Sri Lanka’s China-backed Port City sees up to $4 billion investment interest


A general view of Colombo Port City construction site in Colombo, Sri Lanka May 2, 2018. Picture taken through a glass window. REUTERS/Dinuka Liyanawatte

Shihar Aneez May 2, 2018

COLOMBO (Reuters) – A Chinese-backed real estate project near Sri Lanka’s main port is in discussion with investors for up to $4 billion in investments in its first phase, the developer said on Wednesday.

Work on the $1.4 billion Port City project by China Communication Construction Company (CCCC) (601800.SS) started in 2016 as part of Beijing’s ambitious plans to create a modern-day “Silk Road” linking Asia to the Middle East and Europe.

The project is expected to attract $13 billion in investment over next 20 years.

Liang Thow Ming, chief sales and marketing officer of CHEC Port City Colombo (Pvt) Ltd, the local company that handles the project for CCCC, said 80 percent of the 269-hectare (665-acre) site had been reclaimed from the sea.

“We are on schedule to complete the reclamation and marine works by the second half of next year,” he told Reuters in an interview, adding that roads, parks, and other infrastructure will be completed by 2020.

“There is a healthy level of interest. We are talking about for hospitality, commercial offices, retail space, and residential. We have seen investors from Southeast Asia, India, the Middle East, China and Japan.”

He declined to identify specific investors, but said the Port City would see $3-4 billion investment “if everything comes true”.

“We are looking for partners with international image on the project. There is a healthy demand at the moment.”

The Sri Lankan government has said a consortium led by state-run China Harbour Engineering Company Ltd will invest $1 billion to build three, 60-storey office towers on reclaimed land at Port City, while CCCC is expected to invest $800 million to build an underground road network.,

Sri Lanka has been preparing legislation with tax incentives to lure investment to the Port City, which includes housing, marinas, health facilities and schools.

CHEC Port City Colombo (Pvt) Ltd aims to deliver the first site for construction by the end of 2018.

Reporting by Shihar Aneez; Editing by Kim Coghill

Source: Reuters “Sri Lanka’s China-backed Port City sees up to $4 billion investment interest”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

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China muscles into a new Great Game in Red Sea


New routes. The Chinese Navy’s guided missile destroyer Chang Chun with the Byzantine-era monument of Hagia Sophia in the background is docked at Sarayburnu pier in Istanbul. (Reuters)

China is steadily encroaching into the Middle East and Africa militarily.

March 11, 2018

BEIRUT – China is steadily encroaching into the Middle East and Africa militarily and economically and President Xi Jinping’s apparent drive to make himself president for life is a startling development that could affect the troubled region as it struggles with a cauldron of conflicts.

Xi may step up China’s effort to establish a bridgehead in the Middle East as the United States disengages after a half-century of dominating the region and as Russia seeks to fill the geopolitical vacuum by re-establishing Moscow’s influence there.

The Middle East, gripped by interlocking wars and teetering on the cusp of new ones, such as Israel hitting Iranian advances in Syria or the smouldering confrontation between Iran and Saudi Arabia, could well be affected by China’s westward military expansion.

“Globalisation has created a Chinese monster,” the Washington-based online journal Foreign Policy warned.

The announcement on China’s official news agency Xinhua that the Communist Party’s Central Committee recommended scrapping a two-term limit on the presidency and the prime minister’s postmarked a sharp turn for China after it had seemed to be opening up after decades of tight communist control.

That means Xi would be able to run for a third 5-year term in 2022, with the odds that he would win. Observers said this was a throwback to the iron rule of Mao Zedong and feared that gains China has made since that time were in jeopardy.

“A bombshell,” commented Susan Shirk, a leading China specialist in the United States. “I wasn’t anticipating such an open declaration of the new regime… I thought that maybe he’d stop short of this.”

The party sought to dismiss reports Xi was effectively taking power. The party-run tabloid, the Global Times, claimed in an English-language editorial: “The change doesn’t mean that the Chinese president will have a lifelong tenure.”

Shirk, however, cautioned: “This was the one formal rule that could have blocked him from staying on and being leader for life. So eliminating it really brings the intention out in the open and I think it eliminates any ambiguity about what’s going on here.”

The move came as China inaugurated a new military base on the tiny Horn of Africa state of Djibouti, straddling the important shipping lanes of the Gulf of Aden and some 4,000km of coastline.

Beijing also recently acquired the deepwater port of Hambantota in Sri Lanka under a 99-year, $1.1 billion lease.

India, which has long dominated the vital shipping lanes in the Indian Ocean, is engaged in a contest with China to acquire naval facilities between the Bab el Mandeb Strait, which links the Red Sea with the Indian Ocean, and the Strait of Malacca, the chokepoint between Malaysia and Indonesia that joins the Indian Ocean with the South China Sea.

As China steps up projecting its power westward, including the recent visit by its submarines at Sri Lankan ports, countries in the Middle East are growing alarmed about the potential shift in the balance of power.

“India is concerned about the large deployment of Chinese submarines, warships and tankers in the Indian Ocean,” observed Indian defence analyst Probal Ghosh, a retired Indian Navy captain.

