China’s foreign direct investment is shifting away from natural resources to high-tech areas, such as Artificial Intelligence and robotics. The scale of these acquisitions, along with questions about intellectual property and national security, are causing widespread concern in the West In the previous decade, the big Chinese push outwards was for energy and other natural resources. Now the focus seems to be shifting towards technology and Intellectual Property (IP). This change in China’s focus aligns with the Government’s ‘Made in China 2025’ plan, released in 2015, which seeks to establish it as the world leader in ten industries, including Information Technology and Artificial Intelligence (AI), communications, robotics and new energy vehicles.

The concerns that were raised when Chinese companies were acquiring natural resources are emerging in tech space as well. Multiple news reports indicate that the U.S. Treasury is drafting rules that will prevent companies with substantial Chinese ownership from acquiring
‘industrially significant technology’. These reports come after a White House statement (29 May 2018), accusing China of pursuing ‘state-directed acquisition of sensitive United States technology for strategic purposes’. There is an increasing fear in the United States and other advanced economies that acquisitions of tech firms may eventually result in sensitive U.S. technologies being exported to China by willing multinational companies, fearful of being locked out of the Chinese market.

The issue of control over such technologies came up also in 2016 when a Chinese appliance maker acquired Kuka, a German company that makes industrial robots. Security concerns in the U.S. scuppered a planned takeover of another German enterprise, computer chip equipment maker Aixtron, in 2016. In April 2018, the German government cleared
the acquisition of Cotesa, a supplier to Airbus and Boeing, by a state-owned Chinese firm, after
a prolonged investigation into its national security implications.




Meanwhile, Germany has complained about a lack of reciprocity from China: Chancellor Angela Merkel, making a speech in Beijing, raised the issue of foreign companies getting the same rights as domestic players along with protection for their brands and data. The head of the German intelligence service publicly said that acquisitions by high-tech companies coincided with a drop in cyber espionage activities from China: “Industrial espionage is no longer necessary if one can simply take advantage of liberal economic regulations to buy companies and then disembowel them or cannibalise them to gain access to their know-how”.

Fears of IP theft are not unfounded. China has reverse engineered — or replicated — foreign technology in the recent past. High-profile examples include Japan’s famous Shinkansen bullet trains and Russia’s Sukhoi-27 fighter aircraft – which were first purchased, then copied and are now aiming to be exported to the rest of the world. China is already a leading exporter of defence hardware, and proposes to build high-speed railways in Indonesia and Malaysia.
Data security is another area of concern as data has become a valuable commodity.

On 2 July 2018, the National Telecommunications and Information Administration, the U.S. telecom regulator, rejected a 2011 application, filed by China Mobile, seeking to provide services in the U.S. market. On 5 March 2018, the U.S. Treasury blocked a proposed $117- billion acquisition of U.S. chipmaker, Qualcomm, by Singapore-based telecom company, Broadcom, on national security grounds. It cited Broadcom’s relationships with third party foreign entities and a reduction in Qualcomm’s competitiveness, which could lead to Chinese firms setting standards for 5G telephony.

The U.S. apart, other governments too have started scrutinising Chinese investments. In
2017, Australia rejected a bid by a Chinese consortium (with a state-owned company as a partner) to acquire a majority stake in an electricity grid company, serving 1.7 million consumers. Australia is also concerned about Chinese interference in its political process and creation of a pro-China lobby in its parliament, which was also a major driver for ‘foreign interference laws’ being passed by the Australian parliament. The UK is now rethinking the
$26-billion Hinkley Point C atomic power plant in the country in which a Chinese government firm has a 33.5% stake. A reporttabled in parliament says that consumers have been locked into an expensive long-term deal.
Chinese takeovers have caused concern in the developed world before now. In 2005, the state-owned China National Offshore Oil Corporation’s (CNOOC) bid to acquire American oil major, Unocal, ran into opposition in the U.S. Congress on grounds that China does not permit similar investments in its own oil sector. Later, when CNOOC acquired Nexen, a Canadian oil company, the Canadian government, mirroring U.S. reaction, revised guidelines for takeovers
by foreign state-owned companies.

