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Nation special report
LONDON: An eye-opener report on Chinese investment in various countries caught the world attention on Wednesday and all concerned nations were stunned over the details of Beijing plan. The New York Times’ report was later highlighted by other world media including CNN, Economic Times and Toronto Star.
The report which outlined the strategy of grabbing land against loans by the Chinese Government is a matter of great concern in Pakistan with reference of Chinese Pakistan Economic Corridor (CPEC) project, an unprecedented huge economic plan in the history of two countries. Doubts, apprehensions and questions have started raising in Pakistan and media, quoting the report, have expressed trepidations whether Pakistan would also suffer alike Sri Lanka.
Syed Mushahid Hussain,former Chairman, Senate Foreign Relations Committee, has shrugged off these apprehensions and said that Pakistan’s case is different. China has invested in various projects and has not given the money as loan. So the question of occupying the land or area does not arise.
The astonishing report is related to Sri Lankan port of Hambantota where China invested mammoth amount to develop the whole area. According to details, over years of construction and renegotiation with China Harbor Engineering Company, one of Beijing’s largest state-owned enterprises, the Hambantota Port Development Project distinguished itself mostly by failing, as predicted. With tens of thousands of ships passing by along one of the world’s busiest shipping lanes, the port drew only 34 ships in 2012. And then the port became China’s.
Mr. Rajapaksa was voted out of office in 2015, but Sri Lanka’s new government struggled to make payments on the debt he had taken on. Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December.
The transfer gave China control of territory just a few hundred miles off the shores of a rival, India, and a strategic foothold along a critical commercial and military waterway. China-Backed Ports China has helped finance at least 35 ports around the world in the past decade, according to a Times analysis of construction projects. The case is one of the most vivid examples of China’s ambitious use of loans and aid to gain influence around the world—and of its willingness to play hardball to collect. The debt deal also intensified some of the harshest accusations about President XiJinping’s signature Belt and Road Initiative: that the global investment and lending program amounts to a debt trap for vulnerable countries around the world, fuelling corruption and autocratic behavior in struggling democracies. Months of interviews with Sri Lankan, Indian, Chinese and Western officials, and analysis of documents and agreements stemming from the port project, present a stark illustration of how China and the companies under its control ensured their interests in a small country hungry for financing. During the 2015 Sri Lankan elections, large payments from the Chinese port construction fund flowed directly to campaign aides and activities for Rajapaksa, who had agreed to Chinese terms at every turn and was seen as an important ally in China’s efforts to tilt influence away from India in South Asia.
The payments were confirmed by documents and cash checks detailed in a government investigation seen by The New York Times. Though Chinese officials and analysts have insisted that China’s interest in the Hambantota port is purely commercial, Sri Lankan officials said that from the start, the intelligence and strategic possibilities of the port’s location were part of the negotiations.
Initially moderate terms for lending on the port project became more onerous as Sri Lankan officials asked to renegotiate the timeline and add more financing. And as Sri Lankan officials became desperate to get the debt off their books in recent years, the Chinese demands centered on handing over equity in the port rather than allowing any easing of terms.
Though the deal erased roughly $1 billion in debt for the port project, Sri Lanka is now in more debt to China than ever, as other loans have continued and rates remain much higher than from other international lenders. CNN report When Sri Lanka’s government first looked to develop a port on its southern coast that faced the Indian Ocean, it went not to China, but to its neighbour, India. Then Sri Lankan Prime Minister Mahinda Rajapaksa said he urgently needed funding to transform the harbor of his home town and asked Indian officials for help with the project. New Delhi showed little interest in funding a costly and massive port construction project in the underdeveloped fishing village of Hambantota, a district that had been crushed by the Indian Ocean tsunami in 2004.
“It was offered to India first. I was desperate for development work, but ultimately the Chinese agreed to build it,” Rajapaksa said in an interview with Singapore’s Straits Times in 2010. Beijing invested $1.5 billion in 2010 to build the port. The venture was considered economically unviable and indeed, in the years that followed, the port sat empty and neglected, and Sri Lanka’s debt ballooned. But India’s economic foresight might have cost it in terms of strategic geopolitics, since the debt incurred on the port and the surrounding infrastructure undertakings now belong to its great rival.
China’s official licensing of the port in December last year gives it yet another point of access over a key shipping route, and the prospect of providing it with a sizeable presence in India’s immediate backyard and traditional sphere of influence, bringing China closer to India’s shores than New Delhi might like. Moreover, Sri Lanka’s decision to sign a 99-year lease with a Chinese state-owned company for the Hambantota port to service some of the billions it owes to Beijing has some observers concerned other developing nations doing business with China as part of China’s One Belt One Road initiative might fall into similar financial straits.
A trap, they warn, that may well have them owing more than just money to Beijing. “China is, in many cases, the only party with the interest and the capital to deliver on these projects,” said Jeff Smith, a research fellow on South Asia at the Heritage Foundation in Washington DC. “The relevant question for everyone is: at what cost?” Chinese strategy China has for decades invested in Sri Lanka, particularly during moments in recent history when much of the international community held off. As the European Union and the United States sought to punish Sri Lanka over human rights abuses during the decades-long civil war between government forces and the Tamil Tigers, China acted on its behalf diplomatically at the United Nations. It also supplied the Rajapaksa government with military aid and it promised to spend to rebuild the country’s damaged infrastructure. India had also sent in military help, but nowhere near the levels Beijing dispatched. The civil war ended in 2009. Between 2005 and 2017, China spent nearly $15 billion in Sri Lanka. By comparison, the International Finance Corporation, which is part of the World Bank group, says that between 1956 and 2016, it invested over $1 billion. Jeff Smith points out that along with the Hambantota port investments, Beijing loaned Sri Lanka $200 million in 2010 for a second international airport and a year later a further $810 million for the “second phase of the port project.” There was more.
$272million for a railway in 2013 and more than $1 billion for the Colombo Port City project, ventures that hired mostly Chinese workers(one Sri Lankan report put the number of Chinese workers dedicated to projects in 2009 at 25,000), and all with money Sri Lanka could barely afford to repay.