Friday, August 13, 2010

Sri Lankan waters run deep with China

By Sudha Ramachandran | Asia Times

The first phase of Sri Lanka's Hambantota project, a showpiece of the country's significant and growing cooperation with China, is almost complete. Filling the harbor basin with water for the port on the southern tip of the island begins on August 15 and the first ship is expected to dock at the port by November.

Hambantota is several nautical miles north of a major shipping route that links the Suez Canal with the Malacca Strait, which about 36,000 ships cross annually. Once the entire project is completed, it is expected to transform Sri Lanka into an important transshipment hub.

The project is more than just a port. On completion, the Hambantota Development Zone will include a liquefied natural gas refinery, aviation fuel storage facilities, three separate docks that will give the port transshipment capacity, dry docks for ship repair and construction, and bunkering and refueling facilities.

The entire project is expected to cost about US$1.5 billion and most of the funding could come from China. Already the Chinese have provided 85% of the first phase's total cost of $550 million as a soft loan and pledged $200 million toward the second phase. A consortium of Chinese companies led by the China Harbor Engineering Company and the Sino Hydro Corporation is also involved in the project's construction.

Besides the Hambantota project, China is involved in several others on the island. It is constructing a second international airport at Hambantota, a $248 million expressway connecting the capital Colombo with the airport at Katunayake, a $855 million coal power plant at Norochcholai, and a performing arts theater in Colombo.

China's Huichen Investment will provide $28 million and manage a special economic zone at Mirigama for Chinese investors. In addition, China has provided $1million as humanitarian aid for internally displaced persons and technical assistance for demining operations in northern and eastern provinces.

China's relationship with Sri Lanka goes back many decades. In the 1950s, the countries signed a rubber-rice agreement that assured Sri Lanka with a large market for its rubber, even as it was provided with low-priced rice.

While the Sino-Sri Lankan bond is decades old, the relationship expanded remarkably after Mahinda Rajapaksa became president in 2005. Since 2006, Beijing has provided Sri Lanka with $3.06 billion in financial assistance for various projects. Its aid to Sri Lanka, which was a few million dollars in 2005, jumped to $1.2 billion in 2009, over half the total aid the island has been offered by various countries. China is Sri Lanka's largest aid donor today.

An important reason for the close ties between the Rajapaksa government and China is Beijing's robust endorsement and support of Colombo's conduct in the war against the Liberation Tigers of Tamil Eelam (LTTE). China was "instrumental to some extent in the Sri Lankan government's success in defeating the LTTE", said China expert Srikanth Kondapalli, an associate professor at the Jawaharlal Nehru University in New Delhi. "Colombo was trying to purchase arms from abroad for years and only China supplied it with weaponry on a sustained basis."

Many in Sri Lanka favor the burgeoning relationship with China for reducing dependence on neighboring India, whose presence had been enormous. "Chinese help to Sri Lanka, unlike that from India, is free from conditions," said Soosipillai Keethaponcalan, senior lecturer at Colombo University's Department of Political Science.

Unlike India, which did not fully support Rajapaksa's military operations against the LTTE and which refrained from supplying it with weapons that would worsen the plight of civilians, China had no such qualms. It fulfilled Colombo's wish-list for military hardware, asking no questions, and has stood by Colombo in various international forums when it has been accused of gross human-rights abuses and war crimes.

In 2008, Sri Lankan Foreign Secretary Palitha Kohana told the New York Times that Sri Lanka's new donors "conduct themselves differently. Asians don't go around teaching each other how to behave," he said. "There are ways we deal with each other - perhaps a quiet chat, but not wagging the finger." China's way of dealing with Sri Lanka by not raising uncomfortable questions works well for the Rajapaksa government.

Economic and strategic reasons are behind China's interest in Sri Lanka. The island provides it with a market for its goods. More important is the strategic interest. It is located close to India's southern coast. A presence in Sri Lanka enhances China's access to the Indian Ocean. As mentioned earlier, Sri Lanka is just a few nautical miles from an important sea lane, one that is taken by tankers carrying 80% of China's oil.