“The Horn risks increased tension and violent conflict in what has become a high-stakes chess game for both Middle Eastern and African adversaries,” wrote James M. Dorsey, a senior fellow at the S. Rajaratnam School of International Studies in Singapore, in the Huffington Post.

“It’s a game China inevitably will have to play a hand in, despite the risk of being sucked into the region’s expanding battles.”

The anxieties being expressed about China’s intentions follow two years of intense propaganda by Beijing lauding Xi’s success in transforming China into a leading economic giant.

This has given added weight to concerns that Xi is seeking to abandon the collective leadership introduced in the 1980s to avoid repeating the calamitous cult of Mao and one-man rule.

These anxieties have some validity. Observers say that Xi, 64, has been chipping away at the Chinese constitution since he was elected president in 2012 and has overseen a draconian roundup of those who fear a takeover.

China’s military announced that it “fully agrees” with the ruling party’s controversial measures that would allow Xi to remain president for life and will “resolutely support the constitutional amendment proposal.”

The fall-out from this could heavily affect the Middle East just as China’s ambitious plan to build a multitracked modern Silk Road trade route to the rest of Asia, Europe and the Middle East moves forward.

Gulf oil supplies are crucial for China, so it will not want to jeopardise that flow — pegged at 51% of China’s imports in 2014 by the US Energy Information Administration.

So it may find itself drawn ever deeper into the region’s conflicts, especially the Sunni-Shia rift between Riyadh and Tehran, both of which have a dialogue with Beijing.

Bear in mind that China was one of the six world powers with which the United States shaped the landmark 2015 nuclear agreement with Iran.

China has deployed troops to its first foreign military base on Djibouti, where its facilities are cheek by jowl with a strategic US facility, which includes a major air base that coordinates much of the US war against terrorism in the region.

On the face of it, China seeks not only to create new partnerships in the Middle East and East Africa with trade, energy and infrastructure deals. It is looking at the stormy geopolitics of the region and the political perils they generate.

Xi made his first visit to the region in January 2016. He was one of the first world leaders to visit Tehran after the 2015 agreement was signed. During his regional swing, he articulated a new “Arab policy.”

An intensified push by Xi could unbalance the turbulent Red Sea zone, already suffering setbacks from the Yemen war involving Saudi Arabia and its Gulf Cooperation Council partner, the United Arab Emirates, as well as anti-terror operations by the United States and its allies.

Nearby Somalia, which has been a violence-ridden basket case since the collapse of the last national government of dictator Siad Barre in 1991, is being torn apart by a brutal, decades-long conflict between a weak and corrupt Western-backed government and the jihadists of al-Shabab, who regularly unleash elaborate suicide bombings in the war-scarred capital, Mogadishu.

That insurgency has become a key target for US President Donald Trump’s war on terror that of late has spilt over into neighbouring Kenya.

There’s little enough for China in Somalia but the bloodletting there increasingly threatens to underline that neighbouring Kenya and other East African countries, such as gas-rich Mozambique and Tanzania, are having to battle jihadists.

That gives China a potentially unsettling opening to battle the jihadists on someone else’s turf.

Impoverished Sudan, which lies at the north-west corner of the Red Sea, stands to gain immensely from the proposed Chinese expansion but its endless internal wars mean it is too risky for economic investment right now.

However, if China has its way, these countries, long mismanaged and reliant on economic handouts, would provide Indian Ocean ports for oil exports and other minerals that Beijing needs for its ever-burgeoning economy with swift delivery across the Indian Ocean, where China is steadily expanding its military clout to control the shipping lanes.

At a more prosaic level, the US-based security firm Stratfor cautioned that China is the Americans’ next big foreign policy headache.

“The United States is in fact already in the middle of its next great war — even if it’s only just starting to realise it,” it cautioned.

“In the latest National Security Strategy, the White House highlighted China’s growing technological prowess as a threat to US economic and military might.

“As hard as it may be for Washington to admit, China is catching up in the tech race. The question now is whether tech firms in the United States… will be able to keep up with their Chinese counterparts’ breakthroughs.”

China’s efforts to expand its military influence across the oil-rich South China Sea and the Malacca Strait suggest that it is prepared to use its growing military muscle to keep open such strategic channels in any future conflict with the United States or India, which fought a war against China in the 1960s and is increasingly spooked by its military incursions.

Hambantota port “gives them not only a strategic access point into India’s sphere of influence through which China can deploy its naval forces but it also gives China an advantageous position to export its goods into India’s economic sphere,” Australian security analyst Malcolm Davis told CNN in February. “So it’s achieved a number of strategic aims in that regard.”

Meantime, Beijing continues to build up its military forces, particularly its navy. Under Xi, it has one home-built aircraft at sea and another is under construction, along with an advanced class of destroyers that will operate from the “string of pearls” military bases Beijing has acquired.

It will take years, possibly decades, before China’s naval build-up will be powerful enough to wage a war against a foe such as the United States, with 20 carrier battle groups, or even India, but the will appears to be there.

