India, China Wary About Lankan Debt-Equity Swap Proposal To Save Projects
COLOMBO: Both India and China are wary about Sri Lanka’s proposal to get China to agree to a “debt-equity swap” in respect of the loss making Chinese-funded mega projects.
While both India and China grant that Lanka has no other option, given its inability to repay China the humongous total debt of US$ 8 billion, they have their worries about the proposal.
India is keen that Lanka’s strategic assets like airports and harbors remain effectively under the host country’s control and not handed over to China as a result of the swap.
India feels that Humbantota harbor, Mattala airport, Colombo Port City, and the proposed Third Terminal at Colombo port, should be under Lanka’s control primarily, though they may be Sino-Lankan joint ventures. Earlier, Lanka’s decision to out rightly sell land in Colombo Port City to China, had raised hackles in India.
Beijing has told Lanka diplomatically that it will “explore” the swap proposal, but Chinese economist Bai Ming told China’s Global Times: “If there are no predictable profits and stable investment returns, the swap will be hard to materialize.”
In other words, the Chinese will want Lankans to change their work ethic and help run the proposed joint ventures as rational, apolitical, and commercial enterprises. After the stalling of the US$ 1.4 billion Colombo Port City in 2015 on various charges, China will want investment safeguards. Lanka will also be asked to negotiate with Chinese companies individually.
