US and India pressure Sri Lanka over port deal with China


US and India pressure Sri Lanka over port deal with China

Saman Gunadasa

30 December 2017

The Sri Lanka government formally handed over Hambantota Port to China Merchant Port Holdings (CMPH) on December 9, after almost two years of negotiations. The port is located on the country’s southern coast, close to some of the world’s busiest sea lanes.

Addressing the ceremonial hand-over, Prime Minister Ranil Wickremesinghe declared that Sri Lanka was “on its way to being the hub of the Indian Ocean.” Its port facilities—in Colombo, Hambantota and Trincomalee—were “part of the modern maritime silk route.”

China’s Xinhua news agency reported that Sri Lanka had “joined China’s Belt and Road Initiative (BRI)” through the Hambantota Port joint venture.

The US and India, its strategic regional ally, are hostile to Beijing’s growing influence in the Indo-Pacific region. The BRI is aimed at connecting more than 60 countries in Asia, the Middle East, Africa and Europe via land and sea, ensuring China’s ongoing access to oil and other energy supplies (see: “China hosts international launch of One Belt, One Road initiative”).

Under the Hambantota deal, Sri Lanka has sold a 70 percent stake in the port to CMPH via a 99-year lease, while retaining a 30 percent share under the state-owned Sri Lanka Ports Authority.

Two Chinese companies established to manage Hambantota Port operations were given a 32-year tax holiday. Prior to the deal, the government retrenched 435 port workers. Colombo is also handing over 15,000 acres of land near the port for Chinese companies to build an industrial zone.

After coming to power in January 2015, President Maithripala Sirisena suspended various Chinese-funded ventures, including the multi-million dollar Port City of…

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