China’s air force is also being revamped and built up and its indigenous jet fighter, the J-20, is viewed by Western experts to be a match for the Americans’ much-vaunted but untested in combat F-35 stealth fighter.

A Chinese Navy admiral displayed on television in 2017 what he claimed was a component of a new propulsion system that allows China’s nuclear submarines to move silently, making them extremely hard to detect.

There have been reports, but no verification, that the Chinese Navy has developed the first warship-mounted rail gun, an electromagnetic weapon that the Americans have been struggling to develop.

India is scrambling to keep up with China’s military expansion and is eyeing the purchase of at least 100 state-of-the-art, fifth-generation fighter jets worth an estimated $15 billion, possibly the US F-35 or even the new MiG-35 from Russia.

Meantime, like the Middle East, the Indian Ocean region simmers. Political unrest is brewing in the Maldives, which, like Sri Lanka, has long been considered to be within India’s embrace.

There is political turbulence, too, in Sri Lanka, the Seychelles, Eritrea and Ethiopia, which bodes ill for the Red Sea region, as the confrontation between India and China gathers momentum amid long-running regional rivalries.

While on the face of it, Xi’s “Arab policy” is designed to leverage China’s trade, energy and infrastructure investment, some analysts believe it will eventually drag China “into the geopolitics and cleavages of the region.”

Source: Arab Weekly “China muscles into a new Great Game in Red Sea”

Note: This is Arab Weekly’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


Why Is Quad Encirclement Inferior to China’s Encirclement of India?


Quad encirclement of China is a military encirclement. China’s gifted military strategist Sun Tze says, “If your troops are ten times of your enemy’s, then encircle it.” It means in modern warfare that one shall have overwhelming military superiority to encircle one’s enemy.

That is military encirclement and quad is precisely a military one as without participation of Russia, ASEAN, South Korea, Central Asia, etc. it is utterly impossible for India, the US, Japan and Australia to encircle China geopolitically or economically.

The Trans-Pacific Partnership may encircle China economically to its east and southeast but only partially not fully and China can counter TPP with its free trade agreements with the countries in that area including TPP members.

Now, US President Trump has already scrapped TPP and begun a trade war with almost all other countries, He may end up in having the US encircled economically in the world.

Militarily, the four quad members the US, India, Japan and Australia obviously lack the overwhelming superiority to China and its de facto ally Russia; therefore, the encirclement is meaningless.

China’s encirclement of India is a geopolitical one instead of a military one. China has no intention to take any land from India by force. That has been proved by China’s retreat and return of captured Indian troops and weapons in its previous triumphant war with India.

India has already been sandwiched by Pakistan and its iron brother China geographically. Now China’s Belt and Road initiative has been drawing Sri Lanka, Maldives and Nepal from India’s geopolitical influence. China has increasingly great geopolitical superiority to encircle India, which India is utterly unable to break however much military support it can get from other quad members.

Article by Chan Kai Yee


Can Quad Encircle China when India is Encircled by China?


Today I reblogged Foreign Affairs’ very interesting article about India titled “An Indian Nightmare: Is New Delhi Ready for the Twenty-First Century?” as it has updated my knowledge about India. However, the nightmare described in the article is India’s domestic problems. It is related to China as China is able to put an to India’s nightmare.

I always believe that Indian and Chinese economies supplement each other so that there are good prospects for win-win cooperation between the two giant neighbors. India needs Chinese investment for development of industry and infrastructures to exploit its huge cheep labor so as to provide jobs for its large population and lift lots of people out of poverty. China’s Belt and Road initiative can precisely help India build infrastructures that India is in urgent need of according to the article. Moreover, the infrastructures will enable China to move its labor-intensive industries to India as labor has become much more expensive in China. Win-win cooperation with China will put an end to India’s nightmare. Therefore, there are no reasons at all for India not to welcome China’s Belt and Road initiative.

Indian Prime Minister has the vision and wisdom to see that so that he regarded good relations with China as his first priority when he came to office. He accepted Chinese President Xi Jinping with enthusiasm when Xi visited India in 2014.

However, the honeymoon between India and China turned out to be very short. Why? Perhaps because China is the iron brother of India’s deadly enemy Pakistan.

In order to form a Russia-China-India alliance to counter US hegemony, Russia has tried hard and succeeded in attracting India into Russia- and China-led Shanghai Cooperation Organization (SCO) while Pakistan has joined SCO under China’s influence. The two neighbors with sworn enmity had tried to mend fence through SCO but has not made much progress in improving their relations.

However, China has to carry out its Belt and Road plans despite being cold shouldered by India. China’s successes in its Belt and Road initiative in Pakistan and Sri Lanka have made India fear that it has lost its hegemony in South Asia and Indian Ocean and its influence in the areas it regards as its sphere of influence is being replaced by China.

Seeing India’s predicament, the US and Japan tried hard to win over India into their quad to counter the rise of China that India fears. The US uses the provision of weapons and weapon technology as bait to attract India. As the weapons and weapon technology are what India urgently need to maintain its hegemony in South Asia and Indian Ocean, India readily swallow the bait. Modi should not have been so stupid as to bear the brunt in confronting China while the other three of the quad, especially Japan, have too great interests in their relations with China and would not bear the brunt in confronting China.

