COLOMBO — Sri Lanka last Saturday sealed a billion-dollar deal to let a Chinese state firm take over a loss-making port in a move that worries many, including its giant neighbor India.
The long-delayed $1.1-billion sale of a 70% stake in Hambantota port, which straddles the world鈥檚 busiest east-west shipping route, was confirmed by Sri Lanka鈥檚 Ports Minister Mahinda Samarasinghe.
The government used tough laws against industrial action to stop workers going on strike this week to oppose the sale to China Merchants Port Holdings.
India is nervous about China鈥檚 infrastructure moves into its traditional sphere of influence.
鈥淲e have addressed geo-political concerns,鈥 the minister said at a signing ceremony in Colombo.
鈥淐hina has accepted that everything in this agreement will operate under Sri Lankan law.鈥
Negotiations over the deal were held up for months amid opposition from trade unions and political parties.
The minister said last week that several countries had raised fears about the sale.
India and the United States are known to be concerned that China getting a foothold at the deep-sea port could give it a military naval advantage in the Indian Ocean.
Mr. Samarasinghe said that Hambantota, 240 kilometers (150 miles) south of Colombo, will not be a military base for any country.
China Merchants built and operates Sri Lanka鈥檚 only major deep-sea terminal in Colombo, which can accommodate the world鈥檚 largest container carriers.
Executive Vice-President Hu Jianhua said the company wanted to make Hambantota the gateway to expanding economies in South Asia and Africa where it has similar port operations.
鈥(The) business of Hambantota port will be cross border, across the Indian ocean, stretching to the Far East, to Europe and to the globe,鈥 Mr. Hu said.
鈥淪ri Lanka will be well positioned to play a strategic role in the one-belt-one-road initiative of the government of the People鈥檚 Republic of China.鈥
Sri Lanka has signed up to President Xi Jinping鈥檚 signature foreign policy initiative, which aims to strengthen China鈥檚 land and sea trade routes.
India has snubbed Mr. Xi鈥檚 plan and skipped a May summit in Beijing that was attended by world leaders.
Mr. Samarasinghe said Hambantota will be purely a commercial port, but any routine port calls by foreign navies will be regulated by Sri Lanka as in the case with the Colombo port.
Two Chinese submarines called at Colombo in 2014 during the final year of former president Mahinda Rajapakse鈥檚 tenure, angering New Delhi.
The new government of President Maithripala Sirisena turned down a Chinese request in May for another submarine call at Colombo shortly after Indian Prime Minister Narendra Modi visited the island. Mr. Sirisena came to power in January 2015 promising to loosen ties with China after a decade of hefty funding by Beijing under his predecessor. He suspended big-ticket China-funded projects amid allegations of corruption. These have resumed after modifications to the contracts with the previous government.
Besides the $1.12-billion price, the Chinese firm will invest another $600 million to develop Hambantota, Mr. Samarasinghe said.
The port has racked up $300-million losses in the last six years, according to official figures. In addition, the government pays more than $60 million annually to service the port鈥檚 debt. — AFP
