27 October, 2020

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How Close Is China To Having Military Presence In Sri Lanka?

By Rasika Jayakody

Rasika Jayakody

The Sri Lankan government’s move to seek a billion dollar loan from China to construct an 88 km railway line from Kurunegala to Polonnaruwa – the hometown of President Maithripala Sirisena – is likely to go down in history as the costliest project the island-nation has ever embarked upon.

The project, incorporated into the ‘Pibidemu Polonnaruwa’ development drive launched by Sirisena in his political backyard, will be carried out by the China State Construction Engineering Corporation Limited (CSEC) and is the latest addition to a slew of Chinese-funded projects currently underway in many parts of the country.

In August this year, the Central Bank announced it had secured a further one billion USD on loan from the China Development Bank on an eight-year loan, which carried a 5.25 percent interest rate with a three- year grace period, contributing further to Sri Lanka’s mounting Chinese debts.

As of July 2018, China had officially announced that its loan portfolio in Sri Lanka was USD 5.5 billion just over a tenth of the country’s total USD 51.82 billion external debt. This ratio, it must be noted, is rapidly increasing.

Last year, Sri Lanka granted a 99-year lease on its Hambantota port to Beijing over its inability to repay Chinese loans r on the USD 1.4 billion project. It is clear, growing Chinese debts will soon swallow many strategic aspects of the country’s economy – but, is it only the economics that will be affected? This is the pertinent question.

Dijibouti, a country of dry shrublands on the horn of Africa, is approximately one-third Sri Lanka’s size with a population of ust under one million and GDP ess than 0.01 of the world economy. One way in which Dijibouti draws strong parallels with Sri Lanka is in the way it is an unquestioning beneficiary of China’s lavish generosity.

The Ethiopian-Djiboutian electric railway line, completed last year—the first of its kind in Africa—was constructed , on a USD 04 billion loan from Chinese banks. The Export-Import Bank of China also funded a water pipeline system to transport drinking water from Ethiopia to Djibouti. The amount of money poured into these projects is astounding, but China can still justify them as strategic investments under the Belt Road Initiative (BRI).

In July this year, Djibouti opened the first phase of the Djibouti International Free Trade Zone (DIFTZ), a USD 3.5 billion project spanning an area of 4,800 hectares.

The USD 370 million, 240-hectare pilot zone coming under the first phase of the project consists of four industrial clusters which will focus on trade and logistics, export processing, business and financial support services and manufacturing and duty-free merchandise retail.

Parallel to these massive projects, China also set up its first overseas military base in Dijibouti. The base is located a few minutes’ drive away from the commercial port at Doraleh, another Chinese-funded project in the country. In Dijibouti, China made it abundantly clear that almost all of its lavish infrastructure projects on the BRI route are intertwined with its military interests. This is to indicate there’s an underlying military aspect to the Belt Route Initiative.

After Dijibouti, China is well-positioned to construct its second overseas military base in Gwadar, Pakistan, which Beijing considers a key part of its ‘String of Pearls’ strategy for the Indo-Pacific. Other “pearls” in South Asia include Myanmar’s Kyaukpyu port and Hambantota in Sri Lanka.

South China Morning Post (SCMP), in an article on Sunday, quoted Zhang Jie, a researcher at the Chinese Academy of Social Sciences, who wrote in 2015 about the concept of “first civilian, later military”, in which commercial ports would be built with the goal of slowly being developed into “strategic support points” that could “assist China in defending maritime channel security and [control] key waterways”.

It also explains how China is using port investments as vehicles through which the country can cultivate political influence, constrain recipient countries and build infrastructure meant for military as well as civilian use to facilitate Beijing’s long-range naval operations.

Chinese media has already claimed that the country will increase the size of its marine corps from about 20,000 to 100,000 personnel to protect the nation’s maritime lifelines. This four-fold increase in the size of its maritime corps indicates China is about to enter into a major military expansion drive running in sync with the BRI.

It is against this backdrop that we should analyze the manner in which China positions itself in and around the Colombo and Hambantota ports, and its massive investments in infrastructure development in many other parts of the country. A careful examination of these projects signal that Beijing is rapidly moving towards the possibility of military positioning in Sri Lanka, all the while pushing the government against the wall.

Prime Minister Ranil Wickremesinghe, in a media statement a few months ago, said in no uncertain terms,there would not be a Chinese military base in Hambantota – a port whose operations are fully handled by China. But it is not clear how Sri Lanka will be able to keep its nose above water.. Sri Lanka’s bargaining power has been seriously compromised with the number of Chinese-funded projects springing up in various sectors from railway to rural infrastructure and plantation.

Does Sri Lanka have an alternative? No. Although India is still a ‘counterbalance option’ its pockets are not as deep as China’s and it cannot fight the ‘might’ of BRI. For Sri Lanka, it is a matter of balancing short and mid-term targets against the possibility of a larger threat of Chinese military presence in the country. Unfortunately, Colombo is now playing the game with very limited options.

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Latest comments

  • 3
    1

    Good!

