Taming the dragon

Whether it was meant as a pre-emptive move before leaving for India, President Gotabaya Rajapaksa's public announcement that he would like to renegotiate all foreign agreements entered into by the previous Administration, was still a welcome move, particularly the Hambantota Port deal that gave the Chinese an astounding 99-year (now said to have been reduced to 72 years) lease on it.

That was a sell- out. At the time ( in our August 6, 2017 issue) we wrote: President Mahinda Rajapaksa nor President Maithripala Sirisena has the right to hand over parts of the country to another for three generations to come. The joint venture gives a Chinese company an over 80 per cent stake and the Sri Lanka Port Authority a minority stake of the balance.

The Government of the day gave a convoluted share structure misleading the public and to make out that the Sri Lankan Navy would be in total charge of security within the port; all serious concerns that made India nervous that its underbelly was being compromised.

The 2017 agreement came with public debate conspicuously absent. The Rajapaksa Opposition had only muted criticism because it had gone head-on with the USD 1.2 billion project, which Sri Lanka could not pay back. Only their second string kept siding with local opposition to the project, more for political advantage at home. Losses from the port mounted in 2015 and 2016.

It is still a mystery as to why the Indo-US-Japan axis did not cough up the money to settle the debt and extricate Sri Lanka from the debt trap and doing themselves a favour. All India could do was to establish a Consulate in Hambantota. A Chinese Foreign Ministry official had told Sri Lanka's then ambassador to Beijing with biting sarcasm, "We can sell the Indians binoculars to spy on us". All the US could do was to get its think- tanks to write reams about Chinese hegemony in the Indian Ocean.

The Chinese crippled Sri Lanka with the Hambantota deal. First giving a loan at 6.3 percent interest (considered ' gini poli' or feverishly high interest); then more and more loans till it drowned the recipient Sri Lanka in debt.

The fact that President Xi Jinping, no less, made an overnight visit to Sri Lanka to sign the agreement and 26 other bilateral agreements with former President Rajapaksa underscores how important it was for China.

With ironclad termination clauses, Sri Lanka will face heavy penalties for the abrogation of any provisions. Sri Lanka-China friendship will surely be tested. In 2015, Prime Minister Ranil Wickremesinghe also suspended all agreements with China but his Government capitulated when it did not have the bargaining power. Efforts to convince the local populace in Hambantota, and the rest of the country that this was a ‘ win- win’ Concession Agreement that entailed a debt-to-equity swap did not succeed and though the Chinese worked on the local activists and silenced them, election results show the Sri Lankan Government's secret deal was not to be trusted.

China will not yield so easily. They showed no charity when Prime Minister Wickremesinghe went to Beijing to renegotiate. In recent times Sri Lanka has lacked the diplomatic skills and the political will to negotiate effectively, or as one critic said, it is not only the skill to negotiate, but also, not being paid by the other side not to think. Good luck to the new President.