Chinese investment has moved from natural resources and hard infrastructure, such as ports, mostly in the developing world, to high-tech industries of the future in which the West currently has an edge. China is trying hard to catch up – with large amounts directed towards research. A consulting firm, CB Insights, estimates that 48% of the money flowing into AI start- ups globally during 2017 was in China. Since state-directed research tends to leave gaps, acquisitions of strategic firms and industrial espionage serve to fill those blanks. Chinese investments and their impact on host economies have been a worry for African and smaller Asian economies for some time now, a worry that is now spreading to the larger and developed economies too.


In the recent past, the U.S. has threatened punitive tariffs on Chinese exports, stirring similar responses from China, which is now working together with the EU to strengthen ‘mutual trade ties’. This may end up undermining the U.S. position on trade and also the West’s attempt to preserve its edge in technology.

Based on reactions from around the world it would appear to be so. More so with the latest sanctions imposed on Russia and Iran by President Donald Trump whose decisions that have global import are coming out fast and furious often without due diligence by the institutions in place for expert analyses. Mr Trump evidently thinks nothing of sidelining them. The much- respected former Secretary of State, Rex Tillerson is a case in point. There are several other examples.

Since the end of World War II American governments have generally been able to impose their will. All through the period between 1945 till about 1990 that saw the demise of the Soviet Union some check had been kept on US unilateralism. Since the coming down of the Berlin
Wall the US has had free run till the present day, except in some rare cases. It coincided with the US unipolar moment which could have continued much longer had it not been overtaken by hubris.

Afghanistan was followed by the disastrous war in Iraq. In fact, the quick victory in Iraq to begin
with almost led the US to knock out the two so-called rogue states, as designated by them, Syria and Iran. The later reverses in Iraq saved these two countries. Surprisingly US allies with some exceptions remained on board throughout the period. In spite of China’s rise and the resurgence of Russia under Vladimir Putin, the US continued to largely have its way in the global arena.

The advent of Trump changed everything – within America and without. Understandably, as is generally the case, leaders around the world waited for the first hundred days to see which way the new president would go in spite of erratic behavior that was manifest from almost the first day. They did not have to wait long to realise that they were dealing with a president who was not interested in maintaining the tenuous global equilibrium that had held until his ascent to the White House. In a very short while the incoming President has been able to surprise friend and foe.

By walking out of global protocols almost invariably put in place painstakingly by past US Presidents he has brought in a measure of global uncertainty that does not bode well for the US or the world. In a whimsical manner he is going about wrecking the rules-based global order. It was this global order that had allowed the US to hold sway as primus inter pares even after other powers had shown that they had become global heavyweights in their own right.
The sad part for the US and its future standing in the world regardless of whether Trump gets a
second term or not is that he is well on the way to scuttling US might and standing in the
world.

He feels that the US is still the pre-eminent military power in the world. He is not wrong in this. The realisation will come to him when it would be too late that the US could not have held
sway across the world – militarily or in world bodies that it dominated – for so long without its
allies.

Even during the Cold War where would it have been without its allies? True it was responsible for putting Western Europe on its feet through the Marshall Plan. But even after they were on their feet they continued to be steadfast US allies regardless of whether US policies were good for them or the world.

The same goes for the old Anglo-Saxon order. The US could always count on the support of Canada, Australia, New Zealand, besides the abiding Anglo-American entente that never failed to deliver. Japan, South Korea, the Philippines, Singapore, Thailand to whom the US provided security, to begin with against the Soviet Union, have provided the East and South Asian anchors to the US alliance. Without the support of these allies the US could not have remained the ranking global power for so long. Today, it is these very allies that have the most serious doubts as to where the US leader is taking them and the world order.

Both Japan and Western Europe have been the pillars of US military might. Today Trump is taking the wrecking ball to them. Europe has expressed its misgivings in no uncertain terms. Japan has begun to have its doubts. The Philippine President seems to have walked out, although the military is guarded in its approach. India, another major power on its way up while attempting bravely to guard its strategic independence which seemed to be moving in the direction of the US while not formally aligning itself with it has been put in a quandary. For the US, India has to be the pivot of the Asia-Pacific or India-Pacific maritime freedom of navigation.

