Why China’ Colombo Port City project in Sri Lanka is unsettling for India

Most of India’s container traffic is handled by Colombo port.

VARIETY | 6-minute read | 03-09-2018

COLONEL R HARIHARAN @colhari2

China's ambitious 269-hectare (660-acre) Colombo Port City (CPC) project is poised to take off when the reclamation of land from the sea is completed by June 2019. Skyscrapers, luxury hotels, shopping malls and a marina of the newly created city-within-the-city, are set to change Colombo's scenic Galle Face Green overlooking the sea. At the same time it will also change Sri Lanka's geostrategic landscape with China gaining an overbearing foothold in the Sri Lankan capital.

The $1.4 billion infrastructure project being executed by China Harbour Engineering Construction Corporation (CHEC), a subsidiary of state-owned China Communications Construction Company (CCCC), had courted controversy ever since President Mahinda Rajapaksa and Chinese President Xi Jinping, launched it on September 17, 2014. Issues of sovereignty, lack of transparency, allegations of corruption and environmental concerns dogged the project right from the word go. When President Maithripala Sirisena's government came to power in 2015, he put the project on hold till the allegations were investigated.

The government investigated allegations and carried out a supplementary environmental impact assessment before starting the project again, after signing a new agreement in 2016. Under this agreement, the entire 269 hectares of reclaimed land has been handed over to the Colombo Port City Holdings Ltd on 99-year lease.

The jarring note is the Chinese, with 99-year lease of the city in their pocket, will call the shot and dictate their own rules of the game. How it will impact Sri Lankans socially, economically and environmentally is a question still bothering many Sri Lankans.

CPC and South Asia

Geography dictates that national security concerns of India and Sri Lanka are interlinked and as a corollary South Asia's strategic security as well. Neither of the countries can afford to ignore this geostrategic fact when they take up major development projects to improve the quality of life of their citizens. The geo-strategic implications of the CPC have to be understood in this backdrop.

Unlike the Hambantota project, which was taken up by Sri Lanka with Chinese loan, the Chinese are directly investing $1.4 billion in the CPC project. The CPC dominates the Colombo port complex, which is Sri Lanka's most valuable strategic and economic asset figuring in the top 35 busiest ports in the world. 

The Chinese are already in control of the Colombo port terminal. The CPC will have its own authority and laws favourable to trade and investment within the newly created city.

The CPC project includes development of an international financial centre, added as an afterthought to the original CPC project. The centre is to be developed into a major financial hub rivalling Singapore and Dubai. Such a financial centre would provide direct access to South Asia's under serviced markets. But its success would be largely dictated by its competitive ability against Dubai and Singapore, which are internationally well established.

However, if imaginatively packaged, the CPC in tandem with Colombo port could add a competitive edge to maritime trade.

Most of India's container traffic is handled by Colombo port. So, India's active participation would ensure the profitability of the CPC including the international financial centre. Already, the promoters are wooing Indian investors to take part in the project. However, India's growing strategic security concerns in the Indian Ocean region need to be addressed by both China and Sri Lanka to create an environment to encourage India's participation in the project.

When the CPC becomes fully functional in the next two years, multifaceted Chinese investment is likely to flow into the financial, commercial, trade, entertainment and residential infrastructure. With the US slapping high import tariff to cut down imports from China, Beijing is working hard to boost its trade in other big global markets — EU, India and South Asia and ASEAN. According to the promoters, the project is expected to generate 80,000 jobs in the next four years. However, the moot point is how many locals would benefit.

Already, there are indications of both China and India trying to keep their perennial geostrategic disputes at manageable levels in order to improve their working relations. Under such a dynamic environment, CPC can become an important "third party" (if you ignore the large Chinese ownership) link in progressing non-military relations between the two giant Asian neighbours to their mutual benefit. But India can ill afford to ignore the strategic advantage China has gained in Sri Lanka so close to peninsular India. 