The US uses its quad to encircle China from the south but there are lots of holes in the encirclement. Only naval blockade in Indian Ocean may really hurt China. However, China has established several alternative routes for connection with Europe through Russia and Central Asia and is building China-Pakistan Economic Corridor for connection with the Middle East, Europe and Africa. India cannot block China’s land connection to Pakistani port of Gwadar or sea route from Gwadar to the Mediterranean along the coast of Iran and other Middle Eastern countries friendly to China.

China, however, has intensified its efforts to counter the quad by its generous investment in infrastructures in Nepal, Sri Lanka, Maldives and Pakistan with the effect to encircle India.

I certainly hope that India realizes its folly in bearing the brunt in countering China for the US, Japan and Australia and see the benefits in joining China’s Belt and Road to become a real South Asian power with prosperous economy instead of military strength. However, it is up to India to make the decision.

Indian big moneys are pro-West. They dominate Indian media that are spreading hostility to China day and night. Modi, though wise enough to see the needs for win-win cooperation with China, dare not oppose big moneys. Otherwise, he will perhaps lose quite a few vots in India’s next election.

Comment by Chan Kai Yee on Foreign Affairs’ article, full text of which has been reblogged by him today.


Driven by India into China’s arms, is Nepal the new Sri Lanka?


President Xi Jinping and new Nepalese Prime Minister Khadga Prasad Sharma Oli. Photo: AFP

As a new government takes charge in Kathmandu, the geopolitics of the Himalayas may change, the same way it did in the Indian Ocean

By Debasish Roy Chowdhury

25 Feb 2018

“This looks like China, doesn’t it?”

Deputy Inspector General Mandip Shrestha has his chest puffed out as he gives a tour of Nepal Armed Police Force’s freshly minted training academy. A swanky sprawl complete with a helipad, swimming pool, football ground, shooting range, soundproof meeting rooms, giant auditoriums and elegant red brick buildings, the hilltop campus with a sweeping view of the Kathmandu Valley is not your regular government installation in poorly developed Nepal. Shreshta can be forgiven for his house pride.

The campus was a US$350 million gift from China, which built it in two years and handed it over last year to the paramilitary force, which plays an important role in checking Tibetan refugees from entering Nepal. “Apart from the bricks and mortar, they brought everything from China. All the fittings, the furniture, everything,” says a visibly impressed Shreshta as he points to the overhead projector and the desks in one of the many classrooms. “This entire campus in just two years, imagine the level of efficiency.”

The swanky new Nepal Armed Police Force’s academy, compliments of China. Photo: Debasish Roy Chowdhury

Before shifting to the Nepalese Armed Police Force, which was set up in 2001, Shreshta started out in Nepal’s civilian police force in 1995. A different training academy was the buzz in Nepal those days. That year, Devendra Subedi, currently executive director of the National Police Academy, visited New Delhi as the youngest member of a police delegation from Nepal. “I attended the meeting where the Indians first mentioned they would build a new police academy for us. We were all super-excited. For years, that promised academy was the talk of Nepal’s police community.”

Every successive batch would be told about this mega academy where they would soon relocate, leaving behind the cramped and dusty premises in Kathmandu. “Our seniors would tell us about this coming wonder, we would tell our boys, they would tell their boys. Today, no one talks about it. It’s a joke, a very old joke,” Subedi deadpans. “When I retire in a few years, everyone present at that meeting where it was first promised would be gone, and not a brick would have been laid.”

When Indian Prime Minister Narendra Modi made his first trip to Nepal in 2014 soon after coming to power that year, he criticised the previous government for not delivering on the promises made to Nepal. He and his Nepali counterpart jointly unveiled a plaque of the police academy to flag off the project amid much fanfare. Then it went back right back into the freezer, and the joke was back on.

The academy is among the long list of India’s unkept promises and poor project track record in Nepal, such as the India-funded road projects in southern Nepal or the high-profile hydropower project on the Mahakali river. “This is how India has destroyed its own credibility in Nepal,” says political commentator and writer Yubaraj Ghimire.

Legacy issues such as these have added to the strains in India-Nepal relations in recent years as the small Himalayan country, tired of being pushed around by its giant neighbour is increasingly pushing back. As a new government takes power in Kathmandu, this widening rift puts it on the cusp of a geopolitical transformation as Nepal seeks a hedge in China to counterbalance India’s traditional dominance. Itself looking to tighten its toehold in a strategically important country bordering Tibet as its own relations with New Delhi spiral down, Beijing is equally happy to step in.

A graduate of the academy in action during vote counting in December. Photo: AFP

Hydropower to cement, Chinese businesses are already all around in this small South Asian country. Chinese internet providers are breaking Indian monopoly, Chinese tourists are flooding Nepal, Chinese-language institutions are mushrooming, more Nepali students are travelling to China than to India, and hundreds of Nepali officials are invited to China every year – Shreshta just returned from a year-long military training programme there – as part of an unprecedented charm offensive.