Unless there is a major turn in Trump’s policies that have global impact most if not all of the close US allies enumerated above could start gradually distancing themselves. To begin with economic policies; and at some stage with the time-tested but fraying military alliance as well. Turkey is well on the way to spinning out of the Western military alliance. The economic alliance remains tattered in any case. It has no interest in taking the side of the US against Russia, the main reason for it joining the NATO Alliance after World War II. Trump’s habit of name calling leaders will hasten the demise.

The world has gone along with North Korean sanctions and the several UN-mandated sanctions largely pushed through by US and its allies. Coming to the latest US sanctions, first on Russia and then Iran, signs have started appearing that allies and opponents could be ready to break away from the US fold in both cases. The threat of US government action against governments and private entities breaking the sanctions has held firm to date with judicious exclusions from time to time.

The time may have come for the sanctions against these countries to be undermined as the vital economic interest of several US allies and many others who went along are being severely compromised. They might be obliged to break the sanctions, secure in the knowledge that
once the floodgates are opened many other nations would be obliged to join in as well, thus rendering the sanctions meaningless and in the process dealing a body blow to the US’s ability to continue to impose sanctions globally.


Taking the case of Russia first what have US sanctions achieved? True they have caused considerable economic pain to the country. Where does the US hope to go from there? What have they lost in the bargain? They certainly have pushed Russia towards China and thereby considerably boosted the latter’s ability to stand up to the US. They have alienated important EU allies including Germany and France among others who have never been comfortable with the sanctions on Russia.

A time could come when they might feel obliged to break away and follow an independent economic policy with Russia. Nor are many other countries including India happy with the sanctions.

It would be worth examining the genesis of the sanctions. They are related to Russia’s annexation of Crimea and the ongoing tension in Eastern Ukraine. It would be recalled that had the West not interfered in Ukraine and attempted to bring it into the Western fold including at some stage NATO, Russia would have had no excuse to act as it did. It felt that its military position would have become immeasurably more vulnerable in the process.

Whether it could have handled the situation differently remains in the realm of speculation. Even now were the EU, even without the US to give guarantees to Russia that its offer to Ukraine to join the EU stands withdrawn and would not be changed in future the situation in Ukraine could to a large extent brought under control. Meanwhile, the sanctions require to be rejected by the EU, France and Germany to begin with as well as India and several other countries not comfortable with them.

In the case of Iran, Trump’s decision to walk out of the deal largely fathered by his predecessor (P5 plus Germany) and re-impose stiffer sanctions do not find any sympathisers among the remaining signatories. They have gone to the extent of assuring the Iranian President that they stand committed to the deal.

Therefore, Trump’s threat could soon become unenforceable when China and India realising that their economic interests could be severely threatened, decide not to honour them, thus dealing the final blow to the US regime of unilateral sanctions. While Japan and a few other countries drawing oil from Iran may not come out in the open they would soon join those countries continuing to deal with Iran.

As far as India is concerned its position is severely compromised by sanctions against both Russia and Iran. It has no choice but to come out openly and make its stand clear because otherwise it will stand out as pariah, not being able to show its face to anyone as the unilateral sanctions regime will soon no longer be tenable or enforceable in the global interest in preserving the rules-based global order. Rather than be obliged to join the countries opposing the US decisions reluctantly after the fact, it should make it clear to the US without fanfare that India would not be in a position to go along. A similar decision should be privately conveyed to Iran. In the ultimate analysis it is not in the global interest to see a catastrophic decline in US standing in the world simply on account of a President who is not able to behave rationally
with either his own people or with countries around the world. The looming planetary decline and pressing decisions necessary to restore the geopolitical equipoise rapidly going out of control will continue to necessitate the presence of the US at the helm of world affairs. Neither its allies nor the major world players including Russia, China and India would wish that the US be obliged to go into isolation.

