Chinese Checkers Sans Board

By N Sathiya Moorthy | Published: 12:40 AM Jun 15 2021
Columns Chinese Checkers Sans Board

By N Sathiya Moorthy

If someone wanted to know, who wanted the Colombo Port City Bill designed and drafted the way it now is (thanks to the Supreme Court’s uncompromising determination), then you now have the answer. Addressing the Sri Lanka Investment Forum-2021, Chinese Ambassador Qi Zhenhong talked a lot about what in a single, worn-out phrase could be dismissed as ‘red-tape’ (no reference this to that nation’s political colour or how it is red in other parts of the world).

Interestingly, Ambassador Zhenhong also mentioned how Sri Lanka’s kind of free speech and debate unenthused Chinese investors. Now, you know why the draft Bill wanted to deny judicial review, that corner-stone of democracy, over the functioning of the proposed Port City Economic Commission, meant to manage the affairs of the Special Economic Zone (SEZ).

Possibly, someone in the Government had better sense. They seemed to have advised the Government’s legal team to readily agree to amend such offending provisions midway through the Determination Hearing in the Supreme Court. If so, it still needs to be noted that China had enough influence to push through its version of the Bill through the Government, but not through the higher judiciary, hence Parliament, too.

German game, but…

Chinese Checkers is a board game that originated in Germany. It needs two, four or six players to play the game. In the case of Sri Lanka, someone wants to play it all on their own, call it competition, if you want. But you cannot play it by yourself. That’s a problem situation, Sri Lanka has found for itself. Colombo may still be shy of acknowledging it.

Thus, you have the Government rescinding on the Sri Lankan State’s commitments on the ECT project with India and Japan, and the MCC funding from the US. But the objections outlined in those cases have been wantonly overlooked in the case of the Port City. It was precisely the kind of thing done in the case of Hambantota even as nothing came of projects that neighbouring India was to have undertaken.

Who is the loser? Not India. Definitely, Indian security concerns vis a vis China on Sri Lankan soil may have heightened a few more notches than already after Hambantota. But the real loser is Sri Lanka, as the Nation is finding for itself.

At the height of COVID second wave, every other nation has to rush to Sri Lanka’s help, helping to tide over the vaccine crisis. It’s just not China’s Sinopharm – whether or not you pay for it. India began it, and well, with early donations, first of testing-kits and the like, during the first wave. This was followed by the Indian donation of vaccines.

Today, the US has offered vaccines, so have Japan and Australia – no reference this to Quad, which along with India, is a geo-strategic grouping against China in the Indo-Pacific. Russia has offered its Sputnik V vaccine, and the Russian envoy in Colombo has personally congratulated the army chief, for doing a good job of COVID control. From a local perspective, the first wave job was much better than the second. But even for whatever was done and achieved during the second wave, there was/is no replacement for the armed forces.

So, is it all about China when it comes to the multitude of Sri Lanka’s demands on the international community and none else? Clearly, Sri Lanka is realising that it cannot continue to depend on one source of vaccine or whatever COVID management kit that is required. It is even more so when it comes to serving and sub-serving the Nation’s economy.

Monopoly debt-trap

Elementary economics tells you that a ‘monopoly’ tends to mark up prices, cut down on quality and hold the market to ransom. That is what happened to Sri Lanka at Hambantota, after India repeatedly showed disinterest. Clearly, no one expected a Chinese monopoly of ‘debt-trap’, too. Which is what the debt-equity swap-deal on Hambantota boils down.

It is here, any ‘hidden clauses’ in the Port City pact should be cause for Sri Lanka’s concern. If the Opposition SJB, is aware of such clauses or similar possibilities, they have not talked. That’s what happened with the Hambantota swap-deal.

The secrecy and speed with which the previous Government went about the swap-deal processes makes one suspect more than may be necessary But even today, neither of the two ‘Sinhala majors’ has given a convincing answer. Not that anyone, including the Supreme Court, had sought any.

Some clarity…

Today, the ruling Rajapaksas are clear in their global priorities and the reasons thereof – whether or not others, especially third nations, accept them or approve of them. Their political rivals are at it, too, but want the western world and the Indian neighbour to believe otherwise.

