Eleven hundred feet on the colombo horizon, giant lotus and pink driven out of green metal rods. Filled with a loan of nearly $ 100 million from China, Tower Nelum Kuluna will be the highest building in all South Asia, luxury hotel room housing, conference rooms, shopping centers, and infrastructure needed to provide digital television networks. From the peak of Nelum Kuluna, visitors can see large forests of cranes and dredgers at work, maintaining all cities from the sea.
The tower is empty, a monument for the destruction of a nation. The new city nearby will almost never rise from the mud. The $ 190 million international airport intended to serve the city has not yet had a scheduled flight since 2018. Gajah roams in the area, and the main access road is used by villagers to dry pepper.
“I told you, money could not build the peak of the tower,” William Golding wrote in his great work in 1964, The Spire, who tells the story of a cleric driven by an arrogance that is determined to maintain the tower from the Cathedral without basis. “Wake up from gold, and it will only sink deeper.”
Surrealist disintegration of Sri Lanka’s economic and political system marked a disaster for Chinese President Xi Jinping’s Belt and Road Initiative (BRI), which was designed to foster Chinese power throughout Asia and Africa. For New Delhi, this is an opportunity – but also a nightmare. Fear increased that Sri Lanka could join a long list of countries that failed on the outskirts of India – Afghanistan, Pakistan, Nepal and Myanmar. New Delhi has pumps nearly $ 4 billion in soft loans and assistance-but tofu this is not a long-term solution.
In the destroyed Chinese dreams in Sri Lanka, there is a warning for India: the white elephant land is full of hidden swamps, where good intentions and cash can be lost without a trace.
Dragon treasure
Even when he led Sri Lanka to victory in the Eund War, former President Mahinda Rajapaksa initiated a giant program to release his country from the economic morass caused by years of conflict. The traditional multilateral loan of the country has tightened norms since 1997, when Sri Lanka was considered to have become a lower medium income country. Some private sector investors are willing to take the risk of their money betting on a country hit by war.
From 2005-2010, Economists Umesh Moramudali and Thilina Panduwawala estimated that China released around $ 1.4 billion loans for infrastructure-which involved things like norms that were easily subject to projects and social impacts. In the period 2011-2015, when the payment was due, China rescheduled Sri Lanka’s debt and threw another $ 3.1 million.This country needs 16 International Monetary Fund (IMF) bailout funds since 1965. Now China seems to offer an alternative lifeline, free from difficult policy reform conditions.
China’s expenditure, some argues, supported by a larger plan to develop the client’s state web throughout the Indian Ocean, running from the port of Rim Cambodia to Djibouti. There is a reason to be skeptical, this claim is China’s main motivation. “Foreign policy experts,” Jonathan Hillman wrote in his authoritative book, The New Road: China and the project this century, “Sometimes seeing a strategy where there isn’t.” “Want to support the vision of XI’s signature, Chinese officials approve the loan for the project without adequate complete test. Chinese companies really want to build projects and will be paid regardless of their commercial feasibility, “he added.
“Everyone takes something for themselves, with enthusiasm and without much care for the long -term impact. It’s chaotic, not strategic, “Hillman said further.
Loan game
Like the Roman god Janus, the leaders of Sri Lanka looked both east and west at the same time in the same time in post-independence history, the country had learned to take advantage of the geopolitical competition of great forces. Concerned that the opponents of his Marxist, who at that time Prime Minister Don Stephen Senanayake allowed the British to maintain his naval base in Trincomalee, and the presence at Katunayaye Airport, near Colombo. However, in 1952, he also began trading with China, exchanging rubber for rice.
Although China lacked money, it also gave more than $ 41 million for Colombo in 1968. Chinese scholars George Lerski noted in the 1974 essay that the country was the “loan source and grant most reliable in Sri Lanka.”
For its part, the Soviet Union also stepped to compete for geopolitical influence on the island. In 1956, after the neutral government of the Prime Minister SWRD Bandarnaike served, Moscow provided around $ 24 million in soft loans to finance several industrial projects. Following the nationalization of US oil company assets in 1962, Soviet-BLOC assistance increased significantly, across $ 50 million.
The government of Dudley Senanayay, who took power in 1965, turned west again. The United States responded by collecting coalitions, which extended a loan of $ 50 million.From 1970, Sri Lanka drove left. Now, China is trying to contain the influence of Soviet in the region, offering Sri Lanka loans of $ 27 million. In the summer of 1972, only one month after Sri Lanka failed to get a bailout from the IMF, China gave the country a loan of $ 40 million without interest, paid more than 20 years. White elephant land
Long before the new wave of Chinese investment washed Sri Lanka under Mahinda, clearly the projects that he promoted had a weak foundation. In the 1970s, Mahinda’s father, Don Alwin Rajapaksa, had called for a port to be built in his home district, Hambantota. In 2003, Sri Lanka had rejected a proposal by the Canadian Engineering company SNC Lavalin to explore this idea. SNC Lavalin’s plan – preferably – determined to involve assumptions that are too optimistic.
Although the cronies associated with the regime reportedly received profit from the port-construction contracts, Hambantota did not help Sri Lanka much. The port never approaches the achievement of the traffic projection which is the basis. And the promise that it will produce more than 100,000 jobs proven to be Chimera.Financing Sri Lanka’s foreign debt – most of the commercial market loans are increasingly challenging. The debt ratio to gross domestic product rotates from 36 percent in 2010 to 94 percent in 2015 – and more than 110 percent last year.
To help pay off his debt, Sri Lanka found that he was forced to give a 99 -year lease at the Port to China Merchants in 2017, with a reward of $ 1.1 billion. The government uses the money, until this new bankruptcy, to serve debt to China, and other lenders.Even when Hambantota floundered, China announced its biggest single investment in Sri Lanka. The Colombo Port City project was inaugurated in 2014 by President XI, year after he launched the Belt and Road initiative to build road, train and maritime infrastructure throughout Asia. This project is intended to become a financial center to compete with Dubai and Singapore, complete with houses for 80,000 people and marina.
For a 99 -year rent with 43 percent of the land, China Harbor Engineering Corporation will sink into the $ 1.4 billion estimated needed to build a project. But Sri Lanka, who has been immersed in debt, must collect $ 1 billion needed for roads and infrastructure.