Colombo Telegraph

Enter The Dragon: China Bankrolls Sri Lanka’s Post-War Development

By Marwaan Macan-Markar

Marwaan Macan-Markar

Hambantota, Sri Lanka – This small town with its narrow streets and slow pace of life on Sri Lanka’s southern coast has always belonged to the geography of off-beat trails. Visitors drawn to its solitary hotel are largely day-trippers stopping to take a quick look at Hambantota’s quaint, yet colourful fishing harbor and the vast stretches of the nearby salt pans.

But when it did make the news, headlines about tragedy and death on a massive scale dominated. The powerful Indian Ocean tsunami of December 2004 pummeled this stretch of beach, leaving a trail of bodies in the thousands and reducing communities already laboring under poverty in ruins.

Before that, in the late 1980s, the surrounding areas were added to the list of the country’s “killing fields.” Then, government troops were locked in a brutal battle to suppress a Marxist uprising led by disaffected youth. Headless bodies and torched corpses littered roadsides.

But with the rise of a native son from this region to the highest political office in the land – President Mahinda Rajapaksa – Hambantota and its vicinity have come to symbolise the direction in which this South Asian island is heading. Backhoes, bulldozers and steamrollers are at work, replacing large swathes of forest with broad highways.

An international conference hall is emerging out of a barren landscape. A state-of-the-art international cricket stadium, with floodlights for night games, has already been built in a stretch often frequented by wildlife. Billboards on the roadside announce other development plans to create what one local resident called “Sri Lanka’s future city.”

And that “city” already has two international gateways even before it emerges: the newly built Magampura Mahinda Rajapaksa Port and the Mahinda Rajapaksa International Airport.

The first phase of the port, which began operations in late 2010, has succeeded in attracting a trickle of vessels on transshipment routes – most of them cars made in India due for markets in Africa.

The government, however, has ambitious plans, given Hambantota’s strategic location in the Indian Ocean: 10 nautical miles from one of the world’s busiest shipping lanes, with some 70,000 vessels traversing the nearby waters annually. Over four construction phases, fueling and repair facilities for ships and industrial zones are being built to cater to the global sugar, cement and fertilizer markets.

These twin achievements – the first phase of the port costs 320 million U.S. dollars, while the airport costs over 120 million U.S. dollars – underscore how increasingly dependent the Rajapaksa presidency is on the Chinese for its development dreams.

They are among a growing list of infrastructure and development projects funded by loans from Beijing. In 2012, for instance, China’s financial commitment to Sri Lanka included 1.055 billion U.S. dollars in loans and 16 million U.S. dollars in grants, leaving the island nation’s closest and powerful northern neighbor, India, trailing behind with 443 million U.S. dollars in loans and 257 million U.S. dollars in grants.

But other figures reveal more: it is only after Rajapaksa was elected as president in 2005 that Beijing’s interest in Colombo increased dramatically. Of the roughly five billion U.S. dollars in loans and grants made by China to Sri Lanka between 1971 and 2012, some 4.76 billion U.S. dollars, or 94 percent, has been pumped since 2005.

Among the more striking are a coal-fired power plant along the northwestern coast and a giant performance hall, built in the shape of a lotus pond, in Colombo.

“Those numbers released by finance ministry tells it all about Sri Lanka’s new relationship with China,” an economist observed. “The projects coming up in Hambantota bring this bond out. Other leaders also sought to build up their local constituency, but Rajapaksa is taking it to another level with Beijing’s bags of cash.”

The beginning of this relationship between Beijing and Colombo is rooted in the war machine that the president and his younger brother, Gotabhaya Rajapaksa, the hawkish defence secretary, started to build to confront the Tamil Tigers.

Within days of Colombo announcing in March 2007 that it had leased land to the Chinese to build a new deep-sea water port in Hambantota, the Rajapaksa government announced that it would mount an assault on Tiger-held territory in the country’s north.

The following month, Sri Lanka signed a secret deal for 37.6 million U.S. dollars in military hardware to bolster its army and navy, according to a report that appeared in Jane’s Defence Weekly. The military tranche of Chinese assistance to Colombo included special radar equipment for a base outside Colombo, F-7 fighter jets and weapons for ground troops.

By the time the war ended in May 2009, China had become not only an important military supplier to Sri Lanka and a protector of the country from international opprobrium, it had emerged as the country’s leading provider of foreign assistance contributor, dethroning Japan, who had for decades been a key lifeline for development programmes.

This shift coincided with revelations among international security analysts that Beijing, with an eye on its need for energy security, had begun building a so-called “string of pearls” – a network of ports along the routes taken by its oil tankers and cargo vessels carrying raw materials from Africa and the Middle East to drive the Chinese economy. The Hambantota port emerged among these “pearls,” as did deep-water ports in Pakistan, Bangladesh and Myanmar.

“Of course there is another way of looking at these pearls: an attempt to surround India,” said a diplomat familiar with South Asian affairs. “India is naturally unnerved by this, and the Sri Lankan government needs to be conscious of New Delhi’s concerns given the geo-political implications.”

In public, at least, the Rajapaksa government appears to be making the right sounds to assuage India on this front. Regular visits by senior ministers to New Delhi give the impression that Colombo will not put all its diplomatic eggs in the Chinese basket.

“The government has a few arguments to use in its favour in turning to China,” says an international development analyst. “The country has now moved into the rank of middle-income countries, so it is ineligible for the previous financial assistance. And Sri Lanka is more interested in bi-lateral than multi-lateral assistance.”

*Marwaan Macan-Markar, a Sri Lankan journalist, is a foreign correspondent who has been reporting from Southeast Asia since 2001, following a posting in Mexico City. This dispatch from Hambantota, Sri Lanka, was published in a June issue of The Edge Review, www.theedgereview.com, a new Southeast Asian magazine launched in Kuala Lumpur

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