China hedges its bets

hambantota-portHaving suffered a great deal by putting all its eggs in the basket of the Sri Lankan government led by President Mahinda Rajapaksa between 2010 and 2014, China has now adopted a balanced Sri Lanka policy under which it will engage the opposition as well as the government of the day.

This change is reflected in the official invitation extended to former President Mahinda Rajapaksa to visit China. The visit is currently on.

A beleaguered Sirisena-Wickremesinghe government, abjectly dependent on China to rescue it from a US$ 8 billion debt trap, has been forced to facilitate Rajapaksa’s visit after mocking it at first.

It was amazingly smooth sailing for Beijing when, after Eelam War IV in 2009, the then President Mahinda Rajapaksa decided to go for Chinese loans to meet the infrastructural needs of his country. The Chinese not only obliged him with huge loans but unquestioningly put up facilities which could well turn out to be White Elephants. However, the Chinese saw to it that the price tag was high, with an interest of 6.5 percent.

The magnitude of the projects, their irrelevance, and the humongous cost, expectedly received heavy flak and became one of the main issues which led to Rajapaksa’s defeat in the January 8, 2015 Presidential election.

The successor Sirisena-Wickremesinghe coalition government promptly suspended the Chinese projects to review and renegotiate the terms. Beijing also came under criticism from China’s own think tanks for dealing only with Rajapaksa, neglecting the opposition and assuming that Sri Lanka will be politically stable with no possibility of its abandoning its traditional pro-China policy.

Beijing realized the need for a change in policy. But first, it had to get the existing projects going because much money was locked up in them. Chinese state owned companies doing the projects were losing millions of dollars as a result of the suspension. Taking a soft line, China agreed to the review of the projects.

But fortunately for China, it did not take the Sirisena-Wickremsinghe government very long to realize that no other county other than China will give it money for the asking, or help make the projects yield an income. Western nations with which the new regime has friendly ties, came with ideas, but not money.

With minor adjustments, the projects under construction were revived. But the completed US$ 1.5 billion Hambantota port and the Mattala airport had to be made viable.

No country other than China had an interest in doing so. Sri Lanka suggested that the China convert the debt in Hambantota port into equity, taking 80 percent of the stake in addition to four exclusive berths already given. China was also offered 15,000 acres of land in Hambantota to set up an Economic Zone to build a suitable hinterland for the port. The offer as regards the empty Mattala Port is not clear.

Seeing Colombo trapped, Beijing began to play hardball. The Chinese Ambassador has made public statements criticizing the Sri Lankan attitude, the work ethic, the non-functioning systems and inconsistency in policies. And while government ministers are saying a deal has been struck, the Chinese are ominously silent.

It is in this context that China’s invitation to former President Rajapaksa assumes importance. Diplomats said that China has started hedging its bets. They take with a pinch of salt, the Chinese Ambassador’s declaration that China’s policy is only to deal with the government of the day. .

It makes sense to cultivate Rajapaksa now, as his Sri Lanka Podu Jana Peramuna (SLPP) has significant grassroots support, second only to the UNP. In fact, the recent rural cooperative society elections indicate that the SLPP is number one in the Sinhalese-speaking rural areas. And it is fear of losing to the SLPP which is making the government postpone the local bodies’ elections.

Asked if China, like India and the West, will try to influence Sri Lankan domestic politics, D.Siddharthan MP of the Tamil National Alliance (TNA), pointed out that the Chinese envoy has met the TNA and TNA MPs have gone on sponsored trips to China. China has been regularly taking Sri Lankan journalists and MPs on tours.

Former Sri Lankan Ambassador to the UN in Geneva, Dr.Dayan Jayatilleka, said that Rajapaksa’s visit to China is “very significant” and that Beijing is seeing him as “a player in the Asian region.”

Jayatilleka also pointed out that China had not abandoned the Rajapaksas after the January 2015 defeat.

“China had kept in touch with Gotabaya Rajapaksa (the ex-President’s brother and former Defense Secretary).Significantly it had invited him to participate in a defense seminar. (NIE)

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