to Cough Up a Port

CHINESE COMPANY GAVE MAHINDA US$7.6 MILLION FOR ELECTION CAMPAIGN – NEW YORK TIMES

A cargo ship navigating one of the world’s busiest shipping lanes, near Hambantota, Sri Lanka, in May.

CreditAdam Dean for The New York Times

 

By Maria Abi-Habib-June 25, 2018

 

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HAMBANTOTA, Sri Lanka — Every time Sri Lanka’s president, Mahinda Rajapaksa, turned to his Chinese allies for loans and assistance with an ambitious port project, the answer was yes.

Yes, though feasibility studies said the port wouldn’t work. Yes, though other frequent lenders like India had refused. Yes, though Sri Lanka’s debt was ballooning rapidly under Mr. Rajapaksa.

Over years of construction and renegotiation with China Harbor Engineering Company, one of Beijing’s largest state-owned enterprises, the Hambantota Port Development Project distinguished itself mostly by failing, as predicted. With tens of thousands of ships passing by along one of the world’s busiest shipping lanes, the port drew only 34 ships in 2012.

And then the port became China’s.

Mr. Rajapaksa was voted out of office in 2015, but Sri Lanka’s new government struggled to make payments on the debt he had taken on. Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December.

 

The transfer gave China control of territory just a few hundred miles off the shores of a rival, India, and a strategic foothold along a critical commercial and military waterway.

Note: China provided only partial financing for some ports. | Sources: Construction Intelligence Center; Johns Hopkins University School of Advanced International Studies; Center for Strategic and International Studies; New York Times reporting.

By The New York Times

The case is one of the most vivid examples of China’s ambitious use of loans and aid to gain influence around the world — and of its willingness to play hardball to collect.

The debt deal also intensified some of the harshest accusations about President Xi Jinping’s signature Belt and Road Initiative: that the global investment and lending program amounts to a debt trap for vulnerable countries around the world, fueling corruption and autocratic behavior in struggling democracies.

Former President Mahinda Rajapaksa of Sri Lanka, center, holding court at a wedding in Colombo in June.CreditAdam Dean for The New York Times

 

Months of interviews with Sri Lankan, Indian, Chinese and Western officials and analysis of documents and agreements stemming from the port project present a stark illustration of how China and the companies under its control ensured their interests in a small country hungry for financing.

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