Charm is not the only thing Beijing is showering on Nepal. At US$79.26 million, China accounts for nearly 60 per cent of foreign direct investment (FDI) commitments received by Nepal in the first half of the current fiscal year beginning mid-July 2017. India is a distant second with US$36.63 million, followed by the US and Japan. All this makes India jittery. As China closes in, it severely restricts the clout it once enjoyed in the small countries in the neighbourhood. Nepal is of particular importance as it provides a critical buffer with China.

In this climate of geopolitical anxiety, big-ticket projects can foreshadow strategic trends and intent. China began to invest heavily in Sri Lanka after the civil war there ended in 2009, recently gaining control of a strategic port. In Pakistan, it is building a US$55 billion economic corridor with a port on the Arabian Sea that it may turn into a naval base. In Maldives, where it has been buying islands and building a port, it sent in a naval force last week amid a deepening political crisis after its China-friendly president imposed an emergency.

In a recent interview to This Week in Asia after his appointment as prime minister, communist leader Khadga Prasad Sharma Oli promised to revive the Chinese-led Budhi Gandaki dam project cancelled by the previous government, and stressed the importance of increasing connectivity to the geographically distant China through infrastructure investments in order to diversify Nepal’s options.

A classroom at a school in Kathmandu. Photo: Sarah Zheng

“We can’t forget that we have two neighbours. We don’t want to depend on one country or have one option,” he said. “With a new constitution and completion of elections to the three tiers of government, we have completed our political transformation. As we begin our journey as a federal republic, it’s now time to refocus our attention to Nepal’s economic transformation.”

He expressed appreciation of China’s growth and its ability to “create prosperity” for its people and said he found “the Chinese government interested in contributing to our infrastructure”.

Just two days into the job and still in the middle of a tricky merger between two communist parties and portfolio allocation, he wouldn’t venture any further. But Oli’s fraught relationship with India, Nepal’s pressing need for an economic boost, India’s limited capacity and poor track record, and China’s interest and proven ability in aiding Nepal, all point to significant Chinese participation in Nepal’s economy in the coming years.

Throughout the interview, Oli took care to stress India and China are both important and that Nepal needs to maintain a balance between the two. But Nepal seeking balance between distant China and next-door India with which it has had an open border and centuries-long cultural, economic, political and military bonds, is itself a telling sign of how the power balance is shifting in South Asia.

PAST TENSE

This is 66-year-old Oli’s second stint as head of the government. As prime minister between 2015 and 2016, he crossed swords with India over the provisions of Nepal’s new constitution. India believes the constitution discriminates against the people of the southern plains of Nepal adjoining India who are of Indian ancestry. When Nepal promulgated its constitution in September 2015, India was the only country in the region that did not welcome it and tried to exert pressure on Nepali leaders, who are mostly from the hills, to accommodate the demands of the plains. In the ensuing months, protests broke out in the southern plains, with unhappy minority groups blocking cargo trucks from India, which is landlocked Nepal’s prime source of goods supplies, especially fuel.

Pupils in Kathmandu protest against the Indian blockade in November 2015. Photo: Reuters

Though India never officially admitted it was blockading Nepal, Delhi’s siding with the demands for constitutional changes, encouragement of the border protests, and use of its own border forces and customs to block goods traffic was seen as and remembered in Nepal as an Indian blockade. Coming just months after an earthquake that ravaged the poor country, it amplified the sufferings of the general Nepalis in the harsh Himalayan winter and turned the popular mood decisively against India. It also brought back memories of a year-long blockade by India in 1989 for buying military hardware from China.

Oli approached China for critical fuel supplies and Beijing promptly dispatched tankers carrying 1.3 million litres of petrol. After nearly five months, the blockade began to be slowly lifted in February 2016 as Nepal agreed to a few minor changes in the constitution. Oli visited China the very next month and sealed a number of major pacts, including a transit agreement allowing Nepal access to Chinese sea ports and Chinese loans to build an international airport in the tourist town of Pokhara. Next year, when his government fell just before a planned visit by President Xi Jinping, he blamed India, cancelled a visit by Nepal’s president to India, and recalled the Nepali ambassador to the country, all rare acts of defiance by a Nepali leader against the mighty southern neighbour.

Taxi drivers wait for fuel in Kathmandu during the blockade. Photo: EPA

When Nepal went to elections last year, Oli successfully tapped the groundswell of anti-India sentiment, positioning himself as the embodiment of Nepali pride, the man who stood up to Indian bullying. The strategy earned his Communist Party of Nepal-United Marxist Leninist (CPN-UML) 121 seats in the 275-member parliament. Along with the CPN (Maoist Centre), Oli’s Left alliance has a combined 174 seats. The two parties are now working on a merger deal to cement the partnership. China, which has always openly advocated the communist alliance, is rumoured to have played a key role in forging it.

