China would always respect Sri Lanka’s sovereignty and not allow any “outside interference” in its internal affairs, Foreign Minister Wang Yi said on Tuesday, as he met President Gotabaya Rajapaksa and his brother Mahinda Rajapaksa.
What was muffled out, was the latter part of statement, i.e “except ours”, not only underlines the exclusive arrangement which the present Sri Lankan government promises to the dragon, but also raise eyebrows, on the manner in which last six months of Sri Lankan Politics have panned out, especially the easter bombings. Questions are asked on how, a one-off Islamic bombing, of the magnitude only seen in deep strife Middle eastern conflicts, lacks any congruent context, either before or after the bombings, except influencing the Sri Lankan Elections.
“Popsicle politics” of the Dragon
Sri Lankan Lion the latest victim
On a vast tract of newly reclaimed land off Sri Lanka’s seafront capital, construction is underway on a huge Chinese-backed project designed to turn the small, tropical island nation into a south Asian Singapore: a hub of financial services, business, and tourism.
To be built over the next 25 years, at an expected cost of $15bn, Colombo Port City will have 5.6m sq m of sea-facing office, residential and commercial space to woo investors fleeing supposedly messy, unplanned urbanization elsewhere in south Asia. The biggest, most ambitious foreign direct investment in Sri Lanka’s history, the project is a dream sold on desires of what the country just out of the civil war in the last decade, would strive to be.
Fact check spells out a different story. Today, more than a third of government revenue goes toward servicing Chinese loans, with total foreign debt-service reaching $8.2 billion annually. Meanwhile, Sri Lanka’s trade deficit with China has soared, within imports ($3.8 billion) exceeding exports ($250 million) by a factor of 15.
Hence once these assets are ready, Sri Lanka will not be able to pay the loan. Just like Hambantota, these assets and their administration, as well as ownership, will pass on to Chinese. That will only fill the pocket of the Dragon, while Sri Lankans look on. This is aptly seen as a real issue in Hambantota below.
“Port Diddling” the Lion
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, even though feasibility studies said the port wouldn’t work.
Yes, even though other frequent lenders like India had refused.
Yes, even 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 draws only one ship per day, by a very generous account.
Each year roughly 60,000 ships vital to the global economy sail through the Indian Ocean past a Chinese-operated port on the southern tip of Sri Lanka. Almost none of them stop to unload cargo.
And then the port became China’s.
The eight-year-old Hambantota port, with almost no container traffic and trampled fences that elephants traverse with ease, has become a prime example of what can go wrong for countries involved in President Xi Jinping’s “Belt and Road” trade and infrastructure initiative.
Hambantota has struggled to make money, partly because it is fairy isolated. With no industrial hub and facilities nearby, there are no natural customers on its doorstep.
But now that China looks set to take control of the port, that is a problem it wants to fix and has arm-twisted the government to allow to create a large economic zone: buying 15,000 acres of land to build factories and offices.
But many who live in the area don’t want to give up their homes and farms. At a small village near the harbour, locals are furious about the plan. Many of them participated in a large protest against the investment hub in previous years.
Roads and highways are being laid all over the country, and some have really shortened travel time between towns and cities. This has helped boost tourism, the country’s biggest source of foreign income.”In the near term, there will be some local jobs for Sri Lankans,” says experts on businesses and governments on investments.
“But in the longer term, I think the bigger upside potentially for Sri Lanka is to really get tapped into this global trade route system that the Chinese are backing.” or is it?
Story is better explained with a real example like this: The first major loan Sri Lanka took on the project, came from the Chinese government’s Export-Import Bank, or Exim, for $307 million. But to obtain the loan, Sri Lanka was required to accept Beijing’s preferred company, China Harbor, as the port’s builder(all according to a United States Embassy cable from the time, leaked to Wiki Leaks).
That is a typical demand of China for its projects around the world, rather than allowing an open bidding process. Across the region, Beijing’s government is lending out billions of dollars, being repaid at a premium to hire Chinese companies and thousands of Chinese workers.
This sounds very much like the arguments a decade ago, for Chinese investments in Thailand and Southeast Asia. Today it counts as cropper, while money goes back to China and what the parent country is left looking at, for all the talk of “Foreign Investment” is just daily wages to Sri Lankan unskilled labor.
While Pakistan is likely to be a Chinese Colony in the near future, Dragon is here to play a different game with Sri Lanka. While physical shifting of sweatshops and skilled Chinese labor finding Jobs in Chinese factories, is the way to go in Pakistan, with salary doled out in Yuan and money going back to Chinese banks, is likely to be the reality for Pakistan very soon. Sri Lanka will be played the same way except tone will be hushed and background filled with Christmas music, landscape seemingly colorful with confetti, all smelling Vanilla.
In reality, they will be played same way as others, who have been part of OBOR/CPEC. SEZs, as around Hambantota and the $2.4 billion port city China is building in the commercial capital, Colombo will be in Chinese hands. Both are already given to Chinese to use and shall be operated, financed and used by Chinese with Chinese skilled manpower catering to Chinese coffers.
Sri Lankan government shall be paid null, as they be already repaying loans, by leasing the SEZs. Daily wages shall be provided to unskilled labor of Sri Lanka , even less than what they make today with fishing industry. Latter shall also be taken over by the highly competitive and technologically advanced Chinese Fishing Industry since latter will accrue those rights in lieu of unpaid debt.
Fear-mongering it may be called and the looming crisis casually refuted, but we know Dragon has tasted blood.
16 Jan 2020/Thursday Written by: Fayaz