Sri Lanka’s controversial Hambantota port project, involving massive Chinese investments, real estate holding and large human presence, and well into the future, is back in the news. First, there was local news reports about the China Merchant Port Holdings Ltd (CM Port) holding back the last tranche of the 99-year equity-swap deal before paying up. Recently, The New York Times has put out an analytical report, possibly to kick up fresh dust without actually bringing up anything that the average Sri Lankan newspaper reader has not known over the past decade.

According to local media reports, China holding back the last tranche of $ 585 m over the equity-deal owed to Colombo's objection to plans for using a reclaimed island forming a part of the project-site for entertainment purposes. The reports, quoting local officials, said that the Chinese could use the leased land only for marine and port-
related activities.

However, China has since paid up the last and final tranche, making Hambantota
‘investments’ (?) the single largest FDI project in the country – as incumbent UNP Prime Minister Ranil Wickremesinghe has been pointing out ever since the ’equity-swap deal’ was signed last year. With the current instalment, China’s C M Port has paid up all of
the $ 976-m investment ‘Value 1’ of the port concession. Under the Concession
Agreement, CM Port has also agreed to invest another $ 146 m on ‘Value 2’, to be
utilised for port and marine related activities.

“CM Port is one of the most successful global companies in the ports sector, and their investment in the Port of Hambantota can be described as a credible vote of confidence in its potential as well as in the economy of Sri Lanka,” Dr Parakrama Dissanayake, chairman, Sri Lanka Port Authority (SLPA), said while accepting the last tranche of China funding. However, both sides were silent on the Chinese use of the artificial island for entertainment purposes.

‘Increased profitability’

Between them, the two companies set up to run the Hambantota affairs plan a further investment of $ 400-600 m on Phase-I and Phase-II of the port project. According to Sri Lankan promotional efforts (possibly to offset local and international criticism), “these investments will attract many other foreign investors to the country, making Sri Lanka a pivotal maritime and logistics centre”, the Sunday Times reported.

As the Colombo-based Sunday Times issue of 24 June 2018 recalled, in 2017, Port of Colombo, which has been in existence for long, was ranked as the 23rd largest Container Port and 13thbest-connected port in the world. With the Sri Lankan fiscal year corresponding to the calendar year, the SLPA, the public sector owners of the Colombo port recorded a net profit of SL-Rs 13.2 billion in 2017, as SL-R 1 b in the previous year.


According to the report, the transhipment volume at Colombo during the first five months of the current year has gone up by 19.2 percent against the corresponding figure for 2017. Likewise, the Jaya Container Terminal managed by SLPA too recorded a transhipment growth of 21 percent during the same period. The argument was clear. “The Hambantota Port would further enhance profitability,” the Sunday Times said quoting the SLPA statement.

However, there has been no explanation why then has the Hambantota port not seen higher, or even nominal business that was expected in the first place before the then government of President Mahinda Rajapaksa signed up with China. If the idea is that China (alone) would be able to bring in that kind of business, and only after it had taken possession of Sri Lankan real estate in the name of the 99-year ‘equity-swap’ deal as now, even the Sri Lankan Government has not explained to its people how it was going to be achieved.

Old wine in old bottle

Against the Sunday Times report, which was episode-specific, the longish New York Timesanalysis has not said anything much new. Given the timing of the NYT publication, when Sri Lanka is already on the longish run-up for the presidential polls, due only by early January 2020, some specifics may be able to still entangle the Rajapaksas in new criminal investigations and court cases, with both national and international ramifications.

In a way, the New York Times report remains the proverbial old wine in old bottle. If there was/is anything exciting, it owed to the NYT claims that the Chinese firms operating in Hambantota had made specific payments through their accounts in an international bank in the country to the Rajapaksa campaign ahead of the 2015 presidential polls. Rajapaksa lost the poll and the presidency.

The New York Times analysts claimed to have had access to Sri Lankan Government’s investigation documents regarding the bank transactions. This is possibly the first time that any media outlet has made such a specific claim. Otherwise, reports about such payments and such investigations were doing the rounds, the former during the 2015 poll run-up and the latter post-poll, when the current Government came into place. However, there has not been any great Sri Lankan follow-up on such investigations and reports, since first reported after the present leadership took over in January 2015. While the Government has hauled up the Rajapaksas repeatedly before the Financial Crimes Investigations Division (FCID) formed near-specifically for the purpose, the
‘Hambantota poll payments’ have not found any serious mention.

