Shock for Chinese backers as billion-dollar Sri Lanka project runs into political mess
Chinese-funded project in Sri Lanka is caught between the devil and the deep blue sea as poll rhetoric runs into legal and diplomatic realities
A long, slender breakwater arcs out into the Indian Ocean from near the desolate construction site along the waterfront near Colombo port. The silent excavators dotting the heap of boulders at the site overlook the calm waters. Protected by the breakwater, the tranquility of this swathe of the ocean contrasts the storm raging over the project marked for it.
Now stalled by a government decree, the Colombo Port City project is being reviewed afresh. Promoted by Chinese state-owned and Hong Kong-listed China Communications Construction Co (CCCC), it has become a bone of contention between China and Sri Lanka, threatening to derail Beijing's most successful diplomatic outreach in the region.
For Sri Lanka's new rulers, who have ordered the review after coming to power by trouncing Mahinda Rajapaksa in January's presidential elections, Colombo Port City represents everything that was wrong with the last regime - corruption, cronyism, lack of transparency and utter disregard for democratic institutions and procedures.
For China, it is a shocking turn of events in a country where it has invested enormous financial and political capital. For its companies, it is also a major bend in the learning curve in negotiating the cross-currents of local politics, business and geopolitics on foreign shores as they increasingly venture abroad.
With CCCC now digging in its heels with full-page advertisements defending its position, and the new government appearing torn between its election promise of scrapping the project and the legal, financial and diplomatic implications of actually doing so, the waters can only get muddier. With no easy resolution in sight, it's either going to be a messy and costly divorce or a very long and equally expensive reconciliation process.
From ports and highways to airports and power plants, Chinese funds and companies have been on an infrastructure building spree in this country of 20 million people that sits in the middle of the east-west trading route and along all major oil routes between China and the Middle East.