How China got Sri Lanka to cough up Hambantota Port – Report
China’s acquisition of the strategic Hambantota port from Sri Lanka has given it “control of a territory” just a few 100 miles off the shores of India, highlighting its “debt trap” and ambitious use of loans to gain influence around the world, a media report has said.
An investigation by New York Times about Sri Lanka’s handover of the Hambantota Port to China in December 2017 illustrates how China turned an ally’s struggles to its strategic advantage. The report says feasibility studies had found that the port would not work and “frequent lenders” like India had refused to provide loans or assistance for the port, developed during Sri Lanka’s president Mahinda Rajapaksa’s rule. “However, every time Rajapaksa turned to his Chinese allies for loans and assistance with the ambitious port project, the answer was yes,” it says.
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, it says. At a time when tens of thousands of ships were passing by along one of the world’s busiest shipping lanes, the port drew only 34 ships in 2012, it said.
With Rajapaksa — whose campaign aides received direct payments from the Chinese port construction fund — being voted out of office in 2015, the new government struggled to make payments on the debt he had taken on for the port development. “Under heavy pressure… the government handed over the port and 15,000 acres of land around it for 99 years in December last year,” it says.
“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 report said.
The debt deal which led Lanka to hand over a strategic port to China also put focus on some of the “harshest accusations” about President Xi’s signature OBOR drive: that the global programme amounts to a debt trap for vulnerable countries around the world, fueling corruption and autocratic behaviour in struggling democracies
The New York Times said that 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.
The report claims that during the 2015 Sri Lankan elections, “large payments” from the Chinese port construction fund flowed directly to campaign aides and activities for Mr. 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.
“As the January election inched closer, large payments started to flow toward the president’s circle.”
“At least $7.6 million was dispensed from China Harbor’s account at Standard Chartered Bank to affiliates of Mr. Rajapaksa’s campaign, according to a document, seen by The Times, from an active internal government investigation. The document details China Harbor’s bank account number — ownership of which was verified — and intelligence gleaned from questioning of the people to whom the checks were made out.”
“With 10 days to go before polls opened, around $3.7 million was distributed in checks: $678,000 to print campaign T-shirts and other promotional material and $297,000 to buy supporters gifts, including women’s saris. Another $38,000 was paid to a popular Buddhist monk who was supporting Mr. Rajapaksa’s electoral bid, while two checks totaling $1.7 million were delivered by volunteers to Temple Trees, his official residence.”
“Most of the payments were from a subaccount controlled by China Harbor, named ‘HPDP Phase 2,’ shorthand for Hambantota Port Development Project,” according to the The New York Times article.
(Source: The New York Times)
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Once upon a not far off time the New York times ran a spate of articles when the Rajapaksa government fought a war of attrition against terrprist Velupillai Prabhakaran. The New York times correspondent that spun the yarns from New Delphi was based on reprts concocted by reporters that congregated at consular cocktail parties.
Obviously his particular reporter has been able to dig into information denied to the gocernment agencies and the details defy facts like most of the images published when the government fought off the errorists.
Chinese aid unlike the IMF that do not come in dollars and banks generally payout in local rupees. Chinese bilateral trade does not involve dollars. Further most of the construction work was done by Chinese and they come with their equipment. Like most other Chinese aid extending from peking globally accounts for billions of dollars earned through trade with the US that had run up to by various accounts to trillions of dollars and the prsent government tried to mine agreements signed between rajapksa and the Chinese government and transactions between government is chanelled through the Cenral bank and Central bank disburses these through SDR in rupees. It is strange that Standard chartered bank with limited operations has produced evidenve which is nothing more than a smear campaign,. designed to discredit the chinese and the Rajapaksas.
Its amazing how the New York times has decided to investigate the handing over of the Hambantota Harbour to the Chinese when it is none of there business. Another smear campaign from MY3 and his henchmen. They simply can not win an election on there own merits. Only by blaming every one else around them.
So How come all these countries who are worried about handing over the Port to the Chinese did not come onboard to stop this happening . And how come none of these meddlers could not assist SL financially to keep the ownership of this port where it belong. This report seems to be justifying why the port was handed over to China without any blame to the culprits who did the deal. Definitely an anti MR report.. I hope our Sri Lankans will not be hoodwinked again by the baby faced Fox.
If anybody in SL bothered to read the original article written by this woman for the New York Times, The third chapter is: “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.”
Then most certainly Rajapaksha had done the right thing by building the port near where tens of thousands of ships passing by along one of the world’s busiest shipping lanes. The question is why only 34 ships has used it while at the top of the NY times article there is a photo of huge container ship fully laden with containers with the title “A cargo ship navigating one of the world’s busiest shipping lanes, near Hambantota, Sri Lanka, in May.” . That means like Mattala airport this harbor has no problem with large heavy ships using it. The reason many ships not using it must be the bad, false publicity Rajapaksha’s political enemy’s spread that this harbor is too shallow, with huge rocks at the bottom not suitable for large ships.
Therefore if it is a national waste of money, the responsibility and the blame should fall on the UNP and the other selfish parties and individuals in Sri Lanka. Rajapaksha had a plan and a vision for Sri Lanka. Do the current dumbos running the country has any plan for SL other than complaining about Rajapaksha’s fault for them being unable to do anything worthwhile?
I have one message for those voted for the current regime to make things better for the country. Put the rubbish in. You will get the rubbish out. Don’t complain.
The other question is if the Hambantota harbor is such a useless project, why China spent another 584 million US dollars. It is because by looking at what Chinese are capable doing – from building nuclear plant in the UK to own most of the US debts- deepening the Hambantota harbor will be a piece of cake. Actually if the LTTE was still in SL, the SL government should have given the contract to them. With the explosives they had, they could well have done that.
China spent all the money on this project (on loans to GOSL at higher than commercial interest rates) because of the foothold in the Indian Ocean on Belt and Road expansionary initiative !
Unfortunately, the Chinese are the only ones who have money; the financing capability of Europe and Americans has dried out.
So, the Chinese are using their wealth to pursue global expansionary initiatives.
What a set of mugs we have, both in the Blue and Green Leaders.
You hit the nail on the head, mate.
At every election, we, the voters of Sri Lanka, go to the Polling Booth and elect Blue and Green and Red and Tiger National Alliance (TNA) leaders to the big house by the Diyawanna Oya.
99.999 percent of those elected by us, the voters of Sri Lanka, are corrupt to the core; they are either drug dealers, big business in Dubai including a couple of 5 star hotels, playboys conducting night races in Kandy, Seven Eleven Chain operators in the US , Californian Palace owners, etc etc; the primary and common characteristic of a Sri Lankan politician and their hangers-on is the abject desire to increase personal wealth through corrupt means and exploitation of the Sri Lankan Citizen.
To be honest, these political elements dominating major parties cannot be eliminated.
However, we, as the voters of Sri Lanka, could collectively decide to turn the tables on these utterly corrupt, dead-loss, miserable, corrupt, beggarly leaders (good examples of the scum of the earth) of both genders, many wearing Lilly white clothes (worshipping statues and Gods they don’t believe in, for public consumption) with others in Grandiose shawls around their thick and inflexible necks, from all leading political parties.
That’s a strong but positive and determined comment.
All long as we keep electing corrupt to the core comedians from the Blue, Green, Red and Pohottuwa Parties and the Tiger National Alliance (that’s an apt name for them !!!!), we will be in the great sh**hole called the ‘Emerald Isle’ and ‘Wonder of Asia’.
Keneeranjala, when you walk, I and many many other SL Citizen Voters will join you!
China will take more than it gives.