29 July 2017

Sri Lanka to sign deal on Hambantota port with China

A general view of Sri Lanka's deep sea port facilities at Hambantota on February 10, 2015Image copyright

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Hambantota port straddles the busy east-west international shipping route

Sri Lanka is due to sign a $1.1bn (£837m) deal with China for the control and development of the southern deep-sea port of Hambantota.

The deal has been delayed by several months over concerns that the port could be used by the Chinese military.

The government has given assurances that China will run only commercial operations from the port, on the main shipping route between Asia and Europe.

Sri Lanka’s government says money from the deal will help repay foreign loans.

Under the proposal, a state-run Chinese company will have a 99-year lease on the port and about 15,000 acres nearby for an industrial zone.

The plan envisages the eviction of thousands of villagers but the government says they will be given new land.

China has pumped millions of dollars into Sri Lanka’s infrastructure since the end of a 26-year civil war in 2009.

Hambantota port, overlooking the Indian Ocean, is expected to play a key role in China’s Belt and Road initiative, otherwise known as the new Silk Road, which will link ports and roads between China and Europe.

The initiative is being keenly watched by regional trade rivals including India and Japan.

Opponents of the project said they feared the area being turned into a Chinese colony. There were also concerns that the Chinese navy could use the port as a base.

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Hundreds protested against the Chinese investment in January

In a move to ease those concerns, the Sri Lankan government announced a revised deal to cut the Chinese firm’s stake to 70%. Officials also made assurances that the port would not be used by the Chinese military.

“We are giving the country a better deal without any implications on security,” Prime Minister Ranil Wickremesinghe told reporters on Friday.

He said the deal would help Sri Lanka manage its foreign debt.

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