The photographs that appeared in last weekend’s newspapers after the signing of the tripartite agreement between China Merchant Port (CMP), the Sri Lanka Ports Authority (SLPA) and the Ministry of Ports and Shipping to lease the debt-ridden Hambantota port, said it all. On the prompting of the vice chairman of CMP for a cross handshake [...]


Hambantota Port; a Concession (like no other) Agreement


The photographs that appeared in last weekend’s newspapers after the signing of the tripartite agreement between China Merchant Port (CMP), the Sri Lanka Ports Authority (SLPA) and the Ministry of Ports and Shipping to lease the debt-ridden Hambantota port, said it all. On the prompting of the vice chairman of CMP for a cross handshake between the three signatories, the two locals looked awkward and embarrassed, but they obliged.

Behind the scenes were the Government politicians – for once shy of the cameras. It was they who had negotiated the deal to give the Chinese government- backed company a 99-year lease, and to have a controlling interest over the harbour in a strategic location for sea navigation. The barter. USD 1.2 Billion. Is it a mess of pottage? Some think so. Was Sri Lanka so desperate for this pittance? Has any Government –whether it be President Mahinda Rajapaksa’s or President Maithripala Sirisena’s any moral right to hand over a part of the country to another for three generations to come? If the SLPA was losing money and this was the remedy, what about the bigger losses suffered by SriLankan Airlines and what would the remedy be to offset those losses – would they sell off another part of Sri Lanka to settle that? Could not the Government have borrowed from ‘Peter to pay Paul’ and retained ownership of the harbour? Could not it have continued work begun back in 2012 to develop the port gradually, steadily and strategically to become a national asset through Joint Ventures/Public-Private-Partnerships on shorter terms (35 years) and generated sufficient revenue to service the loans? These and many more questions arise.

A harbour at Hambantota was a logical exercise, in principle. The Sri Lankan Institute of Marine Engineering, Science and Technology (IMAREST) was one of the first to propose a commercial port in the southern city of Hambantota citing the number of vessels sailing just off its coast. What happened thereafter was the Chinese Maritime Silk Route proposal taking off (now called the ‘One Belt; One Road’ initiative), and Hambantota being central to its plans.

That the Chinese aggressively pursued the plan with the Mahinda Rajapaksa Government is no secret. The Chinese came up with the funds for it, and President Rajapaksa eager to show off his economic development prowess to his local audience went hell for leather in implementing it. Protests by the then Opposition, now in Government were short-lived. At the beginning of January 2015, the new Government refused to hear of proceeding with the project, as it did the Colombo port city project.

The Chinese on the other hand, are known for their patience – and optimism that there are ways to the ears – and the pockets, of ruling politicians. They launched massive public relations campaigns overtly, and political relations campaigns with the new leaders, covertly. When the Prime Minister went to Beijing to re-negotiate the rising debt servicing for a port already in situ, he was told by the Chinese leadership in no uncertain terms that there would be no writing off the debts, and no charity. “But if you can’t pay,” they told our Premier, “We are ready to swap debt for equity.” Their excuse was that ‘other countries’ that also can’t meet their debts to the Chinese might ask for the same concessions and similar privileges. And so, what is now called the ‘Concession Agreement’ is what “generosity” China could best offer Sri Lanka.
The Chinese call this a ‘win-win’ agreement. Many sceptics are not so sure. They feel this is Chinese imperialism replacing the old world order of Western colonialism. A foreign policy of based on ‘give a loan; bribe the Third World leaders; start a project they cannot afford; take their territory when they can’t pay back’.

This is not just the case of Sri Lanka. Countries in the Caribbean, and many African countries face the same quagmire. The Chinese Dragon has spread its wings far and wide. Now, comparisons are being made in Sri Lanka to the 1815 capitulation of the Kandyan Kingdom and by a strange twist of contemporary history – to the signing of the Indo-Lanka Peace Accord on the very date this deal was signed, 20 years ago.
The Government seems to be adopting a foreign policy no different to its predecessor in office i.e. to balance the competing interests of China with India in the region. The fact that India has made no formal complaint on the Hambantota agreement is significant and could be taken as not wanting to jeopardise its own quest to secure the oil tanks farms in Trincomalee. As a South East Asian Ambassador was to remark recently, Sri Lanka’s strategic geographical location is “a double-edged sword”.

In a statement, the Ports and Shipping Ministry tried to mislead the public last week by making some arithmetical jiggery-pockery to show the SLPA had majority shares in one of the two companies (viz., HIPS) to run the port. It reminded one of a former Foreign Minister’s maths when he argued that though Sri Lanka lost a vote on the UNHRC Resolution in Geneva, we actually won because he counted the Abstentions also as votes for Sri Lanka. The Minister was at pains to explain that HIPS, which provides for services for the Hambantota port will be chaired by the SLPA chairman etc., but the fact of the matter is that SLPA remains a minority share-holder in the company.

He also spoke of the losses suffered at Hambantota because only some 14 cargo vessels (apart from the containers bringing in cars) berthed at the port. He didn’t tell the country that orders for two cranes ordered by the Rajapaksa Government were cancelled by his predecessor for whatever reason. Obviously, no ship is going to call at the port if the equipment is not available to unload cargo.
In a bid to stave off mounting criticism, the Minister said that after the signing of the agreement, he took the Chinese delegates to meet the President who said that the Government of Sri Lanka should have the option to amend the already signed papers should there be anything inimical to Sri Lanka’s interest. The Chinese readily agreed to this, he added. How naïve is this.

There are only few real options if things go wrong in the future. Any negotiations are by mutual consent of both parties. Nationalisation is not an option as it was in the past with international arbitration tribunals now the order of the day. And make no mistake. This is not a purely commercial exercise of running a port, however good the Chinese are at it. They know that one day, Western sanctions (economic embargoes) – the West’s modern weapons of war, can throw its plans into the sea. This is a dual purpose port for the Chinese. It is a strategic foothold as well, in China’s grand scheme of things – for 99 years.


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