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5 November, 2016 00:00 00 AM
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China’s One Belt One Road – the case of Sri Lanka

One of the primary objectives of the President Xi’s excursion into the region is the One Belt One Road (OBOR) Initiative designed to promote trade, transport, connectivity and security for China
Sheikh Rahman
China’s One Belt One Road – the case of Sri Lanka

China is implementing the One Belt One Road (OBOR) initiative in various parts of the world with varying degree(s) of success. Sri Lanka offers an excellent example of the unpredictable nature of international politics since the change of the government in Colombo led to a serious setback for the string of pearls strategy in the Indian Ocean region (IOR). Not only the security-strategic objectives remained unattainable for the Chinese, the investments in the Mattala International Airport and the deep seaport failed to bring in adequate flow of traffic.
Chinese want their money back and the repayment of the debt to international financiers totalling US$58.3 Billion by the Sri Lankan government accounts for about 95.4 percent of the revenue. Highways constructed with Chinese funds do not have the requisite number of vehicles plying on these roads to make it sustainable. A paltry 4.6 percent is left over as residual for the expenditures on education and public services. Sri Lankan government having failed to renegotiate the terms of the loan with the lender is considering privatization of the white elephants (port and the airport).
One of the primary objectives of the President Xi’s excursion into the region is the One Belt One Road (OBOR) Initiative designed to promote trade, transport, connectivity and security for China. OBOR guarantees cooperation of the partner nations in the development of infrastructure, energy facilities, special economic zones, and access to trade and transit. A series of strategic partnerships have been conceived by the leadership in Beijing that are at various stages of implementation - with the Central Asian Republics, the nations of the Indian Ocean region (IOR), and even extending far into Europe and Africa. At first, China seemed to be engaged in economic and military expansion into Southern Asia / Indian Ocean Region by setting up of bases in Sri Lanka, Myanmar, and the Maldives under the string of pearls strategy that subsequently evolved into forging of strategic partnerships for the implementation of the One Belt One Road and the Maritime Silk Road (OBOR/MSR). These strategies of China appear to be global and focused on certain region or sub-regions of the world and represented by strategic partnerships with specific nations across trans-national boun­daries with the overall objectives cente­red around national security.   
Sri Lanka is a strategically located island in the Indian Ocean. Port of Colombo would serve as a hub for the transportation of oil, commodities and the newly built deep seaport at Humbantota as a naval installation for the PLA navy. Nearly two-thirds of the world’s oil and half of the container shipments pass through the strategic sea route connecting the East to the West. Humbantota offers significant strategic advantage for installation of naval facilities for the PLA navy. Establishment of a naval base at the southernmost tip of the island will further the implementation of the string of pearls strategy in the IOR and realization of the OBOR/MSR Initiative(s). China offered soft loans of up to US$8 Billion to the Rajapaksa government for infrastructure and port development projects motivated by a desire to gain the much needed support from Sri Lanka behind Beijing’s long term strategic objectives in the Southern Asia/Indian Ocean region.
China provided security assistance of US$1 billion to the Rajapaksa regime for defense purchases for fighting the Tamils in securing the support of the regime behind Beijing’s strategic objectives. Infrastructure development projects undertaken by the regime that may have been rather ambitious failed to bring the anticipated rates of return. Foreign direct investments of an estimated US$1.4 Billion in the deep seaport at Hambantota, the Colombo Port City Project, an LNG facility, an international airport, and a large industrial zone represented landmark investments of the Chinese. China sought support and cooperation from the Sri Lankan government in realizing the One Belt One Road Initiative and the Maritime Silk Road (MSR). Sri Lanka relied on Chinese loan to recover from the decade(s) long Tamil turmoil.
However, things did not pan out as expected leading to the disappointment for the leadership in Beijing causing a major setback to the string of pearls strategy in the IOR. Largely attributed to the workings of the Indian intelligence the election into office of President Maithripala Sirisena turned the tables in favor of Delhi. First order of business of President Sirisena upon assumption of office was to revive the ties with neighboring India based on traditional and historical commonalities. Pledges and commitment of the Chinese for ambitious development projects in Sri Lanka had to be put on hold due to President Sirisena’s reaching out to Delhi – as the primary partner. A reminder to the policy makers of any external power dealing with any of the Southern Asian nations is that the fulfillment of the aspirations of the people and conformity with the local cultural and traditional norms can be extremely sensitive issues.  
China had invested heavily in Sri Lanka with the hope of using Humbontota as a naval base for positioning the PLA navy in the Indian Ocean.
However, the newly elected government of Sri Lanka headed by Maitripala Sirisena decided to forestall major infrastructure projects and reduce the presence of and the reliance upon China. Upon insistence from Delhi the government in Colombo gave in to the demands for not allowing port visits by submarines belonging to the PLA navy.  Port City Project fell into a quandary due to the diplomatic interference from Delhi that took some time to get back on track. Tussle between China and India over a South Asian nation are evident in the duality of external relations of Nepal, Bhutan, Bangladesh, Sri Lanka, and the Maldives.

The writer is Managing Partner,
ENERTECH International, Inc.
Infrastructure and Financial Advisory Services

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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