Sri Lanka’s economic past isn’t very bright. Scrapping deals with India won’t help its future

By The Print

Amid the ongoing farmers’ protest and an eight-month-long standoff with the Chinese at the LAC, the news from Colombo — of Sri Lanka going back on the 2019 agreement with India and Japan to build the East Container Terminal at the Colombo Port — should raise alarm bells in some quarters of the Narendra Modi government. While Sri Lanka’s unilateral decision has been frowned upon by New Delhi and Tokyo alike, Colombo appears to be planning some kind of balancing act to placate all stakeholders after its U-turn.

Colombo has reportedly decided to carry on with the East Container Terminal (ECT) project on its own through Sri Lanka Ports Authority. Subsequent to this announcement, the Sri Lankan cabinet is said to have offered a proposal to India — to develop the West Terminal at the Colombo Port on the same lines as the ECT project. As far as India and Japan are concerned, it is not known if they would accept the new offer.

But given the sensitive nature of New Delhi-Colombo relations, it would be prudent for India to approach the subject cautiously. The Sri Lankan government has cited large scale protests against private investment in the port project as the reason for going back on the deal. The excuse, however, does not seem convincing enough. As per the deal, the Terminal Operations Company responsible for running all ECT operations was to be jointly owned by the three countries. While Sri Lanka was supposed to have 51 per cent stake, the joint venture partners (India and Japan) were to have 49 per cent share in the company.

In contrast, Sri Lanka has dealt differently with the Chinese. When the Hambantota Port was handed over to China, Colombo signed a pre-agreement with the China Merchants Port Holdings to buy an 80 per cent stake in the deep-sea port situated just about 250 km southeast of Colombo.

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