Sri Lanka’s new government led by President Gotabhaya Rajapaksa wants to undo the previous regime’s move to lease. Also, the southern port of Hambantota to a Chinese venture, citing national interest.
Former Prime Minister Ranil Wickremesinghe in 2017 changed the terms, saying it would be difficult to pay the loans taken to build the project. He agreed to lease the port for 99 years to a venture led by China Merchants Port Holdings Co. in return for $1.1 billion.
That helped ease the Chinese part of the debt burden raised to build the port. Also, Wickremesinghe said in an interview in 2018.
“We would like them to give it back,” Ajith Nivard Cabraal. A former central bank governor and an economic adviser to Prime Minister Mahinda Rajapaksa. He said in an interview at his home in a Colombo suburb. “The ideal situation would be to go back to the status quo. We pay back the loan in due course in how we had originally agreed with no disturbance at all.”
Sri Lanka agreed to lease the port for 99 years
The port is emblematic of the controversy dogging Chinese President Xi Jinping’s Belt and Road initiative from Kenya to Myanmar, including accusations that the world’s second-largest economy is luring poor countries into debt traps. In Sri Lanka, where the transaction to lease the port was opposed by Rajapaksa’s party, Mahinda took Chinese loans during his 10-year rule as president to build the project in his home district.
“This is a sovereign agreement” and it’s unlikely that it will scrap or altered in a big way, said Smruti Pattanaik. However, a research fellow at the Institute for Defence Studies and Analyses in New Delhi. “The Chinese may reconsider some clause if it considered crucial for the Rajapaksa regime.”
An attempt to rework the transaction will help the new Sri Lankan government. However, led by Gotabaya and his brother Mahinda, showcase their drive to change contracts seen as hurting national security. Also, a key campaign platform for Gotabaya, a former defense secretary.