There was a lot of talk and fanfare about how the Hambantota Port would help the Sri Lankan economy, but the reverse happened. The Sri Lankan government was unable to pay the debt it had incurred on the project, and in July 2017 it signed a 99-year lease of the port to a Chinese state-run shipping company, China Merchants Port Holdings (CMPort).
The deal also includes around 6,000 hectares in the nearby industrial zone. A 70% stake in the port will be held by CMPort and the remaining 30% with the Sri Lanka Ports Authority. Sri Lanka Ports Minister Mahinda Samarasinghe called the deal a “win-win situation for both countries.”
On January 1, the Chinese and Sri Lankan flags were hoisted at the port at the same height, hinting at the Chinese foothold. This deal was an attempt by the Sri Lankan government to try to get out of the “debt trap” that came with increasing Chinese investments. The Chinese government made investments amounting to US$1.5 billion in building the port.
There were always fears and worries in India about the possibility of use of Hambantota by China to increase its influence and hold in the Indian Ocean. These concerns became stronger after the docking of Chinese submarines at the Colombo port in November 2014.
Though Sri Lanka argued that the port had been used regularly by a number of countries for docking and refueling of warships and submarines, the increasing number of Chinese ships is a concern for India. New Delhi feels that this affects its security concerns and also is a violation of the 1978 accord between Sri Lanka and India that promises that neither country will let its ports be used for activities that would affect the other’s “unity, integrity and security.”
The deal giving the Chinese company control over Hambantota fanned these fears. However, last month, the Sri Lankan Navy announced that it would be moving its southern naval command to Hambantota Port and had informed the Chinese that they could not use this port for military purposes.
In an attempt to check the Chinese control over the port, the Indian government has even proposed investing in an airport about 40 kilometers from Hambantota that has proved to be unprofitable, a move that is not based on any economic concerns. If the Indian government manages to gain sufficient control over the functioning of the airport, it may ease some of its security concerns vis-à-vis the Chinese naval presence at Hambantota and in the Indian Ocean.
The growing Chinese investments in Sri Lanka have changed the dynamics of Sri Lanka-India relations and have also provided China increased leverage in the South Asian region. With large sums of money flowing from Beijing to Colombo, there has been an increase in Chinese influence in Sri Lanka as well as in the broader region.
New Delhi has also been forced to wake up to the reality of Beijing becoming more influential in South Asia. This realization, though pretty late, has pushed India to accept the concerns of its smaller neighbors and has also made it understand the importance of delivering on promises.
But in real terms it will be difficult for India to compete with China on a project-by-project basis, as India has very limited resources and it also needs to focus primarily on its domestic development. One will have to wait and watch what direction this competition will take.
India considers South Asia to be its natural space of influence, but with increasing Chinese inroads it is forced to compete with China to maintain its position of leadership. The Chinese have used their economic clout to gain strategic footholds and will continue to do so.
India will have to become more proactive and also strengthen its credibility of being able to commit to and fulfill its promises. India’s benign image and its strong soft-power appeal may come to its rescue, but these would be more appealing if they were accompanied with economic and military benefits.
In the last few years the Sri Lankan government has attempted to withstand Chinese demands and has been trying to pursue an independent foreign policy, but only time will tell how long it will be able to resist Beijing’s moves. Colombo has been welcoming investments from New Delhi as well. It has argued that after its successful conclusion of a free-trade agreement with Singapore it is keen for similar agreements with both India and China.
Hambantota is a very good example of what Chinese investment can do to the strategic autonomy of a smaller nation in a form of neocolonialism. China has been literally buying port access across the globe, which will be intensified under the Belt and Road Initiative and its Maritime Silk Road (MSR) component, which have started to look more like the modern version of unequal treaties, with China being the beneficiary.
China has promised around $24 billion worth of investment in Sri Lanka under the MSR. Beijing has been strategically using its financial leverage to gain access and control of critical infrastructure in a number of countries, and Sri Lanka is no different.