However, now after The New York Times mentioning the claim, otherwise buried in a larger analysis on the Hambantota project and equity-swap, someone in the Government seemed wanting to act. In what could be dubbed an unusual move, Deputy Minister for Social Empowerment, Ranjan Ramanayake, has moved the FCID, citing
the New York Times report.

It is not clear what had happened to the early reports of the Chinese funding, or if the FCID was already seized of the matter and if any progress had at all been made through the past years.
It is another matter no senior government leader has not reacted to the New York Timesreport thus far, or if it is appropriate for an incumbent minister to move the FCID in such a way lest charges of bias and partisanship should be laid against the investigation on a later day.

‘Third-party interference’

The New York Times report has once again flagged larger questions that have remained mostly unanswered for long. For one thing, no answers have been found for the medium and long-term financial feasibility of the Hambantota Port, which has lost out in the short-term, already. If China has had plans and successive governments in Sri
Lanka from either side of the nation’s majority Sinhala-Buddhist political spectrum have
all known, the nation does not know it, as yet.

It is the opaque nature of the deal that has triggered ‘sovereignty discomfort’ in many Sri Lankans as it has also flagged security concerns in all nations using the busy Indian Ocean sea-lanes of communications (IO-SLOC), which is also the busiest SLOC in the world. Hambantota is also posited across the US military base in Diego Garcia on the other side, and this has been an added concern for Washington. Even otherwise, the US (navy) is already the ‘elephant in the Indian Ocean’, as Prime Minister Ranil Wickremesinghe has been flagging from time to time.

If anything, unlike as may have been expected, the New York Times report did not stir up, at least thus far, any fresh Sri Lankan discourse on these aspects of the Hambantota deals, signed over the past decade and more. Whatever reaction has come and
belatedly was from the Chinese Embassy in Colombo, which called the report as “full of
political prejudice and completely inconsistent with the fact”.
An embassy statement said that “China has always been pursuing a friendly policy
toward Sri Lanka, firmly supporting the latter's independence, sovereignty and
territorial integrity, and opposing any country's interference in the internal affairs of Sri Lanka. It is encouraging that all sectors of the Sri Lankan society highly appreciate China's tremendous support and selfless assistance for ending the civil war and post-
war reconstruction in the Island nation.”

Without naming, the statement said, “Despite any interference from a third party, China would like to work together with Sri Lanka to actively implement the important consensus reached by the leaders of the two countries, and concentrate unwaveringly
on our fixed goals, continuously promote the pragmatic cooperation under the framework of the Belt and Road Initiatives following the ‘golden rule’ of ‘extensive consultation, joint contribution and shared benefits’, to better benefit the two countries and the two peoples.”

No debt-trap: Myanmar

Interestingly, China may have received a shot-in-the-arm on the Hambantota deal from a not-so-directly connected source. The Sunday Leader, based in Colombo, citing a report in the South China Morning Post, quoted Myanmar’s Union Minister and Security Adviser Thaung Tun that his nation has “dismissed fears linked to the Chinese-funded Hambantota port and said it will go ahead with a Chinese-backed deep-water port project in Kyaukpyu.
Minister Tun said that his Government was eager to begin work on the Chinese-backed deep-water port project in Kyaukpyu, and a decision is expected soon. Tun dismissed the fear of a “debt-trap”, saying he was confident it would be a “win-win” deal.
“We would like to see this project get off the ground,” Thuang Tun, who is also chairman of the Myanmar Investment Commission (MIC), said. “I would say we (China and Myanmar) are negotiating, the process is moving ahead and a decision is imminent,” The Sunday Leader said, quoting further from the South China Morning Post.

