Chinese investments bundled in the vortex of local politics of Sri Lanka and stayed in the lurch when a friendly regime was swept
The lively 30-something engineer at the port of Galle, pinpoints the benefits of this industrial port complex in the southeast of Sri Lanka about 240 km from the capital Colombo. "There is a massive demand for transshipment of vehicles and is growing by the day. Once companies establish their production lines here, we'll get more boats," gushes Chaminda while strolling through the port.
Hambantota could use more ships, there are none in sight. The port, which began operations in 2010 and was supposed to challenge Singapore, received all six ships in 2011 and 18 in 2012. The government finally had to ask ships carrying vehicles to unload their goods in Hambantota instead of Colombo.
Of course, not many share Chaminda optimism, let your boss. Back in Colombo, Sri Lanka Ports Authority Chairman Lakdas Panagoda makes little effort to conceal his contempt for it. Deploying a map of Sri Lanka on his desk, said two existing ports that could have done the job. "Trincomalee and Galle are natural ports, no need to build a new port".
The only other people who seem to have kept their faith in Hambantota are the Chinese. China Exim Bank finances 85 percent of the US $ 361 million for the first phase of port running China Harbour Engineering Company and Sinohydro Corporation. The U.S. $ 808 million second phase is being built by China Communications Construction Company (CCCC) and China Merchants Group.
Port of Hambantota is one of many infrastructure projects funded by China since the civil war three decades between Colombo and Tamil rebels ended in 2009. Many of them are being revised by the new government Maithripala Sirisena that looks like corrupt relics of the former regime.
Tropical paradise in South Asia is estimated to have received up to US $ 5 billion in China in aid, soft loans and grants in the past five years. Nearly 70 percent of infrastructure projects have been financed by China and built by Chinese companies.
"People want a peace dividend after the war. President Mahinda Rajapaksa looked at the development of infrastructure to offer. But because of the financial crisis, our traditional donors in the West were unable to help. Only China was" says Saman Kelegama, executive director of the Institute of Political Studies of Sri Lanka.
Traditional investors are also kept apart because Rajapaksa's refusal to cooperate with the probe allegations of atrocities in the war against Tamil militants. That left the field open for China, but also proved to be his undoing. The more you spend, the more he identified with white elephants alleged graft and mismanagement Rajapaksa contaminated.
Not far from Magampura Mahinda Rajapaksa Port as the port of Galle, it is called, is another signature vanity project funded by the Exim Bank of China - Mattala Rajapaksa International Airport. Built at a cost of US $ 209 million, there is hardly a soul around like any airline uses today.
Shortly after the election, the national airline of Sri Lanka suspended its flights here, relieved to not have to use the airport to maintain a happy president. That said, it would save $ 18 million a year.
And yet another grueling drive away in the same district of Hambantota - which becomes Rajapaksa family constituency and is represented in Parliament by his son Namal - is the impressive Mahinda Rajapaksa International Cricket Stadium. Right in the middle of nowhere, the authorities have to distribute free tickets and arrange pick-ups and downs for farmers from nearby villages to fill on the rare occasions that houses a match. The nearest towns are hours away.
It is easy to see why large projects Rajapaksa were attacked opposition. "Ports, roads, stadiums, airports, theaters ... Rajapaksa wanted visible symbols of their achievement. They also served China well as they wanted to show their presence in Sri Lanka," says Kelegama. But are the less visible aspects of the projects that swept China in the maelstrom of politics in Sri Lanka. As reports began to fly over the lack of transparency in these projects, the money spent on them, their use, the terms of loans and crushing effect of public debt, China was caught in the crossfire.
"There was no published interest rates of these loans were arriving for registration. Everything was a mystery," says Kelegama.
In September 2013, the then minister of ports and roads, told parliament that the interest rate of the loan to build the airport Mattala had increased from 1.3 percent to 6.3 percent. No reasons were given.