Some of the concerns of CPC

The foremost concern for Sri Lanka would be to ensure that the project does not result in any action detrimental to its sovereignty, environment and society. There are too many agencies — both commercial and governmental agencies involved in managing the CPC - in which two unequal nations are participating. So when CPC gets going, it is likely to generate a host of issues related to governance including law enforcement, public services like health and infrastructure, fiscal issues like taxation and security of international financial transactions and trade specific issues of export and import. The success of the CPC will depend upon how Sri Lanka and China cooperate to ensure smooth conduct of joint mechanisms to run the project.

The possibility of China using the CPC to go on a security overdrive appears remote at present. However, China's power assertion in Indian Ocean littorals, particularly Sri Lanka, is bound to grow. As Chinese presence is already impacting the strategic configuration in the Indo-Pacific, Sri Lanka will have to be on guard to ensure its security interests are not affected with the Chinese taking control of the CPC and Colombo port. Sri Lanka cannot afford to forget that the Colombo port is its irreplaceable naval asset, apart from being a major maritime and financial hub.

CPC's importance for the Belt and Road Initiative

China has always maintained the CPC as one of the important projects of the Belt and Road Initiative (BRI). Almost all Chinese media reports and CPC press releases on its website (www.portcitycolombo.com) stress this aspect. Sri Lanka is a valuable asset in China's 21st Century maritime Silk Road as it occupies a unique place, mid-way in sea lanes of Indian Ocean's east-west trade.

If CPC succeeds, it could become a model for the Chinese to adopt elsewhere in BRI.

So, we can expect the Chinese to ensure the success of CPC project, particularly if the reclamation work is completed by June 2019 as per schedule. And it is inevitable India's strategic interests would be impacted by the CPC.

#Hambantota  #India-China relations #China #Colombo port city

Col R Hariharan, a retired Military Intelligence specialist on South Asia, has rich experience in terrorism and insurgency operations. 

Courtesy: India Today opinion portal DailyO         https://www.dailyo.in/variety/colombo-port-city-china-india-china-relations-galle-face-green-hambantota-belt-and-road-initiative/story/1/26418.html

Sri Lanka Perspectives: August 2018

Col R Hariharan | 31-8-2018 | Courtesy: South Asia Security Trends, September 2018 | www.security-risks.com

PC election issues

The failure of the parliament to ratify the Delimitation Committee Report (DCR) introduced by the government on August 24 illustrates confusion in the ranks of the ruling national unity coalition. In a rare show of unanimity, the Sri Lanka Freedom Party (SLFP) and the United National Party (UNP), Tamil National Alliance (TNA), Sri Lanka Muslim Congress (SLMC) and the Joint Opposition (JO) voted against the report. There was not a single vote in favour of the DCR, which required the support of two-thirds of members present in parliament. Though Local Government Minister, Faiszer Musthapha while presenting the report in parliament was vociferous in saying those who vote against the DCR would be despised as betrayers of the country, he changed his mind and voted against it! 

The episode once again demonstrated the disconnect between Prime Minister Ranil Wickremesinghe and President Maithripala Sirisena, who had appointed a five-member committee, chaired by Dr K Thavalingam, to carry out the delimitation of Provincial Councils required for conducting elections by January 2019. According to media commentators Prime Minister Wickremesinghe had spearheaded the opposition to the report. However SLFP spokesman Mahinda Samarasinghe dismissed such attempts to blame the PM for the vote against the report. He said all political parties were opposed to the report and there was no consensus among them.

The PC elections are to be held under the PC Election Amendment Act No 17 enacted last year. The elections would be held on the new 50:50mixed voting system, with 50 percent of the members elected under the First-Past-Post (FPP) system and 50 percent on the district level Proportional Representation (PR) system. Though the failure of the DCR to pass muster is explained as part of the ruling coalition’s new political strategy, the real reason is perhaps the new mixed voting system to be used in the PC elections.  After suffering a severe drubbing in the local government elections held under the mixed system earlier this year, most of the political parties want the PC elections to be held under the existing PR system. 

Finance minister Mangala Samaraweera had described their poor performance in LG polls as a “timely wake-up call to Yahapalana [good governance] government to get back on track.” 

