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Sri Lanka denies China’s role in rejecting the Colombo Port project

Sri Lanka’s Foreign Minister, Dinesh Gunawardena, has denied that China played a role in Sri Lanka rejecting the East Container Terminal project which it had agreed upon with India and Japan.

“China did not pressure us in any way. They will not interfere in Sri Lanka’s internal affairs. Not only that, China will not interfere in Indo-Lanka relations. These are basic facts”, Gunawardena stated.

This statement follows escalating tension between Sri Lanka and India as Sri Lanka has withdrawn from the $500-$700 million dollar agreement. The agreement reached would have seen Sri Lanka retain a 51% stake whilst the Adani Group, an Indian business with ties to Indian Prime Minister Narendra Modi would hold 49%.

The Hindu highlights that China currently maintains an 85% stake in the Colombo International Container Terminal (CICT), which is under a 35-year ‘Build Operate and Transfer’ agreement with the Sri Lanka Port Authority (SLPA). Sri Lanka has also recently approved Chinese energy projects in three small islands off the Jaffna peninsula. 

Responding to this withdrawal, the Indian government has further demanded that Sri Lanka settle a currency swap agreement worth US$ 400 million as opposed to enabling a further extension. Despite Sri Lanka’s ongoing foreign exchange crisis, the Central Bank of Sri Lanka was able to raise the money however the Rajapaksa administration has said it will not seek to obtain an IMF bailout but have instead looked towards China for further loans.

Indian officials have further raised concerns over the deaths of 4 Tamil Nadu fishermen found in Sri Lanka. India’s Foreign Minister, Subrahmanyam Jaishankar, described the deaths of these fishermen as “unacceptable” and maintained that India government has raised concerns with their Sri Lankan counterparts.

Sri Lanka has stated that West Container Terminal would be offered as an alternative to the ECT, with 85% stakes for India and Japan. Neither country has commented on the offer that, sources said, was yet to be made directly.

Read more from the Hindu.

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