This month, Sri Lanka, unable to pay the onerous debt to China it has accumulated, formally handed over its strategically located Hambantota port to the Asian giant. It was a major acquisition for China’s Belt and Road Initiative (BRI) – which President Xi Jinping calls the “project of the century” – and proof of just how effective China’s debt-trap diplomacy can be.
Unlike International Monetary Fund and World Bank lending, Chinese loans are collateralized by strategically important natural assets with high long-term value (even if they lack short-term commercial viability). Hambantota, for example, straddles Indian Ocean trade routes linking Europe, Africa, and the Middle East to Asia. In exchange for financing and building the infrastructure that poorer countries need, China demands favorable access to their natural assets, from mineral resources to ports.
Moreover, as Sri Lanka’s experience starkly illustrates, Chinese financing can shackle its “partner” countries. Rather than offering grants or concessionary loans, China provides huge project-related loans at market-based rates, without transparency, and often little or no environmental- or social-impact assessments. As US Secretary of State Rex Tillerson said recently, with the BRI, China is aiming to define “its own rules and norms.”
To strengthen its position further, China has encouraged its companies to bid for outright purchase of strategic ports, where possible. The Mediterranean port of Piraeus, which a Chinese firm acquired for $436 million from cash-strapped Greece last year, will serve as the BRI’s “dragon head” in Europe.
By wielding its financial clout in this manner, China seeks to kill two birds with one stone. First, it wants to address overcapacity at home by boosting exports. And, second, it hopes to advance its strategic interests, including expanding its diplomatic influence, securing natural resources, promoting the international use of its currency, and gaining a relative advantage over other powers.
China’s predatory approach – and its gloating over securing Hambantota – is ironic, to say the least. In its relationships with smaller countries like Sri Lanka, China is replicating the practices used against it in the European-colonial period, which began with the 1839-1860 Opium Wars and ended with the 1949 communist takeover – a period that China bitterly refers to as its “century of humiliation.”
China portrayed the 1997 restoration of its sovereignty over Hong Kong, following more than a century of British administration, as righting a historic injustice. Yet, as Hambantota shows, China is now establishing its own Hong Kong-style neocolonial arrangements. Apparently Xi’s promise of the “great rejuvenation of the Chinese nation” is inextricable from the erosion of smaller states’ sovereignty.
Just as European imperial powers employed gunboat diplomacy to open new markets and colonial outposts, China uses sovereign debt to bend other states to its will, without having to fire a single shot. Like the opium the British exported to China, the easy loans China offers are addictive. And, because China chooses its projects according to their long-term strategic value, they may yield short-term returns that are insufficient for countries to repay their debts. This gives China added leverage, which it can use, say, to force borrowers to swap debt for equity, thereby expanding China’s global footprint by trapping a growing number of countries in debt servitude.
Even the terms of the 99-year Hambantota port lease echo those used to force China to lease its own ports to Western colonial powers. Britain leased the New Territories from China for 99 years in 1898, causing Hong Kong’s landmass to expand by 90%. Yet the 99-year term was fixed merely to help China’s ethnic-Manchu Qing Dynasty save face; the reality was that all acquisitions were believed to be permanent.
Now, China is applying the imperial 99-year lease concept in distant lands. China’s lease agreement over Hambantota, concluded this summer, including a promise that China would shave $1.1 billion off Sri Lanka’s debt. In 2015, a Chinese firm took out a 99-year lease on Australia’s deep-water port of Darwin – home to more than 1,000 US Marines – for $388 million (A$506m).
Similarly, after lending billions of dollars to heavily indebted Djibouti, China established its first overseas military base this year in that tiny but strategic state, just a few miles from a US naval base – the only permanent American military facility in Africa. Trapped in a debt crisis, Djibouti had no choice but to lease land to China for $20 million per year. China has also used its leverage over Turkmenistan to secure natural gas via a pipeline largely on Chinese terms.