Three PCs - Eastern, North Central and Sabaraagamuwa are already under governor’s rule after the expiry of their term last year. The terms of three more PCs – Northern, Northwestern and Central – are ending in October 2018. The Western, Southern and Uva PCs will be completing their terms in 2019. Thus PC elections are expected to act as the performance score card of the unity government. So the unity coalition is probably buying time to shore up its image before going ahead with the PC elections. Civil society organizations have described the delay in conducting the elections as a denial of democratic rights of the people.

The President has repeatedly said the PC elections would be held by January 2019. However, the failure of the parliament to ratify the DCR would mean further delay in finalizing the delimitation process and the voting system. In a bid to clear the logjam, the speaker has appointed a five-member committee of ‘intellectuals’ headed by the Prime Minister for its recommendations on conducting the PC elections. However, the success of the ‘committee strategy’ would only work if and when the SLFP and UNP leadership are ready for it.

Japan’s strategic interest in Sri Lanka  

Japan’s defence minister Itsunori Onedera made his first-ever visit to Sri Lanka from August 20 to 22 as part of Japan’s continuing effort to strengthen strategic cooperation with Sri Lanka. The Japanese minister called upon President Sirisena and Prime Minister Wickremesinghe. He visited Trincomalee port, where a Japanese naval ship Ikazuchi was on a friendly visit. According to a NHK television interview with the defence minister after he met with the Sri Lankan president and prime minister, the minister is said to have raised the issue of Hambantota coming under Chinese control. The NHK quoted Onedera as saying, “despite the lease [of Hambantota] there was an agreement that the port remains free of military activities.” This would indicate China looming large in Japan’s efforts to build close relations with Sri Lanka.

Japan has been one of Sri Lanka’s main development partners and largest donors. Japan’s interest in building strategic relations with the island nation increased earlier this year with the visit of Admiral Katsutoshi Kawano, chief of staff of Japanese Self Defence Forces to Sri Lanka. During President Sirisena’s visit to Japan in March 2018, Prime Minister Shinzo Abe sought to further strengthen cooperation with Sri Lanka as part of Japan’s  Free and Open Indo-Pacific Strategy to counter China’s increasingly muscular assertion in the region. It was welcomed by President Sirisena.

The Japanese strategy aims at enhancing connectivity between Asia and Africa to promote stability and prosperity of the region a whole. Areas of cooperation include counterterrorism, capacity building of law enforcement authorities and countermeasures against violent extremism. Japan has agreed to help Sri Lanka’s maritime training and capacity building.

By virtue of its location astride sea lanes of Indian Ocean, Sri Lanka occupies an important place in Japan’s Indian Ocean strategy for securing Indian Ocean sea lanes of shipping. India also shares similar concern. So it was not surprising that Japan invited Sri Lanka to participate as an observer in the joint exercise of coast guards of Japan and India. This would indicate the importance Japan attaches to maritime security in its relationship with Sri Lanka.

The US is also a partner in Japan’s Indo-Pacific strategy. Interestingly, around the same time as the Japanese defence minister’s visit USS Anchorage, a US amphibious ship was exercising with Sri Lanka Navy ships off Trincomalee. Recently, the US had announced that the US would be funding Sri Lanka to the tune of $14 million as part of more than $100 million that would be allotted to South Asia. The focus of the funding would be on issues like maritime security, humanitarian assistance, disaster response, peace keeping capabilities and countering transnational crime, which were “key for a free and open Indo-Pacific.”

Tailpiece: A Colombo magistrate has directed the police to detain Admiral Ravindra Wijegunaratne, Chief of the Defence Staff, for allegedly helping Chandana Hettiarachchi, a naval intelligence officer, accused of leading a hit squad that kidnapped 11 young men between 2008 and 2009 during the Eelam War. According to the criminal investigation department there was evidence of Admiral’s role in allowing the accused to evade arrest. 

Col R Hariharan, a retired MI officer, served as the head of Intelligence of the Indian Peace Keeping Force in Sri Lanka from 1987 to 90. He is associated with the Chennai Centre for China Studies, South Asia Analysis Group and the International Law and Strategic Analysis Institute, Chennai. E-mail: haridirect@gmail.com  Blog: http://col.hariharan.info