Indo-Pacific: India-Japan match China in Sri Lanka port power play
Virendra Pandit
New Delhi: With cementing of the four-nation Quadrilateral Security Dialogue (Quad) between the US, India, Japan, and Australia in October 2020—viewed as a prelude to the emergence of an ‘Asian NATO’ in coming years—Sri Lanka has emerged as a key nation of the 21st-century big power play in the Indo-Pacific Region, the way Nepal has become a strategic country between New Delhi and Beijing in the Himalayas.
Colombo firmed up this position on Tuesday when it announced to open the West Container Terminal (WCT) for development jointly by India and Japan.
Earlier, Sri Lanka had ‘invited’ China for the development of the nearby Colombo International Container Terminal (CICT).
Sri Lanka announced that it will develop the WCT at Colombo Port along with India and Japan, overturning its earlier decision. A month ago, Colombo had ejected New Delhi and Tokyo from a 2019 tripartite agreement to jointly develop it, ostensibly due to the port unions’ resistance to “foreign involvement”.
Speaking to the media in Colombo, government spokesman and Minister Keheliya Rambukwella said that official approval had been granted to develop the WCT with investors nominated by India and Japan. While India has named Adani Ports, which was earlier nominated to invest in the East Container Terminal (ECT), Japan is yet to respond, he said.
The about-turn in Sri Lankan policy—offering the WCT as an alternative to the ECT—on balancing China and India in the multi-power political sweepstakes in the Indian Ocean came about after the People’s Liberation Army (PLA) retreated in mid-February in Eastern Ladakh in the face of extreme pressure mounted globally by New Delhi on military, strategic, diplomatic and economic fronts against Beijing after the bloody border clashes in May 2020.
Like Pakistan and Nepal, the Sri Lankans also realized they couldn’t take India for granted. Hence the 360-degree about-turn within weeks.
A stake in Sri Lankan ports is strategically important both for China as well as the Quad countries to keep their marine routes smooth.
According to reports, the Sri Lanka Ports Authority (SLPA) was to hold 51 percent stakes in the ECT project agreed upon earlier.
In the fresh WCT proposal, New Delhi and Tokyo will be jointly allowed an 85 percent stake, similar to the nearby CICT, where China Merchants Port Holdings Company Limited (CMPH) also holds an 85 percent stake.
In January, Sri Lankan President Gotabaya Rajapaksa had said that 49 percent of the investment will come from the “Adani Group and other stakeholders”.
Addressing port worker unions, he said the “ECT will not be sold or leased”. He also assured that the foreign investments would cause no harm to Sri Lanka’s sovereignty or independence. Over 65 percent of the trans-shipment business at this terminal is linked to India.
In May 2019, the previous government, led by Maithripala Sirisena and Ranil Wickremesinghe, had signed an MoU with India and Japan for the ECT project. But Colombo reneged on it and offered WCT as an alternative, allowing the foreign investors to hold a higher stake.
The three countries agreed that the SLPA would retain 100 percent ownership, while a jointly-owned terminal operations company — 51 percent with Sri Lanka and 49 percent with India and Japan — would operate the terminal.