“India virtually delivered the election to Oli, he didn’t need a lot of strategising. Nor did Oli show exemplary independence in knocking on China’s doors. The visceral ultranationalism in Nepal as a backlash to India’s blockade made these choices pretty obvious for him,” says Kanak Mani Dixit, Nepali publisher and writer.

India, he says, in a way even forced Oli to join hands with Maoist Centre leader Pushpa Kamal Dahal, popularly known as Prachanda. As Oli knew New Delhi was dead against him as prime minister, he decided to leave nothing to chance and agreed to join forces. Apart from Oli, Dahal is the only other prime minister who has openly dared to go against India and was forced out of office after just nine months. Though India later used Dahal to topple Oli, the relationship between Dahal and New Delhi is just as strained.

India has traditionally played an active role in Nepal’s internal politics. It supported its transition from a monarchy to a multi-party democracy and helped end a decade-long civil war. But it found itself at odds with Nepal’s political elite over the new constitution restructuring Nepal as a federal republic.

“Up until 2006, when the civil war ended and the Maoists joined the political mainstream, India has always had a role in Nepal’s policymaking. But when we started working on our new constitution, the political leadership felt that we ought to take our own decisions and that relations with India should be based on mutual respect and benefit. Trapped in its British-era mentality of controlling Nepal, India didn’t take kindly to it,” says Rajan Bhattarai, a senior leader of Oli’s UML party.

Nepal Oil Corporation tankers arrive carrying Chinese petrol during the blockade. Photo: Xinhua

Photo Nepal Oil

“India wants to micromanage Nepal. They have to control all government appointments, they have to know everything. Their ambassadors behave like viceroys. Aren’t we a sovereign nation?” echoes Kishor Shrestha, editor of Jana Astha National Weekly and a board member of Nepal’s press council, channelling the popular resentment against India’s big brother attitude.

What complicated matters was India’s insistence on creating a separate province for Madhesis, as the people of Indian ancestry living along the Terai plains of southern Nepal are called. Nepalese leaders, on the other hand, wanted to avoid identity-based provinces. India’s demand would create a Chile-like sliver province on the border between Nepal and India.

“Such a province comprising only of people of Indian descent was deemed a security threat as it might want to splinter away in the future, giving India new leverage over Nepal. Why was India pressing for a buffer within a buffer? Nepalese policymakers began to get suspicious. Thus began a spiral of distrust and animosity, deepened by allegations of Indian funding of some Madhesi leaders,” says Geja Sharma Wagle, a strategic affairs analyst affiliated with the Nepal Institute for Policy Studies.

HINDU HEAT

After Modi’s Hindu nationalist Bharatiya Janata Party (BJP) came to power with an overwhelming majority, the new dispensation in New Delhi also allegedly began to insist that the constitution define Nepal as a Hindu state, or at the least not call it secular.

“[Previous prime minister] Sher Bahadur Deuba and Dahal were told by BJP leaders to drop the secular provision,” says Maoist Centre leader Narayan Kaji Shrestha, an architect of the Left alliance. “But we couldn’t think of a democracy without secularism. A Hindu state logically leads us back to monarchy as the king is a reincarnation of god in the Hindu power structure. So that was out of the question.”

According to Shrestha, this was a far bigger deal for the Modi government than Madhesi rights. “If we had not incorporated the secularist provision, they wouldn’t have enforced the blockade,” he says.

Nepali politicians and the Indian establishment go back a long way. But these associations are largely between the centre-left parties and leaders on both sides. With the very nature of the Indian establishment having changed, with right-wing Hindu nationalists taking centerstage in Delhi, Nepali leaders have found it difficult to connect. “Strident Hinduism is an unknown concept in syncretic Nepal, with a rich tradition of harmony between Hindus, Muslims, Buddhist and indigenous populations. That makes Nepali politicians deeply uncomfortable with BJP’s brand of Hindu identity politics,” says Ghimire.

Promises, promises: Narendra Modi unveils plaque for a police academy that was never built.

According to Dixit, the institutional channels of communication between Nepal and India have also collapsed. “India’s foreign ministry has been pushed to the sidelines and a small coterie of Modi now takes all the decisions. There’s no clarity on what kind of information they are acting on, and who is channelling this information. When we say Delhi, we don’t know if it’s the foreign ministry, the intelligence services, the Prime Minister’s Office, or the RSS (Rashtriya Swayamsevak Sangh, the ideological parent of the BJP).”

Whatever may have been the real trigger behind the Indian blockade, the end result was a very angry Indian foreign secretary “threatening” – by most accounts in Nepal’s power circles – Nepali leaders to delay the promulgation of the constitution “or face the consequences”. This enraged the leaders even further, prompting them to do it all the same, which in turn provoked the five-month Indian blockade.

Going back from here to a working relationship will take a lot of work. For Modi, in particular, because the Nepali public directly associate him with the blockade. “After his first visit during which he delivered a rousing speech on Nepal-India ties – the first few minutes in flawless Nepali – he became wildly popular here, more than any Nepali politician. Then he blew it all with the blockade. That left a deep sense of betrayal here,” says Kunda Dixit, editor of Nepali Times.