Several other countries, from Argentina to Namibia to Laos, have been ensnared in a Chinese debt trap, forcing them to confront agonizing choices in order to stave off default. Kenya’s crushing debt to China now threatens to turn its busy port of Mombasa – the gateway to East Africa – into another Hambantota.
These experiences should serve as a warning that the BRI is essentially an imperial project that aims to bring to fruition the mythical Middle Kingdom. States caught in debt bondage to China risk losing both their most valuable natural assets and their very sovereignty. The new imperial giant’s velvet glove cloaks an iron fist – one with the strength to squeeze the vitality out of smaller countries.
Brahma Chellaney is a Professor of Strategic Studies at the New Delhi-based Center for Policy Research and a Fellow at the Robert Bosch Academy in Berlin. He is the author of nine books, including Asian Juggernaut, Water: Asia’s New Battleground, and Water, Peace, and War: Confronting the Global Water Crisis.
Copyright: Project Syndicate, 2017.
www.project-syndicate.org
Pradeep Att so your Sri Lanka has enough toilets?
So you guys went to beg and in return China fkd you guys up.
So to hide face you guys fiverting tbe issue here.
Besharam nahi toh….shameless leeches…you guys can sell about any thing to Chinese for money because Sri Lankan males are proving to be bloody imbeciles who wanted easy wau and did not have the ability to pay back the debts.
Soon China will start recruiting your ladies for works in Shanghai…..when tjat day comes then your big egoistic mouth will shut up for good and and yo arrogance will be destroyed…bloody arseholes no wonder Lord Rama destroyed Ravana and his lanka……
You guys look like Indians but talk against Indians…bloody buggers…i just want China to colonize idiots like u to teach u guys lesson of your lives.
Syed Abbas I think the tag lunatic dhould stay wihj Pakistanis.
How dare you compare your country with even likes of India….you idiot.
What the hell Pakistan achieved.
No freedom for women and Himdus.
Discriminating hindus and our temples.
Abducting and raping Hindu females.
Reducing Hindu population to a mere fraction now.
Encouraging jihadi swines.
Preaching that kill the kafirs…non muslims and then beggimg shamelessly grom non muslim countries lime UK and USA.
Saale khaate toh kafiro ke hi ho….toh hue nah tum Pakistani Kafiro ke tukare pe palne waale kutte.
And as far as Indias progress is concerned they would had been bigger and greater if they eould not had entertained jihadi muslims who are against India and Hindus from day one.
Durbhage se India provides those suar ke aulado ko shelter and protection.
Modi should design a package to air drop such bastards from aeroplane in Pakistan with a pig each.
We need China’s support for Myanmar Rohyanga resettlement issue with ndignity and right.
Pradeep Att.. How lame… Rather than thinking about the issue, you are trying to divert attention to something irrelevant. Will srilanka get back if India constructs enough toilets.. Think rationally
Mr. Ramalingham says " sinhala beggars lick mongolian arse"
Chinese are not mongolian although Genghis Khan concured china and did set up the chinese capital Beijing, secondly any war needs to have a winner and a loser. We would not appologise for the death of your hero, however we ask you not to repeat it. Eeryone please keep your emotions in control as betrays your mind.
Our closest naubours sent us trained terrorists to take more than a port, they both learnt the errors of their ways. We are with china and we are happy to take the risk that the chinese will deliver. Question is would India oblige and join the club. Pakistant is in partnership with China fo the same reason. India and Pakistan needs to resolve their differences first. Stop balamimg China as India through its questionable foreign policy has created the problums, starting from the agreement with the British for the partsion. China at that time was on the recieving end. I think, we will back China and keep Indian intersts i our minds. In order tp prevent more terrorists being trained and sent to Sri Lanka.
Cuba
China’s merely doing the sorts of things that the US did.
Yasasvin Chamara Illangasinghe Please check before posting what you are itending to express.Specially Grammer.Trinity college?????
