Controversial since its inception – Analysis – Eurasia Review

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By Vinitha Revi

Initially envisioned during the presidency of Mahinda Rajapaksa (2005-15), the Colombo Port City (CPC) project was announced during Xi Jinping’s visit to Sri Lanka in 2014. The CPC is one of the flagship projects of China and a major component of the Xi Belt and Road. Initiative (BRI). Spanning 269 hectares of land reclaimed from the sea, the project is worth US $ 1.4 billion and is the largest investment in Sri Lanka. Colombo being one of the 25 busiest ports in the world, the proposed project is billed as a “world class city” not only for Sri Lanka but also for South Asia.

While the previous administration of President Maithripala Sirisena and Prime Minister Ranil Wickresinghe briefly halted the project in 2015-2016 due to environmental concerns over dredging, under pressure from a high-level diplomatic visit (from the Deputy Minister Chinese Foreign Minister Liu Zhemin), they soon revived it. Since returning to power, the Rajapaksa administration under President Gotabaya has been firmly behind this project, promoting both its supposed potential to attract foreign direct investment and the prospects of job creation for locals. If this happens as promised, it will be the first China-funded project to create thousands of jobs and generate family income for Sri Lankans.

Environmental concerns

The CPC has raised concerns from the very beginning. Pejoratively called “another Chinese enclave”, criticism of it has come from all quarters, both internationally and nationally. Since its inception, environmentalists have consistently opposed the harmful impact of rock mining on biodiversity and marine life. Additionally, there has been opposition from fishermen regarding its impact on their livelihoods. Fishermen living along the coastal area of ​​Kammalthota have lamented that their income has already declined due to the depletion of fishery resources due to sand mining. There have been concerns that sand mining by mining the seabed from Hendala to Basiyawatta of Thalahena will negatively affect the livelihoods of residents who make a living from fishing in and around this area.

Sand exploitation is also expected to affect the lagoons, especially the famous Negombo Lagoon. Although the CPC project carried out three Environmental Impact Assessments (EIAs), the criticism was that these assessment reports did not sufficiently address several related issues. Many related issues could arise as the project progresses, such as water pollution, dumping of waste, dredging in port, discharge of cargo ballast water, soil pollution , acidification and acid rain.

CPC Economic Commission Act

The political opposition, NGOs and civil society opposed the government’s decision in April 2021 when it introduced the CPC Economic Commission bill to parliament. The bill provided for the establishment of a commission with decision-making powers on matters as diverse as granting tax breaks and other concessions, approving commercial applications and granting exceptions. According to the draft law, committee members are not accountable to Parliament or parliamentary committees, or the Auditor General of the nation, a constitutional authority.

The opposition parties, while welcoming the potential for growth, development and job creation, criticized the commission, stressing that it was an “all-powerful commission that is unaccountable. give back to no one ”. The bill, they argued, exceeded Sri Lanka’s sovereignty, as it granted the CPC Commission immunity from Sri Lankan law. Some Buddhist monks also opposed the bill on similar grounds. Opposition leader Sajith Premadasa criticized the bill on the grounds that it violated the concept of “one country, one law”, which the Rajapaksa administration also defended. He said, “If this bill passes, we will have one law in the country and another in Port City. Kandy District MP Lakshman Kiriella, who is also the chief opposition whip, said the CCP would look like a separate state outside parliamentary oversight, as 25 laws passed by parliament failed to pass. would not apply to him. JVP chief Anura Kumara Dissanayake said the proposed law would help transform the port city into a province of China.

After several petitions filed by opposition parties and NGO groups, the Supreme Court recommended certain amendments. The government agreed to these changes, avoiding the need for a two-thirds majority under Sri Lankan law, which would have been the case had it sought passage of the bill. In May 2021, Parliament passed the bill with a majority of 149 lawmakers (out of 225) voting in favor (58 against), officially declaring the establishment of Sri Lanka’s first Special Economic Zone (SEZ).

American reaction

In an interview in August 2021, then-US Ambassador Alaina B. Teplitz “expressed concern that the government is creating the best possible business environment to attract investment to Port City” and put warning against bad practices or even illicit financing such as money laundering and corruption. Similar concerns have been raised by other observers, such as Transparency International Sri Lanka (TISL) who have argued that inadequate monitoring could lead to money laundering.

Responding to a related question on QUAD and the Indo-Pacific, Amb Teplitz said, “We want to ensure that this vast region of the world is accessible, that it is dynamic, governed by international law and that there are key principles such as the freedom of navigation and the peaceful resolution of disputes are the rules that govern this space… because the democracies that the United States and Sri Lanka really should share common goals.

India’s concerns

India’s concerns, although not formally expressed, are manifold. First, the CPC is located only 290 kilometers from Kanyakumari at the end of the land. China’s presence in Hambantota with its potential for intelligence gathering, surveillance and possible Chinese submarine docking rights has already sounded the alarm bells for India. Colombo and Hambantota (although denied by Colombo) offer strategic positions in the Indian Ocean region (IOR). Chinese Ambassador to Sri Lanka Qi Zhenhong stressed Beijing’s absolute focus on these two projects, calling them “twin engines of growth”.

Second, Sri Lanka quashed the East Container Terminal (ECT) deal, based on national opposition and sovereignty concerns, but decided to push through the Economic Commission bill despite challenges. similar concerns. This has not gone unnoticed in India. Although serious concerns remain about the rushed process by which the bill was passed, in particular the insufficient time given to parliamentarians to consider the revised version of the bill and fears about illicit financial flows, this has not happened. makes little difference to the progress of the project.

Third, although the relationship between India and Sri Lanka has been multiple and unique, China’s economic engagement with Sri Lanka has grown and undeniably stronger in a relatively short period of time. It is clear that China will benefit more from Sri Lanka’s current economic situation, especially one centered on foreign exchange reserves. Foreign direct investment (FDI) plays a crucial role in the economic development of island nations and, in this regard, CPC is expected to attract huge amounts of FDI to Sri Lanka. The CPC finally highlights two things; one, for small island nations seeking to boost their economies, saying no to Chinese money, despite visible and real concerns, will be a challenge; second, as great power contention grows in the Indo-Pacific, island nations and the competition for influence over them will all become important to China and India.

The opinions expressed above belong to the authors.

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