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China In Sri Lanka: The Colombo Port Conundrum – Analysis

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Sri Lanka’s Parliament postponed discussion of a bill regarding Colombo Port City, but it is expected to pass.

By Rajeswari Pillai Rajagopalan

Since the return of the Rajapaksa brothers to office as president and prime minister in Sri Lanka, Colombo’s relations with China have improved dramatically. Earlier in the week, the Sri Lankan Parliament decided to postpone a debate on the controversial Colombo Port City Economic Commission Bill that was scheduled for the middle of the week. The bill was seen as supporting China’s interests, and tantamount to ceding control over Colombo Port City. It triggered a domestic political storm. Officials reportedly told the media that, “All party leaders in the House agreed that the debate should be rescheduled as the Supreme Court’s determination on the constitutionality of the bill had not yet reached Parliament.”

Calling the bill “disastrous,” Sri Lanka Podujana Peramuna (SLPP) member of parliament Dr. Wijeyadasa Rajapakshe said, “This Bill is inconsistent with Article 12(1) of the Constitution on equality. The business community in Colombo will have to collapse. The new land will be tax free. The new Bill will not help the economy of Sri Lanka. The profits in this region will flow out to China.” He added that the “Bill would not help Sri Lanka’s economy as it seeks to allow all profits of the venture to flow out to China.” He also said, “Ranil Wickremesinghe had given the Hambantota Port by an agreement and handing over the Port City to China through an Act would be more dangerous than the Hambantota port proposal.”

Even though State Minister of Money & Capital Markets and State Enterprise Reforms Ajith Nivard Cabraal and other government officials have tried to reassure Sri Lankans about the bill, they have not succeeded. Cabraal said that the “Parliament will oversee the Port City’s activities. Financial, legal, and other administrative activities will be governed and regulated by the Sri Lankan government. Financial activities will be done with concurrence of the Central Bank of Sri Lanka and the relevant law and order and jurisdiction will be subjected to local jurisdiction.” These statements have done very little to assuage the fears of many parliamentarians as well as those in civil society. There are at least 20 petitions filed in the Supreme Court against the government’s move, with Rajapakshe stating that “the entire country should be concerned over the government move made at the behest of China.”

Other public commentators have also criticized the idea. Professor Suri Ratnapala argued that the provisions of the Port City bill “will erode the legal and political sovereignty of Sri Lanka” including by “exemptions from national law, wide discretionary power granted to the commission, limitation of parliamentary, prudential and judicial oversight of the commission’s operations.” Asanga Abeyagoonasekera in another essay commented that the Special Economic Zone (SEZ) in Colombo Port or Overseas Economic and Commercial Cooperation Zones (OECCZ) are the primum principium of “building a nest to accommodate the Phoenix” and questioned what China’s OECCZ models of development have been able to do for the partnering countries.

Nevertheless, speaking to this author, Abeyagoonasekera said that in all likelihood, the bill will be passed with barely a day of discussion in the Parliament. It is even more likely because the Parliament discussions are now focused on the COVID-19 pandemic. The government has a majority in the Parliament, and so will find it easy to have the bill approved. The UNP, the opposition party, has also come out with similar objections, with the JVP leader Anura Kumara Dissanayake also saying, “The government with a two-thirds majority could rush this legislation through the House.”

But China’s growing influence in Sri Lanka does not end with the Colombo Port and the SEZ. China’s Defense Minister Gen. Wei Fenghe and a delegation of senior military officers made a three-day visit to Sri Lanka toward the end of April in an effort to further strengthen defense ties between China and Sri Lanka. During their discussions, Sri Lankan Defense Secretary Gen. Kamal Gunaratne (Retd), who led the Sri Lankan delegation, said that “China had been a historical ally of Sri Lanka across a multitude of avenues including Buddhism, trade, infrastructure development and global connectivity.” Fenghe in turn stated that China is “looking forward to working together with Sri Lanka to enhance practical cooperation and to promote bilateral relations to a greater extent.” During the defense dialogue, the two countries also signed a Mutual Assistance Protocol. The Sri Lankan defense secretary also extended his appreciation to China for its extensive support at the U.N. Human Rights Council meeting, which saw the tabling of a resolution against Sri Lanka. On the other hand, India abstained from voting on the recent UNHRC resolution critical of Sri Lanka.

In a telephone call a few weeks ago, Sri Lankan President Gotabaya Rajapaksa and Chinese President Xi Jinping reiterated the importance of their bilateral partnership. While Rajapaksa thanked Xi for the Chinese government’s support at the UNHRC session, he also said that for poverty alleviation, Sri Lanka can follow the Chinese model. Xi is reported to have specifically highlighted the Sino-Sri Lankan cooperation on the Port City of Colombo and the Port of Hambantota. Similar sentiments were echoed by the two foreign ministers where the Sri Lankan foreign minister, Dinesh Gunawardena, said it considered “China as its closest friend.”

All of these developments are likely to be concerning both to India and the Quad countries.  Commenting on the Malabar exercises in 2020 that saw the participation of the U.S., Japan, India and Australia, Sri Lanka’s Foreign Secretary Jayanth Colombage said, “We are observing the rise of Quad as an exclusive military alliance. That is the problem. If Quad is aiming at economic revival, there are no issues.” Nevertheless, apparently trying to maintain a degree of balance, he tried to reassure India that Colombo will remain neutral and would do no harm to India saying, “We will not, we cannot be, we should not be a strategic security concern to India. Period. We have to understand the importance of India in the region and we have to understand that Sri Lanka is very much in the maritime and air security umbrellas of India. We need to benefit from that.” But, as he explained, given the geostrategic location of Sri Lanka in the Indian Ocean, Colombo is “at the crossroads of both – (the United States’) Indo-Pacific as well as (the Chinese) Belt and Road Initiative.”

Sri Lanka has reiterated often that it does not want to be caught in the great power politics in the region. But more often than not, it would appear to be much more sympathetic to China’s positions. Despite the debt-trap situation in Sri Lanka that necessitated the 99-year lease of Hambantota Port to China, Colombo appears to be ever more willing to take more money from China, while rejecting U.S. offers, for instance, during then-U.S. Secretary of State Mike Pompeo’s visit last year.

In addition to the Chinese loans and economic assistance, what makes China attractive as a partner to Sri Lanka is that these loans and other forms of assistance come with no strings attached. That China raises no conditions such as on human rights practices and war crimes in its dealings with Sri Lanka is comforting to a regime that brought an end to the LTTE guerrilla war in 2009. Second, China’s unconditional support to Sri Lanka in international platforms such as the UNHRC and Beijing’s ability to shield Colombo from the West on human rights, accountability, and reconciliation with minorities work in favor of China.

India has been increasingly concerned by China’s influence in Sri Lanka but it has not been able to shun the Tamil factor completely. India continues to insist on the 13th amendment that will facilitate devolution of power to provinces in Sri Lanka and this will continue to be a point of annoyance with the Sri Lankan leadership. Meanwhile, China will continue to exploit any opportunities that arise from such annoyance.


This article originally appeared in The Diplomat.

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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