They have screw my country left ,right an centre.That’s it.Who created the war? India.
This is the Sri Lankan “debt trap” :-.
1. Japan ranks as the country to which Sri Lanka is indebted most – SL Rs. 486.8
billion;
2. India ranks second at SL Rs. 142.3 billion
3. China comes third at SL. Rs. 131.6 billion.
Japan and multilateral agencies (ADB, IDA and others) alone account for more than half of Sri Lanka’s total external debt. China’s share comes to less than 5 percent of the total external debt.
So either the author is incompetent, ignorant and refuse to do his homework or he is lying through his teeth trying to smear the Chinese.
actually china was very leanient on this arangement, as a friendly nation. They did not take over like that in a hostile way. What was happen is there is a new holding company with 60%-40% basis. and this will be reviewed after 30 years by Sri Lankan government. It was because China Sri Lanka could end the civil war. While India was helping and arming terrorists, China, Russia and USA helped us when we needed the most. So some silly article will not show the reality of our small nation. World may want to see Sri Lanka as a little india, which is NOT ! we have some indian in our culter but definetly have our own identity.
Actually, India under Indira is responsible. She got the LTTE started in Sri Lanka, and the country was blessed (rather, cursed) by having a weak leadership that could not effectively deal with the terros movement. Sri Lankan government was theeatened with invasion to add to the fear and the LTTE got so strong that even the Indian Peace Keeping Mission left after loosing several thousand men to the battle. Finally, the goverment under Rajapaksa took decissive action and had to depend on China and Israel for weapons and cash, Israel for navy vessels and aircraft. IF the curse of the LTTE never happened, these things would never have happened to Sri Lanka and there would be no corruption of this level. Yes, in time, sadly the litlle country will be a sattelite of China. Even now the Chinese presence is enormous.
sinhala beggars lick mongolian arse.
India, not yet a Permanent Member of the UN, inspite of it’s massive population, top ten GDP, an ancient cultured civilization, has to change gear if it is to be recognized as a global power broker and dealing assertively with long term vision rather than ‘winning the next election’ has to be the way forward, and that’s where it’s relationship with Neighbours comes into play.
In addition to Hambantota, India’s 7 borders are surrounded with Ports, Naval presence, a massive highway to Nepal, not forgetting Tibet, $ 46 billion aid to Pakistan and Gwadar.
What will India do? Waking up is step one but it’s Neighbours wonder whether they have the will or ability to do anything at all.
Alex Wijaya Also arun had warned you before the objective of hotel dev eloper was to dump his own material which he is saddled as excess most likely you will lose the land so i am not going to put my money on this hotel.
Alex Wijaya The story is slightly different,i am a hotel developer i have technical staff who built someother hotel & are idle…besides i also have steel,cement from left over project.I want to dispose them so i ask you to build a hotel….you say i have a land in a desert which customer will come for using my hotel i use my charm offensive saying don’t worry i will lend you money if the project does not earn you revenue you will lose just the land….the project failed the hotel is unviable i took your land….will you blame your risk appetite or blame me or arun for your decision
And Trump doesn’t want to!
The body language says it all! Modi hugs Trump submissively while Trump towers over him like ‘ I am the boss! ‘ look .
The authour’s is the Indian view! Pre 1978 Sri Lanka was very pro-indian. It did everyting to satisfy them. And trusted that they will suppport to crush the nascent separatist movemnet. Instead they supported the separatist in a 30 year war and banded with the so called International Community to impose arms embargo on us that ruined Sri Lanka economy. After three attempts on peace the then President has no option but to give in to the local pressure and wage open war on the separatists when the separatists threatened to kill 30,000 farmers by blocking the water supply to their village. China openly prodived with arms to us. The well orchestred war ended the separatist movement. India as a result became a pariah in Sri Lanka. Indians woke up to see a new neighbour! What’s your problem? India has no single neighbour who they can call a friend. Does that mean something ?