Hambantota continues to be the important and wider focus of politics this week, despite the push by the story on questions about Minister Ravi Karunanayake’s penthouse residence in Colombo, which has certainly grabbed the media interest, due to the material that links it to the Central Bank Bond scam and the related issues of corruption, that continue to trail the present government.
The Joint Opposition (JO) has already given a No Confidence motion in Parliament on Minister Karunanayake. However, the matter remains before the Presidential Commission on the Bond Scams, and any action by government will require the findings of the Commission.
The JO and associated social-political forces are seeking to build a campaign against the government on an alleged ‘sale’ of the Hambantota Port or the Magampura Mahinda Rajapaksa Port to give its official name, to the Chinese, on what is a 99 year lease – with several provisions in the lease agreement that ensures Sri Lanka obtaining rights over the port and its facilities at various stages of the lease period.
What is evident is that the JO, and the Rajapaksa clan that leads it, have realized that the lease of the Hambantota Port to the Chinese, and the development of the Port that will begin very soon, together with the Chinese business activity in the peripheral zone, will bring about a major change to the economic activity in the Hambantota District. The Rajapaksas were unable to bring about this, despite the huge projects it brought to Hambantota at considerable cost to the county, and not without financial advantages to those associated with these projects.
Much of the Rajapaksa years of government from 2005 till 2014 saw strategies to show that Mahinda Rajapaksa and his family – the son, brothers and niece in Parliament and the Defence Secretary, were having a special campaign to develop the South of Sri Lanka, and particularly the Hambantota District that is the Deep South, to make it possibly the best developed region in the country.
It is true that Hambantota remained a very poorly developed district in the country. The efforts by the late DM Rajapaksa to bring both political and economic development to the region in the 1930s failed, with his early demise. He was the person who brought the brown or ‘kurakkan’ coloured “sataka” to the political apparel of the time, which Mahinda Rajapaksa transferred to red and made it his own symbol of pro-people politics. But, the Hambantota Port, the Mattala Rajapaksa International Airport, the Mahinda Rajapaksa International Cricket Stadium – better known as the Sooriyawewa Stadium, and other lesser known projects, did little to improve the economy of the region and living conditions of the people. The huge sums paid for these key projects remained a burden on the national economy.
The Mattala International Airport, that also carried the Mahinda Rajapaksa name, too was built by China at US $ 4.8 billion, mostly from soft loans obtained during the Rajapaksa Regime. The disastrous economic situation of this airport is best described by what it is known by the world aviation industry- the “World’s Emptiest International Airport”. The Sooriyawewa Stadium also did little to promote sports or help the Hambantota people by way of employment. In fact, it had been closed down and neglected until there was a sudden move by Sri Lanka Cricket to renovate it for a recent cricket series.
With all the expenditure on the Rajapaksa Projects costing many billions of US dollars, to be paid up by the Sri Lankan economy and people, Hambantota was steadily transformed into an area of economic disaster in this country, with huge empty promises of emergent development mainly with Chinese funded projects. Hambantota possibly owed much more to the world than any other district in the rural areas of Sri Lanka. Had Mahinda Rajapaksa won the January 2015 Presidential Poll, Hambantota would inevitably have had to raise much more funds, again from the Chinese, who remained very close to Mahinda Rajapaksa and his regime.
The situation in the district, the Southern Province and the county would have been much worse than today, and without the relief that has been brought by the Lease of the Hambantota Port, yes to the Chinese – the original builders who had the plans, the funds, the know-how and the interest to develop this port from the largely idling location it was till now, to a fully functioning international harbour.
Benefits known
The benefits of a port at Hambantota were known to economic planners and shipping interests in Sri Lanka for several decades. Several studies have been done to assess the value of a new port at Hambantota, considering the increased shipping in this region over the past few decades, and especially with the rise in importance of the Ports of Dubai and Singapore. Hambantota was certainly a much looked forward to location for fuelling and supply of victuals to the increasing numbers, in their hundreds, of vessels sailing in this part of the Indian Ocean, where Sri Lanka is strategically located. Apart from bringing glory to the Rajapaksa name, this growing need for a good port at Hambantota would have made Mahinda Rajapaksa look at this project. But, the hurries of political advantage certainly went against making it a fully functional port with the necessary bunkering and other essential facilities, when it was ceremonially opened.
It is also necessary, in the context of international relations, to ensure that India, the closest neighbour of Sri Lanka is in no way given cause to be worried about the Chinese shipping and port activities in Hambantota. The Foreign Policy of Sri Lanka and the Policy of Good Neighbourly Relations should make sure that while China attends to the development and good, profitable functioning of the Hambantota Port, there will be no cause whatever, for concerns by India. The requirement in the lease with China that all security activities in the Hambantota Port will be handled by Sri Lanka is important in this context. There is also the decision to ensure that no foreign naval vessels will be allowed to this port and its facilities, with India having raised concerns about such vessels in Sri Lankan ports earlier.
The lease of the Hambantota Port to China has certainly brought much international attention to Sri Lanka. The story is well focused by all international news agencies and, especially by the institutions related to investment and economic relations. There has been a welcome reaction by the international marketplace to the new development, and the promises it holds for the future. This is reflected in the Moody’s ‘Credit Positive’ image for Sri Lanka due to the port lease. This is what Moody’s said, as reported in Lanka Business Online (LBO) on August 01, 2017. Quote: The Hambantota port deal is credit positive for Sri Lanka because it will boost foreign-exchange reserves, which will ease the government’s external liquidity position ahead of several large international bond payments in 2019-22.
“Earnings from the Hambantota Port stake sale will feed into the Central Bank’s foreign-exchange reserves, which will help bolster investor confidence and encourage future portfolio inflows, Moody’s said.
“Importantly, the sale will allow the government to set aside earnings to repay its upcoming debt maturities and reduce its external debt, a key constraint on Sri Lanka’s credit quality. External debt maturities in 2019-22 total $13.8 billion.” Unquote
In the context of the international interest on the Hambantota Port Lease, Forbes – Markets # Foreign Affairs, has given this opinion by Panos Mourdoukoutas on August 01, 2017.
“China's Hambantota deal is bad news for both Pakistan and India”
“The taking over of Hambantota by Beijing is bad news for both Pakistan and India -- for different reasons.
For Pakistan, the deal will serve as a model for the future of CPEC (China–Pakistan Economic Corridor), a huge transportation network connecting China to the Arabian Sea at Pakistan’s Gwadar Port. Like Hambantota, CPEC started with loans that will eventually be converted into equity, as it seems very unlikely Pakistan will ever be in a position to pay them back. This means that Beijing will one day own CPEC, and collect tolls from every vehicle that makes use of it.
For New Delhi, the Hambantota deal is bad news because it’s one more step to encircle and pacify India by Beijing. China’s enormous investment in CPEC, and port infrastructure in the Indian Ocean, serves much more than trade. It advances Beijing’s “String of Pearls” strategy, as well as its unofficial agenda to encircle India through its arch-rival, Pakistan.”
To be fair, the Hambantota port will make it easier for India to trade with Sri Lanka. But it could also be used as a naval station for China should the two countries ever engage in a full-scale war.”
These are certainly issues of importance that Sri Lanka’s political leaders and policy makers would have to always bear in mind with the progress of the “One Belt – One Road Policy of China, and India’s own development and defence strategies in the region.
Mattala International Airport
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