    • 2
      2

      China did not crash Greece, Argentina or Haiti!
      It is the Washington Consensus IMF-WB with Neo Con Millennium Challenge Corp, (MCC that Drafts Bond Scam Ranil’s Vision 2025 and policy), Japan, ADB (also owned and operated by US-Japan) with their out dated Market Fundamentalism, deregulation and neoliberal reforms to crash the Lankan economy and manufacturing sector in Lanka and Fake Development to Benefit the Global 1 percent Economic Development model that are playing with Lanka’s debt and speculating with currency de-valuation
      Japan-US are larger SL debt holders and now putting screws on Lanka in their Cold War on China in Indian Ocean.
      This guy Rasika must be in pay of MCC and Neo Con Advocata that is promoting the myth that Lanka is not an Open Economy!
      Just look at the Toyotas, Rager Rover, Audi, BMWs and MERCS on the road and say Lanka is closed for business. Rather it is flooded and crippled by foreign goods and debt and open import market that is crippling local industry as a result of neoliberal refoms!

      • 6
        0

        Dinuk/Dodo

        Could you explain what exactly you mean by “Washington Consensus IMF-WB with Neo Con Millennium Challenge Corp”.

        If you can’t please feel free to ignore me as I will continue to seek answers from elsewhere.

    • 5
      0

      Rasika Jayakody

      “Although India is still a ‘counterbalance option’ its pockets are not as deep as China’s and it cannot fight the ‘might’ of BRI.”

      Leave the worrying to the Hindians at Delhi Sultanate.
      Little islanders should stop believing in their own clever dick diplomacy which has brought immense misery to the poor people of this island.

      “Unfortunately, Colombo is now playing the game with very limited options.”

      Being clever dicks, Colombo has always played stupid which resulted in misery for millions of people. The only solution is stop being smart ass patriotic clever dicks and start treating own people well.

      Isn’t it about the local thugs preferring the protection of one or the other bigger thug. Some bullies in this island had tried it and failed in the 1970s, 1980s, 1990s, and 2000s, ………… Weeping widow went one step further, dreamed of making the Indian ocean ‘Nuclear Free Zone’ while killing innocent youth in this tiny island and starving the rest. What a stupid hypocrite these leaders were/are.

      And Sirisena sends Dayan to manage complex International diplomatic issues in Moscow. As a result Russia and Turkey have agreed to cooperate on Syrian conflict.

    • 3
      0

      If Mahinda family come back again China Military presence is 100%.

  • 4
    0

    China has already owns part of southern Sri lanka . It is said land lease is for 99 years …
    How clever is china to have a big chunk of land in Sri Lanka near to sea and access to all parts of Indian ocean.
    Why do you think that China need a base now ?
    It does not need approval Sri Lanka parliament to build its base in Sri Lanka as and when it feel that he need to protect its business interest ..
    I do not know what former government did was a wise thing to do ..
    China trapped us in financial difficult in expectation that we will be forced to sell out land .
    A colleague in my work place told me China did same thing to some African countries too.
    It is playing with Pakistan and Bangladesh with that ..
    It gives a big amount of money to poor countries in the pretext of helping but hidden agenda is get back money with huge interest ..
    Malaysia knows this and avoided that ..
    If war breaks out between India and China ..
    We will pay the price for that ..
    We will be sandwiched between to giants fighting ..
    We will be used by both..
    Now Sri Lanka is part of indo- Chinese geopolitics games ..
    May God protect us from the evil of war of any kind around us ….
    May God protect us from invasion of any outsiders .
    May God bless Sri Lanka and protect it from evil eyes of any one ..

    • 1
      2

      Come-on lets give-up the Sri Lankan Rupee and take on the Chinese Ruble. Very soon Chinese will one of the main languages taught in schools.

      If MR has his way he will even under cut his good friends the Chinese and sell to the Indians. To be fair that would be an easier swap.

      • 3
        0

        Burt

        Man you are getting old.
        Ruble is Russian currency.
        Chinese currency is yuan.
        China’s revolutionary name for it currency is “renminbi” – “the people’s currency” and being used in high-flying financial circles.

    • 1
      1

      No country has ever given loans to Sri Lanka without strings. Both IMF, World Bank have conditions that bind poor countries politically and economically to their masters. They expect far more than China does in return for their paltry loans at higher interest rates. The Silk route initiative is a good initiative, it dates back over hundreds of years and served many countries until the marauding western nations destroyed it to benefit their sea going vessels. Of course, the western countries are not happy about the Silk Road initiative as trade between Asian nations will flourish without their involvement. They want all international trade to go through their middlemen, their banks, insurance and in their ships. There is a lot of scaremongering by western media and their governments and cohorts. If the Chinese loans are bad as they say for African and Asian countries, all they have to do is pump money to them at a lower interest rates without political conditions. Will they? No. They are broke. And, they do not want Africa and Asia to flourish. China has been a good friend to Sri Lanka. Leave the fear mongering and the dishonest suggestion of Chinese bases in Sri Lanka to western media. It would be disappointing to read such propaganda written by a Sri Lankan but, there are people who can be bought for a few rupees to do anything.