Security concerns

The security concerns for and in neighbouring India is far more real and greater. Apart from the traditional adversity flowing from the 1962 war that India and China fought along the land-border, New Delhi should also be concerned about the increasing Chinese prowess to become a ‘Blue Water navy’ as fast as it can. Apart from the real threat to the nation, India should be even more concerned about the real possibilities of a US-China naval competition in the IOR neighbourhood, possibly triggering a ‘neo cold war’.

Even otherwise, in times of heightened bilateral tensions with China if and when it came to that, India should be concerned about the East-West-East maritime transportation between the nation’s two shorelines, even if it does not actually turn out to be a naval engagement of any kind. Given the high cost of road and rail transport and related issues, industries, trades and also State Government institutions across the
shore-lines have been using the sea-route for ‘internal transportation’ of bulk goods like
coal and other volume-based consumables and other goods.

Underscoring the unmentioned Indian concern of the time was the Vajpayee Government’s decision to go launch the ‘Sethusamudram Project’. Though suspect in techno-fiscal terms, the project was still expected to provide a sure and possible alternative ‘inland waterway’ route linking the two wins of the Indian shore-lines. After the exit of the Vajpayee Government, however, his BJP has been in the frontline
of court battles, which have stalled the project. The delays do not relate to techno-fiscal
feasibility or corruption charges, but derive from faith-related issues, that Lord Rama had laid a now-submerged stone-bridge between the India and Sri Lanka, using an ‘army of monkeys’ and that it should not be tampered with.

SLN Command HQ

Today, when Hambantota is on its way to become a full-fledged port in its own
right, albeitChinese funding, participation and strong presence, India especially may have to ask itself if China were interested wholly on using it for military purposes. It is more so, now the amended agreement draft, signed last year, clearly states that Sri Lanka Navy (SLN) would be in exclusive control of port and adjoining sea security and China would have no role or claims to it.

Sri Lankan media reports at the time had claimed that the amendment more than India, SLN and other arms of the nation’s armed forces had expressed strong reservations to handing over Hambantota port security to the Chinese or any other foreign power.

Before the incumbent Government’s assertions in this regard, both the Rajapaksa Government and that of President Chandrika Bandaranayake-Kumaratunga dispensation before it, had said as much – both to domestic queries and to international interlocutors.

In this regard, Prime Minister Wickremesinghe’s office has made a further clarification now, declaring that the SLN’s Southern Command Headquarters was being moved to Hambantota. The statement claimed PM Wickremesinghe’s claims to negotiating the Hambantota deal with Chinese Prime Minister Li Keqiang and President Xi Jinping of China and “came up with a proposal which was beneficial for both parties”.

The statement recalled that “Sri Lanka also informed the Chinese that Hambantota cannot be used for military purposes. The Sri Lanka Navy is moving its Southern Command to Hambantota. There is no need to be frightened as security of the port will be under the control of Sri Lanka Navy.”

The statement said further: “Once an American has asked him, “what would you do if the Chinese troops land in Hambantota”. The Prime Minister has responded saying that there is a full army division stationed at Hambantota. The Prime Minister never mentioned that we will not be resisting any invasion. Further, no Navy in the region has the capacity to land an army division in Sri Lanka,” the statement said, clarifying media misquotes in this regard.

‘Sensitive to Indian interests’

Nearly a week after the New York Times report, Mahinda Rajapaksa, in a lengthy statement, has denied accepting any campaign funding from China. Stating that the London-headquartered news agency Reuters had reported as far back as July 2015 that China gave his campaign $ 7.6-m, the statement recalled how the present Government had suspended the Hambantota deal, only to revive it not long after, with PM Wickremesinghe describing it as the ‘premier project on which his Government has placed its hopes”.

Early on after the New York Times report, Mahinda’s parliamentarian-son Namal Rajapaksa had, in response to New York Times article titled ‘How China Got Sri Lanka to Cough Up a Port’, MP Namal Rajapaksa had tweeted to say that it “has many inaccuracies’. He added that the “country’s assets shouldn’t be used as geopolitical pawns in this power struggle” (between China and the West).

