New York Times Report “How China Got Sri-Lanka to cough up a port”: A counter narrative
- Pakistan and Sri-Lanka have different political setups, circumstances, geo-strategic importance and economic realities
- The major difference between the two ports is that
- Hambantota port was given to China by Srilanka for political reasons as Srilankan President Rajapakasa also established a cricket stadium and an international airport because Hambantota happened to be his hometown
- China conceived the idea of CPEC and Gwadar and Pakistan became a partner in view of its potential
- Unlike Hambantota, China Pakistan Economic Corridor (CPEC) is spread throughout the country, and through Gwadar Central Asian states will gain access to African and Middle Eastern Markets
- Pakistan joined CPEC purely due to economic considerations because of a crumbling economy and an ever prevalent energy crisis
- Out of the $ 62 billion investment in CPEC, 35 billion is a Foreign Direct Investment (FDI). Financing is arranged by the Chinese companies to service these debts from their own earnings
- The Infrastructural projects are based on concessional loans arrangements with interest rates of approximately 2% that will generate economic activity and adequate revenues to repay these loans
- The CPEC linkage with Central Asia will generate economic activity in the entire region, unlike Hambantota which has no such potential or dimensions
- There was no demand from businesses in Hambantota port, unlike Gwadar where there is demand from both Central Asia, Middle East and Europe.
- 26 countries are part of the Belt and Road Initiative (BRI) of which CPEC is a part, unlike Hambantota which was a sole venture.
- The feasibility studies of Hambantota were not economically viable and the port was unable to break-even unlike Gwadar which has a national consensus, both economically and politically.
- Important to note that another reason for failure of Hambantota was that Rajpakasa was defeated in the presidential elections in January 2015 – there is national consensus on development of CPEC in Pakistan and no matter which party wins the elections CPEC will remain operational.
- The Gwadar International Airport and Gwadar Vocational and Technical Training institute is a grant provided by China to Pakistan.
- The establishment of Gwadar Free Zone is under a concessional-loan arrangement at below market interest rates that will generate significant economic activity, hereby increasing growth.
Why Hambantota was given to China
- Rajpakasa was defeated in the presidential elections in 2015, which according to international observers was orchestrated by former Sri-lankan president Sirisina with US support to bring a pro-US regime
- The pro-US regime in the country under Sirisina suspended all projects undertaken by Rajapakasa, including building a harbor, an international airport in Hambantota and the Colombo Port City.