The loan terms also were sometimes unclear. When the agreement for the second phase of the Hambantota project during the visit of President Xi Jinping to Sri Lanka was signed in September, the Port Authority made a surprise announcement that had been granted China Merchants Holdings International and CCCC rights of exploitation of the four squares in the harbor.
Local media speculated that the Chinese extracted berths in exchange for alleviating the conditions of existing loans for the port, as it had become difficult to service.
Terms unclear have also led to questions about rights of control and use, most famously in the US stalled $ 1.4 billion project to recover real estate Colombo Port City. The agreement to allow the Chinese company involved to maintain 108 hectares of land reclaimed from the opposition raised hackles on the rights of sovereignty of Sri Lanka on their land.
There were other minor issues with Chinese investments.
"Chinese loans also came with Chinese workers, so not that many jobs are not created," says Kelegama.
In 2013, the government said more than 26,000 work visas were issued to Chinese citizens in the previous seven years. But as companies also bring Chinese workers on tourist visas, the exact number, nobody knows.
The quality of Chinese projects has also been a sore spot, as a US $ power station likely disintegration in Norochcholai 1.35 billion, financed by loans from the Exim Bank of China and designed and built by China Machinery Engineering Corp.
But the main political opposition to Chinese projects focused on unfair terms between unequal partners on unnecessary and inflated projects with China presents as a neocolonial power prop up a brutal and corrupt regime.
In a veiled reference to China, Sirisena election manifesto read: "The land that the white man took over by military force now being obtained by foreigners by paying a ransom to a handful of people."
The disappointment was increasing among Tamils, Muslims and evangelicals, threatened by Buddhist Sinhalese nationalist base tables Rajapaksa. The intelligentsia, including journalists complained of repression. The discontent over corruption spread as the politicization of the judiciary and the police began to affect public order.
With a brother like Finance Minister, another in charge of defense and his extended family and friends placed in strategic positions throughout the government, controlling Rajapaksa in the country was complete. And because of its financial support, China control over what looked so full.
"A perception began to grow that China was in fact using corruption as a control device," says political scientist and constitutional expert Jayadeva Uyangoda.
"For the first time, China became a domestic political issue in Sri Lanka as people began to see the Chinese aid to Rajapaksa as a means of buying support by helping to increase their control over the country."
But while the opposition to Rajapaksa - and by extension, China - rose, Beijing seemed oblivious of the quicksand under his feet. Neither seem to realize is presently considered as an active partner in crime rather than a passive investor.
His overconfidence Rajapaksa meant I had no communication channels with competing political forces and other stakeholders typical multi-party democracy. When the South China Morning Post asked Finance Minister Ravi Karunanayake if the Chinese were in contact with him when he was in opposition, he said: "No, they probably thought Rajapaksa rule forever."
R Sampanthan, leader of the Tamil National Alliance, the third largest, also sounds disappointed: "They seem to listen to what we say, but hard to say if they act on it."
Ironically, could have been the policy of non-interference that blinded changing fortunes Rajapaksa and his own of China.
"Chinese Missions are not good to read the general mood. The policy of non-interference, which makes establishing a friendly relationship with the current government's overriding objective of the local mission, is part of the reason" says Zhou Hang, co-author of Defense overseas interests of China: The slow shift away from non-interference, a policy paper at the International Institute of the Stockholm International Peace Research Institute (SIPRI).
Xi Sri Lanka trip in September, the first by a Chinese president in 28 years, was a measure of this disconnect. A politically smarter mission would have seen the change coming in four months and advised against the visit.
"There is a growing debate within academic and political circles in China about whether to participate more actively opposition parties abroad," says Zhou. But take heart Zhou case of former Zambian President Michael Sata. A Basher China, while in opposition, the first official date of Sata was with the Ambassador of China once was elected to power in 2011. "China card is played more and more as it becomes a global actor. But pragmatism probably still prevail, especially in countries that receive large amounts of Chinese investment," he said.
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