Rajapaksa threatens to overturn deal with China on Hambantota port

Colombo, December 16 (The New Indian Express): The woes of the non-performing Hambantota port, built by former President Mahinda Rajapaksa with a Chinese loan of US$ 1.4 billion, have not come to an end with a Chinese company, China Merchant Port Holdings (CMPort) agreeing to take 80 percent stake in it and pull it out of the financial woods.

Rajapaksa, and his new organization the Sri Lanka Podu Jana Peramuna (SLPP), have threatened to abrogate the agreement with China when they come to power.

To Rajapaksa, the SLPP and the “Joint Opposition Group”, the Sino-Lankan deal is a sellout to China, totally deleterious to the national interest. And in this, they have the support of the Marxist Janatha Vimukthi Peramuna (JVP) also.

This month, nearly 500 Rajapaksa-backed workers at the port struck work against its privatization through a sale to a Chinese company. They detained a Japanese and a South African vessel for several days in an act which was tantamount to piracy. The Sri Lankan navy had to use force to evict the strikers and release the ships. As consequence, insurance companies designated Hambantota port as a high risk port, damaging the country’s image in the eyes of foreign shipping lines and foreign investors.

Rajapaksa’s objections to the deal with China are many. By giving 80 percent stake in the port to the state-owned Chinese company, and making the deal valid for 99 years, the Sirisena-Wickremesinghe regime has virtually handed over a huge national economic and strategic asset to a foreign company and a foreign country, he charged.

The Sri Lanka Ports Authority (SLPA) will lose its control over the port. The Sri Lankan navy, which is in charge of security in all Sri Lankan ports, will lose this role to the Joint Venture company in Hambantota port.  Although the navy will be a member of  the committee to ensure security, it will not be in-charge of security in the way in which it is now. Sri Lanka will not be able to get any dividend from the port for 15 years which is the time it might take to become commercially viable. Sri Lanka will also not be able tax the Sino-Sri Lankan Joint Venture company for 15 years.

Rajapaksa charged that government has plans to sell other ports at  Kankesanthurai and Trincomalee to foreign powers and said that very soon there will be no need for a Sri Lanka Ports Authority.   The former President also promised to take back all sacked workers if he comes to power.

Threatening a mass agitation against the deal over Hambantota and the proposed deal with India over a new terminal in Colombo port, JVP leader Anura Kumara Dissanayake said that the Hambantota Port could have been developed to earn massive revenue by offering services to ships and not restricting its role to transshipment.

“The world’s main maritime routes run past the Hambantota Port and shipping passing through could have brought us huge earnings from bunkering, supplying food and water to ships and providing repair services. However, without taking that into consideration, the Rajapaksa government developed the Hambantota harbor for transshipment purposes only. According to the new agreement supply of fuel to foreign ships and gas storage are to be handed over to a Chinese company,” he said.

However, the Minister of Shipping and Ports ,Arjuna Ranatunga ,said that the “deal” with China is only a Framework Agreement “ or something like an MoU”. It is not the “Final Agreement” which is still being negotiated ,he clarified. He further said that many changes could be made between now and January 8, 2017 when the Final Agreement is to be signed. He even stated that if the SLPA is not given the power to ensure security in the port, he will not sign the agreement.

But Ranatunga justified the deal with China by saying that it is the only way to develop Sri Lanka’s ports. So far, the profit-making Colombo port has been pumping funds into other ports to keep them afloat. But Colombo port’s finances have suffered in the process, affecting its development, he pointed out.

Impact on Sino-Lanka Relations

Political observers say that the controversies over Hambantota port will, in due course, sour relations between China and Sri Lanka. China was very upset when the Sirisena-Wickrmesinghe government stopped projects funded by China alleging corruption and high interest rates on loans. After several months of lay off, work resumed in many projects.But before normally could be fully restored, Hambantota port got embroiled in controversies in which China is being portrayed as a greedy and domineering power cynically making use of Sri Lanka’s financial and other vulnerabilities.

Previously, Rajapaksa was a friend of China’s. But today, he is not. It is possible that he may want the agreements signed by the Sirisena-Wickremesinghe government to be re-examined when he is voted back to power.

Sino-Sri Lankan relations may be heading for a period of uncertainty, if not turmoil, in the near and medium term.

(The featured image at the top shows Chinese President Xi Jinping with the then Sri Lankan President Mahinda Rajapaksa in Colombo, 2014)