(MENAFN- Colombo Gazette) By R M M Lilani
A significant shift in the chaotic foreign policy of the Sri Lankan government has raised the idea of Japan once more acquiring the East Container Terminal (ECT), as the International Monetary Fund works to ameliorate Sri Lanka's current financial crisis. After signing a MoU in 2019 agreeing to construct and run the ECT for 35 years, Japan was one of the partners that were dropped along with India.
The government is working hard to convince all the developing partners to restructure their debt to Sri Lanka in order to get a USD 2.9 billion credit facility. Japan is one of the major development partners that have been asked to do so along with China and India.
The ECT is being offered to Japan at a time when Sri Lanka is requesting an IMF bailout. Whether Japan would agree or not, the negotiations to persuade the development partners to grant Sri Lanka a 10-year moratorium in exchange for the IMF facility are still ongoing.
Despite consistently claiming to be impartial in its interactions with the international community, Sri Lanka has been sending mixed signals, escalating geopolitical tension that comes with its unethical foreign policy.
The new President of Sri Lanka Ranil Wickremesinghe, was replaced by Gotabaya Rajapaksa, who was overthrown by the country's enraged populace owing to his botched foreign policy, mismanagement of the nation that made the masses to fight for survival. The removal of Rajapaksa had more to do with the convoluted domestic politics, but he also seriously fouled up with the foreign bilateral partners.
When the MoU for ECT was signed and ready to be handed over, Wickremesinghe was Prime Minister. He was, however, defeated in the 2020 General Election. His party had already disintegrated due to a schism.
Wickremesinghe recounted how the ECT was pushed from pillar to post at the Colombo Economic Summit on Thursday (6 December).
“Why don't we develop (Colombo harbour) and make it a logistics center?” he suggested.” When I last tried to develop Colombo Harbour and give out the East Container Terminal, there was a lot of dispute about whether I was trying to sell the country. Now we have given the West Container Terminal out. Very good, but if you really want to get going, you have to give the East terminal out. We've given the first choice to Japan. If they don't, we'll ask the others to come. Colombo port must be the busiest port in South Asia. The small port won't do so when you get full. We are now thinking of expanding the Colombo port all the way to Ja-Ela,” he told the attendees of the summit.
One of the several foreign projects Gotabaya abandoned in 2019 was the ECT, which was earlier intended to be offered on a tripartite agreement between India, Japan, and the Sri Lanka Port Authority (SLPA).
India referred to it as a reprehensible act of submission to a group of trade unions that purportedly collaborated closely with the Chinese in Sri Lanka.
Every time the government changes, so do the policies, particularly the foreign policy, which has irritated many investors as well as those who make recommendations on their behalf. Despite the fact that authorities have advised Sri Lanka not to be political in its investment projects, this has been a continual source of concern.
But the same thing happened this time. Japan was irritated by the cancellation of the ECT because they had also performed the survey. They had also conducted feasibility studies. However, because India was involved, the prior government opted not to let it go.
The ECT protesters in 2021 claimed that the India's richest man Adani Group, which would have the largest stake in the ECT, was denied due to the Indian government's involvement.
However, because India was embarrassed, Adani was eventually offered the West Container Terminal (WCT). Japan pulled out of the proposal to collaborate with India to build the WCT.
Following this setback, international tensions soared. The Quadrilateral Security Dialogue (QUAD) countries arrived in force, pressuring Sri Lanka to work with them all. US Envoy Julie Chung reiterated that Sri Lanka should play on a fair playing field with its bilateral partners.
Unexpectedly, the South Asian region became concerned about the impending financial crisis in 2021 and the defaulting foreign debts. India offered to financially support Sri Lanka and strengthen its defence ties with Sri Lanka, claiming that the country's problems were clearly caused by high levels of corruption. The Quad came to help on humanitarian grounds but it was their strategy too.
Samant Kumar Goel, the RAW chief, traveled to Sri Lanka on November 28 and met with the President and other politicians. According to a local newspaper, the President and the RAW Chief discussed security-related problems, including visits by the Chinese espionage ship“Yuan Wang 5,” which was let to dock at the Hambantota Port and was outfitted with different monitoring and surveillance devices.
India vehemently protested the permit and said Sri Lanka should have known better. Also the President had briefed him on the trajectory of Indo-Lanka relations and assured him that Sri Lanka will not harm Indian interests.
India agrees that elections should be held in Sri Lanka to gauge public opinion. After his meeting with Goel, Basil Rajapaksa told the Sri Lankan people that his party, the Sri Lanka Podujana Permanuna (SLPP), was prepared for the election and that the government could conduct it.
On Sri Lanka, the Quadrilateral Security Dialogue (QUAD) has made significant progress. To repair their relationship, they are working with Wickremesinghe's administration. On December 6, 2022, Wickremesinghe met with the Australian High Commissioner, the Indian High Commissioner, and the Japanese Ambassador. He also met with the British High Commissioner.
The President's Media reported that they had discussed the bilateral development corporation. They are QUAD members, and the British have backed QUAD strategies as well. This paints a clear picture of the geopolitical environment that Sri Lanka is currently operating in, with the government ready to share its resources for joint ventures, one of which is finally offering the ECT to Japan.
India has provided unprecedented bilateral aid of close to USD 4 billion this year for easing the challenges experienced by the people of Sri Lanka as their financial crisis began to worsen in 2022. In addition, India has urged other bilateral and multilateral partners to assist Sri Lanka quickly in light of its current economic challenges. We also took notice of the conclusion of the Staff Level Agreement between the IMF and the Sri Lankan government. Its continued acceptance by the IMF is dependent on a number of factors, including Sri Lanka's capacity to manage its debt.
India said they will continue to support Sri Lanka in whatever manner they can, particularly by encouraging long-term investments from their country in important Sri Lankan economic sectors in order to hasten the country's early economic recovery and expansion. Additionally, they have active bilateral development cooperation projects in Sri Lanka for a total of around USD 3.5 billion.
Now that the ECT is heading to Japan, problems could arise because the powerful Trade Unions are already upset about the most recent plan to sell State assets to international partners. The government claims they must“sell” shares in order to pay off the debt and keeping in line with the IMF recommendations, to make maximum revenue with under functioning institutions.
The national career SriLankan Airlines is already available for grabs. The Mattala Airport, the telecom, Trinco Harbour, the Lotus Tower, and the LRT project are also up for grabs (towards Japan). Even while US interests are not immediately apparent, they eventually will be.
Wickremesinghe is caught in the crossfire between China and the other bilateral nations. The Quad nations and Sri Lanka were drawn together by China's significant influence. Although Wickremesinghe has played by the rules thus far in geopolitics, nobody wants to witness again another bloody demonstration against Japan assuming control of the ECT. If that occurs, Sri Lanka would be back where it started, battling for its existence.