Wednesday, June 16, 2010



China, which is already meeting in the form of a soft loan from its Ex-Im Bank 85 per cent of the cost of construction ( US $ 360 million) of the first phase of the Hambantota port in Southern Sri Lanka, has agreed to give another soft loan of US $ 200 million towards the cost of construction of the second phase due to start early next year. An agreement in this regard was signed by the concerned officials during the visit of Chinese Vice Premier Zhang Dejiang to Colombo from June 10 to 12,2010. With this, the total Chinese funding for the project will come to about US $ 500 million, out of its total estimated cost of US $ one billion. The project being undertaken in three phases is expected to be completed by 2023. It is too early to say whether China will substantially fund the third and last phase too.

2.The first stage due to be ready by end 2010 will allow three ships to berth. The final stage, for which there is no offer of funding yet from China, is planned to accommodate more than 30 ships, which is the present capacity at Colombo. President Mahinda Rajapaksa is trying to develop Hambantota in his home district into another Colombo with its own port as big and as modern as Colombo, its own international airport at Weerawila, its own oil storage facilities and refinery, its own tourist hub, its own international conference hall and its own complex of sports stadia to enable it to bid for the Asian Games one day. He is hoping that the Chinese will ultimately fund the major part of the cost of his Hambantota dream. He has also sought South Korean funding for the proposed international conference hall.

3. While China has readily expanded its financial commitment for the Hambantota project, it is still to make up its mind on the request from Sheikh Hasina, Prime Minister of Bangladesh, made during her visit to China in March last for Chinese financial and construction assistance for the expansion and modernization of the Chittagong port. While the Chinese have agreed to consider her request sympathetically, they have not yet come out with a concrete project. Expectations that they would make a firm announcement during the just-concluded visit (June 13 and 14,2010) to Dhaka by Chinese Vice President Xi Jinping have been belied.

4. Local news agencies did report that during his talks with Sheikh Hasina, Mr.Xi “proposed to give assistance to Bangladesh for building a deep seaport in Chittagong and installing the country's first space satellite” and that “Beijing also agreed to quickly disburse its assistance for the Pagla Water Treatment Plant and the Shahjalal Fertiliser Factory”, but there was no official announcement. Briefing reporters on the outcome of the talks, Foreign Minister Dipu Moni said the Chinese side assured more investment in Bangladesh, and promised to reduce the bilateral trade imbalance by allowing more Bangladeshi products to have duty-free access to the Chinese market. She added that the Chinese agreed to help Bangladesh in ensuring food security and in combating militancy and terrorism. She also said that China also agreed to extend cooperation for the development of telecommunication and infrastructure in Bangladesh. While there was thus a mention of Chinese assistance for the development of infrastructure, there was no specific reference to the proposal for Chinese assistance for the expansion and modernization of the Chittagong port. The issue was formally raised by Sheikh Hasina with the Chinese leaders only in March and it is perhaps too early for the Chinese to come out with a formal proposal.

5. After Gwadar on the Mekran coast of Pakistan, the first phase of which has already been completed and the port commissioned, their focus has been on the early completion of the first phase of the construction of the Hambantota port and its commissioning by the end of this year and the start of the second phase. They are attaching equal priority to the timely completion of the Kyakpyu port off the Arakan coast in Myanmar, the construction of which started last year. While they are interested in taking up the project for the expansion and modernization of the Chittagong port, it does not as yet seem to enjoy the same priority as Gwadar, Hambantota and Kyakpyu,, which, in their view, are important for ensuring their energy flows from West Asia and Africa. They do not seem to attach the same urgency to the Chittagong project from the point of view of their energy flows.

6.There are so far no indications of a Chinese interest in a naval base at Hambantota or Kyaukpyu or Chittagong. Their interest in a naval base at Gwadar remains strong. Retired Chinese naval officials have been underlining the importance of rest, refueling and re-stocking facilities for Chinese ships deployed in the Indian Ocean and the Gulf of Aden. Gwadar is attractive in this regard, but if the internal security situation in Balochistan where Gwadar is located remains unsatisfactory, Hambantota could become their fall-back choice.( 16-6-10)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai, and Associate of the Chennai Centre For China Studies. E-mail: )


nri2008 said...

Dear Mr,Raman,

Could you please leaborate why Indian Government is taking these issues lying down? Is the Indian Government so busy fire fighting ikn domestic arena that it has lost way of how to manage volatile South Asian neighbourhood? PM Singh seesm to be most happy having photo opportunities with Prez Obama and G20 to give serious thought to foreign policy-even new Nuclear Law compensation is pittance when Prez Obama has got BP to agree to USD20Billion fund for BP oil spill victims!

Analysts and strategic experts cry hoarse about China's encirclement of China but Indian policy making is still frozen in Cold War Era. Will it not make more sense for India to offer assistance for deepwater harbours in Bangladesh and Sri Lanka? In a business or corporate or business enterprise one tries to expand business in areas of synergy. The same principle is applied to geopolitics by wise and strong powers like USA and China.

Unless we replace current leadership in Indian Government and bureaucracy by honest, dynamic, competent and innovative leaders we will never able to be match to China at all as we have already lost the war in many small battles being waged in South Area.

The culture of excellence in India is present in only a few niche areas and political will and determination is needed to ramp up capabilities and capacities in big way if our country has any chance of success.

But alas our bright star ministers are more interested in cosying up with business tycoons who manipulate Government policy for their own private good. Now with revelations of sordid saga of lobbying one wonders whether Government is run by PM Singh or business tycoons like exPM Thaksin Shinawatra in India too!

Warm Regards


Sarang said...

Dear Ram,

"Could you please leaborate why Indian Government is taking these issues lying down? Is the Indian Government so busy fire fighting ikn domestic arena that it has lost way of how to manage volatile South Asian neighbourhood?"

India has been looking inwards since 1000AD and thats why we were invaded by foreigners for the last 950 years!! Wave after wave of invasions and we did not make a common defence, let alone offence. What is happening now? Pakistan makes wave after wave of attacks, Bangladeshis and Nepalese and Chinese and Burmese and ...etc etc do not care about India and we have trouble with every neighbour. China is encircling us with the help of Pakistan and their only aim is to destroy India! Period! And our PM sends Mangoes as godwill gesture to Pak PM on the same day Pakistan frees Hafeez Saeed...the butcher of Mumbai. What do you expect?

Our Government HELPED Anderson escape in a Government plane when thousands of Indians were dying!! Such insensitivity!

Why don't we help build deep water ports for Bangladesh and Sri Lanka?? Because we do not have the vision, the motivation, the guts and the committment to complete projects on time and of quality. Corruption is so huge that construction projects have to be halted mid-way due to lack of funds. Projects are 100-200% over-budget, many years behind schedule. I heard a news about a plan to build some guest houses in Nepal. Indians and Chinese were asked for assistance. The Chinese built and handed over swanky new houses in record time when Indians had barely gone further than laying the foundation stone...and that too is gathering dust. How do you expect our neighbours to take us seriously?

Your frustration is shared by many Indians today. "NOTHING CHANGES"! is what is wrong with us...