Sri Lanka clears revised deal for Hambantota port

Image: Sri Lanka clears revised deal for Hambantota port
Image Source: The New Indian Express

Sri Lanka’s Cabinet on Tuesday cleared a revised deal for the Chinese-built port in Hambantota, the government said. The modified agreement, the government added, was more profitable to Sri Lanka and also addressed security concerns raised by other countries.

Sri Lankan Minister said the Cabinet gave final approval to sell 70% stake in the southern port to the state-run China Merchants Port Holding. He also highlighted that some diplomatic missions were worried that the port would be used as a naval military base which Sri Lanka has addressed in the revised agreement. He said, though the Chinese would manage port operations, no naval ship (including Chinese ones) can come at Hambantota without our permission.

India has repeatedly raised its concern with Sri Lanka regarding China’s ambition to have control in the strategic Indian Ocean. India considers China’s aim to get hold of the Hambantota port as part of a strategy to encircle India. Some experts have termed this theory as “String of Pearls”.

About Hambantota Port Issue:

Selling stake of the Hambantota Port to the Chinese is the main issue which is being opposed both domestically within Sri Lanka as well as by India.

Under former Sri Lankan President’s tenure, massive loans were borrowed and invested on huge infrastructure projects in Hambantota including a $1.4 billion deep sea port, a large industrial zone, an LNG plant, an international airport, to name a few. To finance these projects, he looked upto China for the loans; China embraced this opportunity with both hands by giving $8 billion in soft loans.

Now that the projects are struck in b/w and no source of continuous cash flow is available with the Sri Lankan government to take the projects forward, amid its high debt-to-GDP of around 95%, Sri Lankan government has decided to lease the port for 99 years to the Chinese.

This was opposed by the Sri Lankans whose lands were taken to build the industrial zone, where the Sri Lankan government is planning to invite China for setting up its industries.

India opposed the move owing to strategic concerns. Indian experts consider it as a strategy of China to control the strategic Indian Ocean and encircle India – a theory popularly known as “String of Pearls”.

 

Reference(s):

The Hindu Newspaper (You can download the newspaper for free from a link given on this FB page – UPSC Aspirants Forum)