Sri Lanka formally hands over Hambantota port to China

•  Sri Lanka has formally handed over the southern sea port of Hambantota to China on a 99-year lease.
• Two Chinese firms, namely Hambantota International Port Group (HIPG) and Hambantota International Port Services (HIPS) managed by the China Merchants Port Holdings Company (CMPort) and the Sri Lanka Ports Authority will own the port and the investment zone around it.
• Sri Lanka, in July 2017, cleared a revised deal for the Chinese-built port in Hambantota. The modified agreement is believed to be more profitable to Sri Lanka and also addresses security concerns raised by other countries. As per the deal, while the Chinese would manage port operations, no naval ship, including Chinese ones, can call at Hambantota without Sri Lanka’s permission.

Analysis:

• The Hambantota port is located on the southern tip of Sri Lanka within 10 nautical miles from the world’s busiest maritime lanes. It is ideally located at the intersection of the major international shipping routes. Approximately 200 to 300 ships sail through this route daily. The Hambantota port is strategically positioned in terms of domestic trade perspectives also.
• China has long been interested in the commercial and strategic potential of Hambantota. While the Indian Ocean is itself a crucial space, being the bridge between Africa and the Middle East on one side and Southeast Asia on the other, Hambantota is right in the middle of vital energy supply lines in the Indian Ocean, connecting the Middle East and East Asia.
• It is also a strategic link in Xi Jinping’s ambitious 21st Century Maritime Silk Road – a grand blueprint based on technical and economic connectivity that spans China, Africa, and Europe, which could very likely change the face of Eurasian geopolitics, should it come to fruition.
• India had expressed concerns regarding Chinese-built projects especially the Colombo Port City and the Hambantota port in the past. In both these cases, the agreements were revised ostensibly to address the concerns of India as well as of some other countries.
• India’s main concern has been the long term impact of Chinese state-owned companies acquiring equity in the Sri Lankan economy and the extent to which Chinese influence on Sri Lanka’s economy would affect Colombo’s ability to practice an independent foreign policy. Chinese influence in Sri Lanka will have serious implications for the latter’s relationship with India. India’s fear regarding China’s intentions in its neighbourhood are not unfounded given the latter’s increasing naval presence in the Indian Ocean, decision to acquire its first overseas base in Djibouti and its presence in Gwadar as part of the intensifying Sino-Pakistan axis.

By: Vishal