“But 90 per cent of Nepal’s trade is with India, so they’ll just have to get on with it. Besides, Oli is not as anti-Indian as he is made out to be. Much of his supposedly pro-China moves such as inking deals with Beijing was plain playing to the gallery. But the blockade undoubtedly created an opening for China to deepen its interests in Nepal, which are basically two – Tibet and trade. It is in particular pushing very hard for a railway connection with India through Nepal.”

Premier Li Keqiang with Oli in March 2016, during Oli’s first stint as Nepal’s leader. Photo: AFP

In his interview with This Week in Asia, Oli said he wanted to have the Qinghai-Tibet railway extended all the way to Kathmandu. China is already working to extend it to Shigatse and then Kyirong, in Tibet, which is close to the Nepal border. Kyirong is about 75km from Kathmandu. “If we can connect this railway network to our east-west rail project, it can revolutionise China-India trade, with Nepal in the middle,” he said.

In fact, the reading in Kathmandu is that trade with India is one of the reasons why China is so interested in Nepal. India has refused to sign on to China’s “Belt and Road Initiative”, which Nepal joined last year. Greater connectivity with Nepal automatically drags next-door India into China’s economic network, even if kicking and screaming.

“After all, Nepal is too small to risk or jeopardise a vital, multifaceted relationship between China and India,” says Swarnim Wagle, who has just resigned as vice-chairman of the National Planning Commission of Nepal.

LANKA REDUX

So large doses of Chinese investments are inevitable, especially those promoting connectivity.

Apart from railway, Nepal’s energy ministry this month sent a feasibility report for a 80km cross-border transmission line to the Chinese government that will allow electricity trade between Nepal and Tibet.

“Look at our roads, our infrastructure. There’s popular demand for infrastructure investment. Our debt-GDP ratio is 22 per cent. The average for low-income countries is 43 per cent. We can raise borrowings substantially, but too much of internal borrowing crowds out the private sector. So there’ll be need to look at funds from outside, and China is a natural fit as it’s eager to invest abroad,” says Wagle.

That puts Oli in a similar situation as Sri Lankan strongman Mahinda Rajapaksa at the end of the civil war in the island nation. Hungry for investments and at loggerheads with India, he turned to China. Oli, too, needs to show results and China, visible symbols of its influence. The spate of Chinese loans and investments did help Sri Lanka to break away from India’s control, but it also pulled it into deep debt, making it even more dependent on China. In the process, it helped China gain a strategic presence in the Indian Ocean. Oli now faces a Rajapaksha moment that could radically alter the geopolitics of the Himalayas.

Nepali human rights activists protest in front of the Chinese Embassy in Kathmandu. Photo: EPA

Already there are complaints that the Pokhara airport the Chinese are building is vastly overpriced. It was estimated to cost about US$140 million but was contracted to a Chinese company at US$216 million with loans from the China EXIM Bank. As in Sri Lanka, the extra cash has allegedly been used to line politicians’ pockets. There are similar complaints about the way Maoist leader Dahal hurriedly cleared the Budhi Gandaki dam deal with the Chinese in his last days as prime minister.

“South Asia is on a learning curve. Debt trap is a phenomenon that will not be learnt unless experienced first-hand. Poverty and lack of basic infrastructure in South Asian countries are so acute that they are basically desperate for outside investment and resources, and do not really care what happens a hundred years on,” says Nishchal Nath Pandey, director of the Centre for South Asian Studies, a think tank in Nepal.

Wagle differs. The conditions are different, he points out. Sri Lanka’s relations with the Western powers were completely broken when it turned to China. “Nepal has a cosy relationship with the West. Oli doesn’t have Rajapaksha’s unbriddled power. And we know the Lanka story,” he says. “There are checks and balances in Nepal to safeguard against reckless borrowing. If there are red flags, there will be resistance.”

But the biggest China risk, says Geja Sharma Wagle, the strategic affairs analyst, is ignorance about China. “We blame India for everything as we know India so well. But there’s no understanding of how China operates. We need to study their diplomatic and strategic instincts, and how Chinese money is coming into Nepal. Nepali politicians and policymakers have simply given China the benefit of the doubt.

Source: SCMP “Driven by India into China’s arms, is Nepal the new Sri Lanka?”

Note: This is SCMP’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


China Harbour Engineering to invest $1 billion in Sri Lanka’s Port City: minister


Sand is dredged from the sea at Colombo Port City construction site during the Sri Lanka’s Prime Minister Ranil Wickremesinghe’s (not pictured) visit in Colombo, Sri Lanka January 2, 2018. REUTERS/Dinuka Liyanawatte

Shihar Aneez January 3, 2018

COLOMBO (Reuters) – A consortium led by state-run China Harbour Engineering Company Ltd will invest $1 billion to build three 60-storey office towers on reclaimed land of the Port City development in Sri Lanka’s capital, a government minister said on Tuesday.

The $1.4 billion development of Port City, a project of China Communication Construction Company (CCCC) (601800.SS), the parent company of CHEC, began in late 2016 as part of Beijing’s ambitious plans to create a modern-day “Silk Road” across Asia.

