Sri Lanka is set to sell a majority stake in its ‘remote’ Hambantota port to a Chinese company after agreeing on a revised deal to pacify India’s concerns, reports the Financial Times.
With nearly all government revenue currently going to debt servicing, the port is being sold as part of Sri Lanka’s strategy to pay down some of its debt, estimated to be around $65bn (USD), including $8bn to China.
The port is financially unviable due to its remote location with little demand for large-scale freight traffic, although India has expressed concern that China’s long-term interest in the project is strategic rather than commercial.
Brahma Chellaney, a professor of strategic studies at New Delhi’s Centre for Policy Research, said that the deal “technically looks OK” but that China’s future use of the port for military purposes cannot be ruled out. “Sri Lanka’s decision-making has become increasingly constrained by the debt trap that it has fallen into,” he said. “The Chinese will dictate the terms; they will run the show.”
Read more on the Financial Times.