(MENAFN- Colombo Gazette)
According to the latest information, 'following an agreement between the two parties, Chinese company and Sri Lanka, the court order was suspended and the People's Bank released the dollars for the relevant payments. People's Bank has been removed from the Black list accordingly'. The issue was samples tested confirmed that the fertilizers imported from China contained harmful bacteria in the soil and the fertilizer stock was returned. However, Sri Lanka had to pay $ 6.9 million for fertilizer imports. To put it in a nutshell, a Sino-Sri Lankan quarrel over fertilizer has ended in China's favor.
Only a month ago, Agriculture Minister Mahindnanda Aluthgamage had stated that the Chinese organic fertilizer shipment would not be accepted nor would Sri Lanka make any payment towards this shipment.Sri Lanka was compelled to shift away from that position. We cannot afford to damage diplomatic relations over this issue,” Aluthgamage said explaining the government's volte face.
Context
The Chinese ship 'Hippo Spirit' – departed from China in September 2021 carrying 20,000 tons of much-needed organic fertilizer to Colombo. The order was placed after the Sri Lankan government suddenly stopped all chemical fertilizer imports in May to convert the country into the world's first completely organic farming nation. It was the first consignment of Colombo's plans to purchase 99,000 tons of organic fertilizer from a Chinese company at a cost of $49.7m. The issue is with the quality of the fertilizer – which scientists say, instead of helping, could prove harmful to Sri Lankan crops. They insist that since the cargo has implications for the bio-security of the country, it cannot be accepted.
Colombo rejected the consignment on the grounds that the samples contained deadly bacteria called Erwinia which destroys crops. The Chinese company in its turn has denied sending contaminated fertilizers and spelt out the production process. This is exported not just to Sri Lanka, but to fifty other countries including the US, Germany, Spain, Italy, Australia and New Zealand.
Through its lawyers, the Chinese company had threatened legal action against the department demanded $8 million from W.A.R.T Wickramaarachchi, the Additional Director of the National Plant Quarantine Services, as compensation for wrongful charges and damage to its international reputation.
Chinese Response
“The Sri Lankan Ministry of Agriculture has backtracked and has no sincerity in solving the problem; therefore, enterprises can only use judicial and arbitration channels. Despite the embassy's joint efforts to promote the settlement of the dispute by guiding and assisting enterprises to deal with the issue, as well as communicating with the Sri Lankan Ministry of Trade, the Ministry of Agriculture and other relevant departments, the issue remains unsolved, the Chinese Embassy in Sri Lanka said, extending its hope that the matter can be resolved satisfactorily as soon as possible.
A war of words ensued and was followed by tit-for-tat actions.
“The unscientific detection method and conclusion” of Sri Lanka's National Plant Quarantine Service (NPQS)“do not comply with international animal and plant quarantine convention,” Qingdao Seawin said in a statement . It accused NPQS of having also“irresponsibly conveyed false and even controversial remarks to the media.” The Chinese company also slammed the media for using“derogatory words” like“toxic, garbage, pollution” to describe the fertilizer consignment. This was aimed at“seriously slander[ing] the image of the Chinese enterprises and the Chinese government,” it said.
In subsequent talks with Sri Lanka's agriculture Ministry, Qingdao Seawin, put forward several conditions for resolving the dispute. Sri Lanka would have to pay 70 percent of the agreed price in the original tender agreement and additional freight charges, it said clearly, Qingdao Seawin did not want the controversy over the quality of its shipment to Sri Lanka to impact its trade with over 50 countries, including the U.S.
If Chinese pressure forced Colombo to buckle down on a toxic consignment of organic fertilizer, mass protests by farmers forced the government to retreat on its fertilizer policy. Even as China came out victorious in its spat with Sri Lanka over the organic fertilizer controversy, the Rajapaksa government has partially lifted the ban on chemical fertilizers.
The People's Bank had to make a payment of over a US $42 million to China. The Chinese Embassy in Colombo tweeted the blacklisting.
The Sri Lankan authorities had sent back a recent Chinese ship with 20,000 tons of the fertilizer, due to harmful bacteria in the shipment in October. The Chinese authorities have defended the high quality of their export from Quingdao Seawin Biotech Company. Surprisingly, the same ship, 'Hippo-Spirit,' was rechristened as 'Seiyo Explorer' and re-entered with the same consignment in November. The ship deactivated its automatic identification system (AIS) and renamed itself in mid-sea. China was using its influence to get the contaminated fertilizer consignment offloaded on the island regardless of the rejection.
The extent to which China would go from blacklisting the bank to renaming the ship shows China's significant 'push' factor and depicts the apparent weakness in Sri Lankan institutional capacity—such as the Foreign Ministry—to defend the blacklisted local bank and pressure China to adhere to the local test data. The Chinese wish to take a third-party assessment on the fertilizer, again undermining Sri Lankan expertise. China's capacity to maneuver supply chains is exemplified by this case, where Sri Lanka was being pressured and is a victim of its heavy dependency on Chinese loans.
China is altering the rule book and standards to suit and pressure the local policymakers in countries like Sri Lanka. The significant growth of Chinese agency over Sri Lankan elites, government institutions, and media space was captured as 'high risk' by a recent comprehensive report on China's influence in South Asia: Vulnerabilities and Resilience in Four Countries' by the Carnegie Endowment . The growing agitation amongst the public over Chinese loans is a serious indicator of this development. The report aptly highlights the 'high-risk' Sri Lanka faces from China when it comes to potential capture of“influential elites and key individuals in Sri Lanka's vibrant and robust media, as an alternative to politicians to get their view across to the public'. The report further states that,“issue of captured or capturable elites by China is more relevant in Sri Lanka than in Bangladesh.”
Opposition Party Protests
Opposition Samagi Jana Balavegaya MP Rohini Kaviratne pointed out that though the Maha season was underway the farmers were yet to receive promised fertilizer. Government politicians wouldn't be able to visit the farming regions, MP Kaviratne said, adding that idiotic government had ruined the Maha season. The MP said that the Chinese action against the People's Bank over the Commercial High Court of Colombo stopping payments was an extremely serious matter.
Indian assistance
By early November 2021, India came to the rescue of Sri Lanka by airlifting 100,000 kg of liquid nano nitrogen for urgent distribution among farmers protesting against the government's failure to provide required fertilizer and agro-chemicals.
Two Indian Air Force Globe masters arrived at the Bandaranaike International Airport (BIA) in perhaps one of the largest if not the biggest single airlift carried out by a foreign Air Force here. The Sri Lankan Airlines airlifted the first consignment on Oct 21.
The Indian High Commission spokesperson said that the deployment was essentially in support of Sri Lanka's initiative towards organic farming and to expedite availability of nano nitrogen fertilizer to the farming community as reported by Island newspaper.
“The Government of India has continued to support Sri Lanka in times of critical requirement as part of its 'Neighborhood First' policy and has repeatedly demonstrated its capacity and role as the 'First Responder' in the region.”
So deeply steeped in Chinese debt is Sri Lanka that it is said to be caught in a Chinese debt trap. Importantly, Beijing has repeatedly defended Sri Lanka from censure at global human rights forums.
However, Sri Lanka and China hadn't been able to resolve the crisis over the former rejecting 20,000 metric tons of carbonic fertilizer following adverse test report by the national quarantine services. Sources said that the issue had put on hold the move to procure 99,000 metric tons of carbonic fertilizer from China.
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