“It will be part of the new financial city,” regional development minister Champika Ranawaka told reporters while accompanying Prime Minister Ranil Wickremesinghe on a inspection tour of the Port City development in Colombo.

“The investment will be $1 billion and we expect to sign the agreements this month in Beijing.”

CHEC officials were not immediately available for comment.

Sri Lanka is preparing legislation with tax incentives to lure investment to the 269-hectare (665-acre) Port City tract.

China Communications Construction Co Ltd13.17
601800.SS Shanghai Stock Exchange +0.37(+2.89%)

601800.SS

About 60 percent of its total area is reclaimed land from the sea in the commercial heart of Colombo, adjacent to the main port and the historic Galle Face Green park. The rest is expected to be reclaimed by June 2019.

For the overall project, Sri Lanka anticipates an eventual $13 billion of investment in housing, marinas, health facilities, schools and other developments over the next 30 years. The project is expected to create over 83,000 jobs.

CHEC Port City Colombo (Pvt) Ltd, the Sri Lanka company handling the project for CCCC, aims to deliver the first site for construction by the end of 2018.

Reporting by Shihar Aneez; editing by Mark Heinrich

Source: Reuters “China Harbour Engineering to invest $1 billion in Sri Lanka’s Port City: minister”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Lies, Fake News Cannot Stop China’s Belt and Road Win-win Cooperation


In SubChina’s report titled “Debt-trap: Debt-trap diplomacy on the Belt and Road?” today, it quotes Indian author and commentator Brahma Chellaney’s tweet, “Debt-Trap Diplomacy: In a reminder of how Chinese loans are collateralized by strategically important physical assets, Sri Lanka today formally handed over the Hambantota port to China on a 99-year lease because it is simply not in a position to repay its onerous debt to Beijing.”

That is pure lie but SubChina regards it as worthwhile basis for its fake news to describe China’s Belt and Road diplomacy as debt trap.

There is no Belt and Road debt in the port project at all.

The Chinese investor China Merchant Port Holdings (SM Port) is a subsidiary of China Merchant Group listed on Hong Kong stock exchange with obligation to disclose its Hambantota Port transaction.

According to the Group’s public announcement titled “Potential Discloseable Transaction Concession Agreement in Relation to Hambantota Port, Sri Lanka”, the company is to pay SLPA (Sri Lanka Port Authority) USD973.658 millions for the acquisition of 85% of issued share capital of HIPG (Hambantota International Port Group) and 58% of issued share capital of HIPG (Hambantota International Port Services) at USD146.00 million.

Adaderana.lk says in its report “Hambantota port handed over to HIPG and HIPS” on December 9, 2017, “The National Treasury (of Sri Lanka) received 294 million dollars as the initial 30% of the total amount that will be received.”

With such huge amount of payments, the Chinese company has only obtained shares in Sri Lanka-Chinese joint ventures in charge of the port. The port assets belong to the joint ventures instead of China.

Sri Lanka is heavily in debt when it concluded the above port agreement, but most of its USD25.3 billion debts in 2016 were borrowed by its former president Mahinda Rajapaksa for infrastructure projects mainly consisting of Colombo Lotus Tower, Magampura Mahinda Rajapaksa Port, Colombo Harbour South Container Terminal, Mattala Rajapaksa International Airport, Colombo – Katunayake Expressway, Mahinda Rajapaksa International Cricket Stadium. None of those projects are related to China’s 21st Century maritime Silk Road that began in September 2013, not long before the end of President Rajapaksa’s tenure on January 9, 2015 though 34% of Sri Lanka’s debts was borrowed from China.

As a matter of fact, instead of borrowing any loans from China, Sri Lanka receives USD964 million from China’s Belt and Road project to enable it to repay its debts borrowed for its expenditures not related to Belt and Road.

The above facts prove that SubChina’s description of Chins’s Belt and Road as debt-trap is pure lie and fake news.

True, China will stretch its influence to developing countries in Asia, eastern Europe and Africa through its Belt and Road initiative, but it has to be win-win cooperation to benefit those countries instead traps to harm their interests like colonialists did in the past. China is certainly not so stupid as to copy colonialists’ failures.

Sri Lanka will certainly be benefited from Hambantola Port developed by China. For now, the port will be second in importance to Singapore for trade through Indian Ocean, but if Thai political situation has stabilized, a canal across Kra Isthmus will certainly be built as the benefit of the shortcut for China, Japan and South Korea’s trade through Indian Ocean is too attractive to ignore. Then Hambantola will replace Singapore as the major shipping hub for the trade.

The benefits of the win-win cooperation in China’s Belt and Road initiative is too great for India and SubChina and other media to deny by lies and fake news.

Comment by Chan Kai Yee on SubChina’s report, full text of which can be viewed at http://supchina.com/2017/12/11/debt-trap-diplomacy-belt-road/?utm_source=SupChina&utm_campaign=64049b70ad-20171211-437+DebtTrapDiplomacy&utm_medium=email&utm_term=0_caef3ab334-64049b70ad-164862477.