New York Times Report ‘How China Got Sri-Lanka to cough up a port’: A counter narrative

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.

Source: PCI