Sri Lanka said Tuesday that it has withdrawn from an agreement with Japan and India to develop a deep-sea container terminal, seen as an attempt to counter China’s growing influence in the region.
The East Container Terminal in Colombo Port is being built next to a controversial $ 500 million Chinese container jetty, and would be developed as a joint venture – with India and Japan for 49 percent.
But the government has faced opposition in recent weeks from hardline nationalists within its coalition who oppose the sale of national assets to foreigners.
The deal for the deep-sea jetty was signed in May 2019, a few months before President Gotabaya Rajapaksa came to power.
The government said in a statement that it would instead develop the site “as a wholly owned container terminal by the Sri Lanka Ports Authority” for $ 800 million.
The decision marks a turnaround from Rajapaksa’s statement more than two weeks ago, when he said the project would go ahead, citing “regional geopolitical concerns”.
It also comes the day after India’s High Commission in Colombo called on the government to honor its commitments in relation to the deal.
When Mahinda, the brother of Gotabaya Rajapaksa – who is now Prime Minister – was president between 2005 and 2015, Colombo borrowed billions from China, building up a mountain of debt for a series of infrastructure projects.
With credit agencies lowering Sri Lanka’s debt ratings as the island nation teeters from the economic impact of the pandemic blockades and deadly Easter bombings in 2019, the government expects more Chinese loans this year.
In December 2017, Sri Lanka was unable to repay a massive Chinese loan and China Merchants Port Holdings allowed it to acquire the deep-sea port in Hambantota, which spans the world’s busiest east-west shipping route.
The deal, which gave the Chinese company a 99-year lease, caused concern at home and abroad.
India and the United States are both concerned that a Chinese aid to Hambantota could give Beijing a military advantage in the Indian Ocean.
India filed protests when Chinese submarines made unannounced visits to the Colombo terminal in 2014. Since then, Sri Lanka has not authorized further calls by submarines.
aj / grk / am
Originally published