Sri Lanka is an island nation, which makes its ports and airports the entry and exit points to the country strategically important and necessitates elected governments to place this significance above all else.
The importance of the Colombo Port is strategic and commercial, strengthening the need for any Government to weigh risks and odds when sourcing for foreign investors. The Colombo Port is ranked 23rd globally and located in one of the world’s best routes for shipping. What Sri Lanka’s leaders need to ponder is whether India and Japan are entering as investors to make Colombo Port commercially successful or to use the Port as a political watch post?
Sri Lanka must come to terms with the scope and scale of foreign interference and interventions in Sri Lanka. These have been involved and associated with political parties, politicians, rebel movements (JVP) terror movements (LTTE), media outlets and social organisations. We see an increase in faith-based organisations as well.
Geopolitics
We also witnessed their ability to even fund and influence local elections and set about regime change. This was part of the US Pivot to Asia, the QUAD strategy with India which is now a key partner in the Indo-US Pacific Strategy. Thus, the theatre of geopolitics has changed with India being part of Western geopolitical strategy in Asia. A key component of this strategy uses India to forge a bloc of Asian nations to contain and challenge China’s rise.
The MCC-ACSA- SOFA triangular package to Sri Lanka was part of the US and its allies’ game plan. The frequent naval training programs, calling to Port of US and Indian ships to Trincomalee showcase the development of this objective. It is natural, therefore, to wonder if the overall plan is to turn Colombo Port into a base for the two QUAD partners (India and Japan) under the camouflage of developing it.
We must also note that the Indian presence may primarily be to function as a ‘watching post’ for the Chinese built Colombo Port City. Colombo Port must be developed, and it also must take advantage of its strategic positioning. Colombo Port must market itself as the best option for shipping lines. But, what ails all these noble objectives is funding, but worse is the political tug-of-war that comes to play partnered by corruptions putting national interests at risk?
If Sri Lanka’s political leaders realise the importance of Sri Lanka’s strategic positioning, they would have first developed its ports to generate revenue for Sri Lanka’s other developments as these revenues come from foreign currency.
The country has lacked national planning coupled with savvy economic options instead of simply resorting to carrying a begging bowl for loans and accumulating loans by simply paying the interest.
A loan is paid back, but an FDI means the parties making investments are not doing any charity. They expect returns and will stay in the country until they get their returns.
If India and Japan are making investments in the East Container Terminal (ECT) of the Colombo Port, how much are they putting, what is the investment for, what do their investment would not cover, how much cost will Sri Lanka have to bear, against the revenues and how much will go to India and Japan and what is the eventual profit left for Sri Lanka? Is it worth in the end? Will this mean India and Japan that are putting an investment into Sri Lanka’s main Port be occupying the Port for some 40 or more years? This is a period that we may not live to even see India and Japan leaving after feeling satisfied when they have got their investment back.
MOC
Sri Lanka must remember that India and Japan as investors are not going to put any small amount. If there are kickbacks involved to palm the hands of many Sri Lankans, they will also want to recover the amount and will remain in Sri Lanka until they do so.
The ECT is nothing but another Hambantota Port which was given for a 99-year lease. For both deals, the land ownership remains with Sri Lanka. But what is the viability for Sri Lanka commercially? We are unsure about the provisions in the ECT Memorandum of Contract (MOC) agreement.
Will Sri Lanka’s ECT terminal be commercially viable simply with 51% of profits for the next 40 to 50 years?
Have other factors also been taken into account? We are told of a Terminal Operating Company, India handling the operations with. Does this mean, India will bring Indian labour?
The people’s apprehensions are further highlighted by the manner Adani Group has steamrolled itself to become the selected party without a tender process. What makes people cautious about Adani Group is its corruption and mismanagement charges in Australia and India with even Indian farmers publicly protesting against Adani. Australia even has a “Stop Adani Movement’.
Local investors
Under the Yahapalana MOC, India was to construct the ECT and Japan was to provide a $500 million loan through 40 years. What is Japan’s role in the 2020 MOC loan giver or investor? Apparently, Japan is now an investor. If both India and Japan are investors, how will the equipment be bought, will this be set off against the initial investment, how much is it likely to be? Have all these areas been discussed and finalised? Whether loan or investment, India and Japan will be in the Colombo Port for 40 or more years. This is one reason why there are calls to have local investors assist the development of Colombo Port.
The development of the ECT started in 2011 and was set to be completed and operational in 2016. Over 430 metres of the 1,200-metre ECT terminal was completed with a loan obtained from the Asian Development Bank and the Bank of Ceylon. The Yahaplana Ports Minister cancelled an international order for equipment to the ECT resulting in massive undisclosed penalty, wrecking the development of the ECT.
President Gotabaya Rajapaksa tabling his vision in Parliament on January 3, 2020 titled Saubhaghya Dakkma – The Visions of Prosperity and Splendour gave an assurance that “We will never allow other countries to take over our economically significant geographic regions or physical resources”. The commercially viable Colombo Port should not fall into foreign hands for their geopolitical objectives.