Against this, Mahinda’s belated response was not perfunctory, but contained great many details, starting with how two western consultancies chosen by the CBK Government twice and that of PM Wickremesinghe’s earlier dispensation in the first half of last decade had certified the project as an economically feasible proposition. Claiming that the higher project cost owed to the swift hike in the standard LIBOR (London Inter-Bank Offered Rate) to which Chinese funding was linked, Mahinda also argued that the number of ships calling at Hambantota Pohad gone up from 32 ships in
2012, the port’s first year of operation, to 3,667 ships at the Colombo port, but the New York Times cited only the former figure and not the latter.


According to him, the “port made an operating profit of SL-Rs. 900 m in 2014 and Rs.
1,200 million in 2015... and a “new harbour that opened in 2011 cannot be expected to
produce profits by 2012”. In this context, the statement also denies the New York Times report that there was a debt-trap, forcing the “present government was compelled to lease the port to China”.

Possibly for the first-time ever by any Sri Lankan or Chinese stake-holder with personal knowledge of the Hambantota project costs and time-line, Mahinda said that the “total cost of financing the (capital plus interest) will be $ 1,761 m by the time the loan expires in 2036. By the end of 2016, nearly $ 500 m of this total amount had already been repaid. There was never any problem ... because it was paid out of the profits of the Sri Lanka Ports Authority (SLPA).”

Mahinda’s statement said further: “The Auditor-General’s report for 2014 states that the profit of the SLPA in 2014 after paying all loans and taxes was SL-Rs. 8.8 b... the government did not use the $ 1,120 m received from the port-lease to repay the loan taken to build it. Instead it went to the treasury to meet the day to day expenditure of the Government and the loan still remains on our books.”

Mahinda concluded his statement, declaring that his Government was ‘sensitive to India’s interests’, and said that the leasing of Hambantota port to China “would never have arisen if my government had continued in power”. In this context, he quoted from former Indian National Security Advisor (NSA) and Foreign Secretary Shivshankar Menon’s 2016 book “Choices: Inside the Making of India’s Foreign Policy” and said that “my Defence Secretary, Gotabaya Rajapaksa had a clear view of Sri Lanka’s interests which was completely compatible with India’s interests and that India had been given assurances about the nature of Sri Lanka’s relationship with China”.

Mahinda went on to quote Menon to say that “Gotabaya was sensitive to India’s concerns and that the assurances given to India by my government were respected throughout the duration of the Congress Party government which was voted out in May
2014”. As coincidence would have it, Mahinda Rajapaksa, in an interview to the
Colombo-based Daily Mirror, said that in the Sri Lankan presidential polls, due by January 2020, the West “can make an impact. Actually, India is the country that can make the biggest political impact... India influences to a certain extent. We have to reach a position to overcome such influences. I hope India would not meddle with Sri Lanka’s internal political affairs.”

Buying up liner firms

Independent of the politics and allegations of bribes pertaining to the Hambantota projects, which continues to centre on the Rajapaksa clan, there was national consensus of a kind on the need for the same, its feasibility and involving China, long before Mahinda R became President. The project was often been mentioned over the previous three or four decades. It was also Mahinda Rajapaksa’s predecessor President,
Chandrika Kumaratunga, who actually signed the Hambantota MoU with China after India had declined the offer. Rajapaksa offered it again, and India declined it again – for valid fiscal and technical reasons, all of which may not have been put out in the public domain.

In this context, critics of China in Sri Lanka, who see the Hambantota deal only through the prism of political possibilities nearer home and security concerns elsewhere may have to look beyond them both, to get a fuller picture of Chinese intentions. There have been reports that China has been increasing its equity stakes in major ocean-liner firms in the world, and may become a major player in that sector before other nations and stake-holders realised it in full measure.

If so, China could then dictate terms to those ocean-liners, with the result, not only Hambantota but also other port-points in the nation’s ambitious BRI project could also become economically feasible. This could mean that China would end up calling shots on the global maritime trade, insurance, and even manipulate both, especially if the rest are going to raise the ‘China bogey’ in security matters constantly. This is apart from the real security concerns, if not outright threat, that China’s Hambantota presence and all along the BRI route could pose for the rest of the world.