The Opposition’s game is up. Unless the re-branded SJB, from the tired and defeated UNP stables, under a less-cunning Sajith Premadasa, is able to actually prove otherwise, the predecessors have only made it bad for their types in Sri Lanka. But then SJB’s Kabir Hashim has recently gone out of the way to reiterate that they are ‘not against China’, as if they needed to tear open their chest to show up the sincerity behind their statement.

It is a time of reckoning for the nation, and in more ways than one. COVID pandemic has now shown that there are times when Sri Lanka will need more friends and allies than it would have been happy with – rather, just one, that is China. There is more to international relations and foreign policy than debt-driven development, which has proved to be no development in Sri Lanka’s case.

The problem is not just about the debt, but about its size and the needs to which it was employed. Thus far, all of it, running to millions and millions of dollars, have driven jobless growth, as all men and material for the China-funded projects came from that country. It was no growth in any sense of the term, especially considering that most of the debt went into Hambantota and the rest into road-laying, euphemistically called ‘expressways’.

Other than the unsure Norochcholai thermal power project, there is no manufacturing unit that China created in and for Sri Lanka, which alone can bring in the moolah for the Government and constituent homes – which is what growth is all about. Now, we are told that the Port City project will bring in those jobs, hence family incomes. It remains to be seen how far does China sticks to this unprecedented promise with which Beijing has always been uncomfortable.

It is not just for commercial reasons, as in the case of the West, but owing to ideology and also to keep a tight-fist over the labour. Ask the Chinese, and they would tell you, it is all for keeping their commitments and deadlines to the host-nation, for whom the interest-clock would be ticking away, anyway.

Swap, another kind

When the talk is about China in Sri Lanka, the phrase ‘swap’ brings to mind only the surrender of Sri Lankan territory to the creditor in Hambantota, as if national sovereignty and territorial integrity are high-value assets that could be pledged. But there is the other, more recent employment of the term, where ‘currency swap’ is in currency.

China is there, too, in a big way. It is not about China or any other. Bangladesh is only the more recent instance in which the nation has entered into a $ 200-m currency swap. In between, there it was with the larger Indian neighbour. Already, critics in Sri Lanka have attributed motives to India delaying further decisions on Colombo’s request.

But the fact remains that despite a decade-long economic engagement with China, Sri Lanka is unable to raise that $ 200-m, borrowed from Bangladesh, with the arrangement to return it in goods or services or local currency. It implies that the US dollar, whether China and Sri Lanka like it or not, is going to be the sole international currency. It will be so until at least, China is able to make its yuan a regional, if not international currency, through the Colombo Port City – as is being anticipated. 

Gainer, loser

At the end of it, who is the gainer, who is the loser? For China, it is the obvious gainer. Even if some of the plans like the Mattala International Airport did not work out as expected, it has nothing to lose. But they you cannot blame China for it.

Sri Lanka wanted the airport, did not do its due diligence on the fiscal and economic front. India did so on Hambantota, so in a way advised Sri Lanka, not to venture out. India did not expect to swap Sri Lankan territory for unpaid dues, however short the repayment time be. China was not looking at repayment, but everything else, including Sri Lankan territory. Where angels fear to tread….

So, today, is Colombo Port City going to go the Hambantota-Mattala way, or is it going to create a new beginning in bilateral economic ties with China, for Sri Lanka that is? Friends of Sri Lanka can only wish the nation well. So at least for that goodwill, Sri Lanka cannot afford to lose on the Port City, at the very least.

Does it all mean that past debts and sins would be overcome? Granted that the Port City works well, and even more than expected for Sri Lanka – no one knows how and why – it would be a good beginning, yes. At least a time may then soon come so that Sri Lanka need not have to look around for ‘currency swap’ even of $ 100-200 millions, which should not have been a problem for a middle-income nation, pandemic or not.

But that would not still wash out the past debts, most of it committed to China. It is not about Governments in Colombo, but about creditor-nations. They are not going to change the rules, that too in debtor’s favour, even if the Port City prospered for them to gain from, more than expected. This is a burden, the present generation, the Big Two political entities have inflicted on future generations, knowingly and otherwise. Does anyone care?

(The writer is Distinguished Fellow and Head-Chennai Initiative, Observer Research Foundation, the multi-disciplinary Indian public-policy think-tank, headquartered in New Delhi. email: [email protected])

By N Sathiya Moorthy | Published: 12:40 AM Jun 15 2021

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