  • 2
    0

    The writer’s question is very easy to answer. How close? Very close. After that what? China’s very real military presence. If Sri Lanka is reluctant, then a few thousand hectares on lease on the Hambantota model.

    The PM has seriously considered saving half a billion dollars through the strategy of import duty increase for import reduction. If the PM saves half a billion, why can’t I, higher in precedence and protocol dissipate One Billion Dollars as President? so runs the logic.

    Climb one span and descend one cubit , runs a Tamil proverb.

  • 2
    0

    I do not think Lankans have any idea about what kind of game China is up to.Chinese strategies are of long term , well planned for years , willing to take risks and be patient .No one seems to have any idea how Chinese banks function in tandem with the government / The party/and policies. The main Banks in China including china construction, Bank of china, Industrial bank, Merchant bank and so called private investments are all regulated and under the grip of The Government, They are proxies who do the government bidding. If things/debt goes wrong then the government will step in to bail out.The govt regulates all loans given within and outside of country. Though they are public and stocks can be bought in international markets most of there books are not transparent.The details of their annual financial statements are hard to come.The CEO, s are politburo members of the party,Anyone who have been involved with Chinese stocks knows the hidden risk.I have been following these banks for over 10 years since it was open to public. In US it is available (in tertiary market)as CICHF,BACHF, IDCBF …..etc which are not rigidly scrutinized by commission.

  • 1
    0

    I see people who some or another find the world bank, IMF and other international financial bodies at fault for all our problems. For me this sounds like a person with Lung cancer blaming the shop guy for selling smoke to him , though may not be the appropriate example to site. People need to remember there are countries which have been helped and recovered from financial crisis (caused due to own fault)in past. Ireland and Greece are two countries will thank them for the needed help. The difference is these institutions when lending money are taking necessary steps to protect their loans just like the banks do. And one of it is the austerity measures. But countries like Lanka will not like it because of free bees are vital for political survival. But every bank has right to protect their loans and recover these loans.No bank is going to be happy seeing someone borrowing money to give free bees and having no plans to pay back.

  • 1
    0

    (cont) Where as Chinese banks do not care what you do with their loans, They can talk you into white elephants so to double their profits by giving employment to their people, send materials and seek political advantage(multiple birds with one stone). They do not bother with your plans because their goal of lending is setting the trap(more you borrow will be deeper the trap) so that a puppet regime /country is established.The gains can be political (monitoring/hacking/surveillance ) financial (setting up business, infiltrating into finance/economy) or setting up a base, silk route scheme, stealing natural resources (in Africa), expanding their garment/toys/manufacturing sector by proxy, dumping goods, get access for china telecom, internet trading, casinos etc….etc.

  • 1
    0

    As soon the financial recession took control in 2009, The first thing China proposed was to start a fund of their own with BRIC + other emerging countries (Indonesia, South Africa ). Due to world wide financial melt down (including the US ) the cash starved World bank and IMF were not adequate in addressing the dire situation. Due to stagnation in economy others backed out and China decided to go alone. China took advantage of the crisis in laying the Debt Trap under pretext of financial aid.It is a well known fact that China has been manipulating its currency and at the same time lending to others in $$$$. When Obama administration banned elastic garments from China ( due to unfair trade practices) China still managed to dump the goods by proxy from Vietnam and Cameroon islands where they had moved there machinery and man power. This is China for you in nut shell.

    • 2
      0

      chiv

      A percipient comment, placing China’s political strategy in very correct perspective.

  • 2
    0

    The Shylockian intent is getting exposed. Countries are learning from our mistakes. For example Myanmar has shelved the Kyaukpyu port after looking at our Hambantota fiasco. And this by the Burmese Junta which forcibly chased out Rohingyas for the land they occupied. The Junta is filthy rich but their greed is insatiable.
    .
    Rasika argues convincingly that troops may be stationed in our soil. One has to hope that they will not dare because India is too close.

  • 1
    0

    comparing to Sri Lanka to Dijibouti!!!!
    Goodness Gracious!
    “Sri Lanka Miracle of Asia” goes out of the window?

  • 0
    0

    China is an emerging superpower. It still lags the West by a decade or so in military and economic capacity, but the gap is surely closing. When the petrodollar world order consisting of USA & OPEC collapses, someone will have to fill the gap. China is an ideal candidate. So Sri Lanka should definitely increase its ties with China.

  • 0
    0

    Lester agreed, But in anticipation US has been taking necessary steps to be less dependent on Petrol/crude oil and there by on countries which are supplying these resources. I believe one third of light vehicles has been gradually replaced by electric or hybrid sources. The plan is to eventually replace all vehicles. Also US economy may be dragging but will never come to stand still.Though most of manufacturing jobs have been outsourced the investors continue to finance these out side companies in order to reap profits. For example telecom,automobile and petroleum companies invest heavily on out side companies ( rivals or competing) to take away their share of profits.So it will be a win win situation. By outsourcing you get cheap labor, by selling end products make a profit and by investing on the outsourced companies they not only have a hold/ unrestricted supply of end products but make more profits.Where as China in now more and more dependent on others in need of resources.(metals, fuel,iron,aluminium —-etc)

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