Sri Lanka said on Tuesday that it had withdrawn from an agreement with Japan and India to develop a deep-sea freight terminal, which is seen as an attempt to counter China’s growing influence in the region.
The East Container Terminal in Colombo Harbor is being built next to a controversial $ 500 million Chinese jetty and would be developed as a joint venture – with India and Japan owning 49 percent.
But the government has faced opposition from hardline nationalists in the coalition in recent weeks who are against the sale of national assets to foreigners.
The deep-sea jetty was signed in May 2019, a few months before President Gotabaya Rajapaksa came to power.
The government said in a statement that it would develop the site “as a full cargo terminal of the Sri Lankan Port Authority” for $ 800 million.
The decision points to a reversal of the statement Rajapaksa made more than two weeks ago, when he said the project would continue, citing ‘regional geopolitical concerns’.
It also comes the day after the Indian High Commission in Colombo called on the government to meet its obligations under the agreement.
When Gotabaya Rajapaksa’s brother Mahinda – who is now the prime minister – was president between 2005 and 2015, Colombo borrowed billions from China and built up a mountain of debt for a series of infrastructure projects.
As credit agencies lower Sri Lanka’s debt ratings because the island nation is due to the economic impact of its pandemic closures and the deadly Easter attacks in 2019, the government expects more Chinese loans this year.
In December 2017, when Sri Lanka was unable to repay a large Chinese loan, China Merchants allowed Port Holdings to take over the deep-sea port in Hambantota, crossing the world’s busiest east-west shipping.
The agreement, which gave the Chinese company a 99-year lease, has raised concerns abroad and abroad.
India and the United States are both concerned that a Chinese foothold near Hambantota Beijing could give a military advantage in the Indian Ocean.
India staged protests when Chinese submarines made unannounced visits to the Colombo terminal in 2014. Since then, Sri Lanka has not yet given permission for further submarine calls.
aj / grk / am
Originally published