"China's influence in Sri Lanka is as major as that of India's," said John Gooneratne, a retired Sri Lankan diplomat and author of A Decade of Confrontation: Sri Lanka and India in the 1980s. India's investment in projects in Sri Lanka is largely in the war-torn Tamil areas, not visible to the majority Sinhalese community. "China has the 'knack' of making grants/loans for projects that visibly project the Chinese image - the Bandaranaike Conference Hall, the Courts complex, and now a Cultural Complex [under construction] in Colombo," he told Asia Times Online.

"There is reason for India to be concerned over the growing Chinese influence in Sri Lanka, particularly in the long term," says Kondapalli.

And the worry is showing.

Indian security analysts have pointed out that while at present there is no talk of a Chinese naval base on the island, the possibility of one at Hambantota at a later stage cannot be ruled out.

At the height of the war against the LTTE, India's then national security adviser, M K Narayanan, went public with India's concern over Colombo sourcing arms from China. More recently, India reached agreement with Colombo to set up a consulate in Hambantota, the district where the China-funded project is being built. India has a high commission in Colombo and a consulate in Kandy. Consulates in Jaffna and Hambantota are in the pipeline. This huge presence on a small island seems rather excessive. Sri Lankans believe the proposed Hambantota consulate is aimed at "keeping an eye" on Chinese activity there.

The Sino-Sri Lankan relationship is not without its problems. Bilateral trade has doubled over the past five years and China has emerged the second-largest exporter to Sri Lanka and the 13th-largest export destination for Sri Lankan exports. However, “the trade balance is overwhelmingly in China's favor", Kondapalli told Asia Times Online.

Sri Lanka's exports consist of raw materials, rubber, tea, spices, gems and some minerals. "The Lankans want a diversification of the trade basket. Besides, Lankan traders are also having problems with the Chinese banking system," he said.

An issue that could trouble Sino-Sri Lankan relations in the coming years is that of China bringing in its own workers. This has triggered tensions in several countries such as Zambia, where Beijing is involved in big projects. Media reports have also drawn attention to claims that China uses convicts on overseas projects, a charge that Beijing has denied. Such allegations, especially if proved true, have the potential of triggering anti-China public sentiment and souring the current Sino-Sri Lankan bonhomie.

Sri Lanka has taken care not to allow its dalliance with the Chinese to offend India. It has repeatedly clarified that it will keep India's security concerns in mind.

With the end of the war in Sri Lanka last year, India's role in the island has diminished. All the same, the government recognizes it cannot afford to antagonize India, and geographical proximity to India is a factor that Colombo cannot ignore. Decision-makers in Colombo are unlikely to have forgotten past experiences.

In the 1980s, when the civil war was unfolding, the Sri Lankan government sourced weapons from countries like the United States, the United Kingdom, Israel, Pakistan and China - all with whom India was not on cordial terms at that time - ignoring India's security concerns. That sparked a series of moves by India that culminated in its provision of limited arms and training to the Tamil militants. Then in June 1987, when India violated Sri Lankan airspace and dropped relief supplies to Jaffna's beleaguered Tamil population, the J R Jayawardene government appealed to its Western friends and Asian allies for assistance. But little concrete help was forthcoming.

China, for instance, expressed strong disapproval of the "bullying action of big powers", but stopped short of naming India. It gave Colombo some arms, but that was it. China was aware that "it was too far away from Sri Lanka to sustain any military support operation on the island", Kondapalli said. Beijing advised the Sri Lankan government to pursue a political solution to the ethnic conflict, reminding Colombo that "distant waters don't put out fires on your doorstep", Gooneratne, then in the Sri Lankan diplomatic service, recalled. It was proximate countries that were in a position to do so.

This is a fact that Colombo will bear in mind as it does a careful balancing act between the two Asian giants.

Sudha Ramachandran is an independent journalist/researcher based in Bangalore.

© Asia Times

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