Srilanka has signed an agreement that hands over control of an important port on its southern Coast for a lease period of 99 years. These Chinese firms will hold over 70% stake of the Hambantota port.
The port was sold by political oppositions and trade unions for $1.1 billion because the Srilankan government struggled to repay loan debt taken from Chinese state-owned bank. The project was occuring heavy losses and they needed to pay this debt off as they owe the Chinese government a total of $8bn.
“With [the Hambantota port] agreement we have started to pay back the loans,” Sri Lankan prime minster Ranil Wickremesinghe said during a handing-over ceremony in parliament. “Hambantota will be converted to a major port in the Indian Ocean”.
Hambantota is a strategic port as it sits on one of the world’s most busiest marine routes with most of the east-west trade passing through the Indian Ocean’s sea lanes.
China Merchants Port Holdings company will now hold a major stake in the port and will pay Sri Lanka starting with an amount of $300 million. International experts and analysts say this will increase China’s geopolitical ambitions and fear that Srilanka will lose its sovereignty, “Government is playing geopolitics with national assets? #stopselling SL” local MP Namal Rajapaksa said.
For China, Acquiring Hambantota is a part of the achieving the ‘One Belt, One Road’ (OBOR) projects worth $100.7 billion and CPEC ‘s $ 55 billion (China- Pakistan Economic Corridor) can be implemented now that Pakistan’s Gwadar port is close to Hambantota.
“China deems the Maldives as an important partner to building the 21st Century Maritime Silk Road” said China’s leader Xi Jinping when he hosted Maldive’s president Abdulla Yameen. President Yameen in response said ” China is among our closest friends, most trusted and most dependable partners”.
Many analysts fear that the move to buy the port is a part of China’s geopolitical goals and that they may use the port to dock its submarines and use it as a naval base or to challenge USA as the world’s pre-eminent maritime power. India moved immediately and leased an unused airport for 40 years, the airport sits adjacent to the Hambantota port for $300 million. “A key element in any overseas naval base, and even a logistics facility, is easy access by air for people and supplies”. “In short, India is spending $300m buying an airport to block a Chinese naval base.”