A grand summit is now on in China. Around 65 countries are participating in the One Belt One Road (ORBOR) meeting which envisages construction of international trunk passageways and an infrastructure network connecting all sub-regions in Asia, and between Asia, Europe and Africa.
There is big money promised for these projects - China has committed a total of about $100 billion to three new infrastructure funds: a $ 40 billion fund to the Central Asia-focused Silk Road Fund, a $ 50 billion fund to a new Asian Infrastructure Investment Bank (AIIB) and a $ 10 billion fund to the BRICS-led New Development Bank.
India, however, has opted out. It is anything but enthusiastic about the CPEC, a highway that cuts through territory that has been illegally occupied by Pakistan.
What does this mean to countries that are enthusiastically participating in OBOR? Perhaps they expect a windfall by way of investments and market access. Or perhaps they will take a closer look at countries that have already borrowed tons of money from China, and ten contemplate - like Sri Lanka - whether they did the right thing.
Sri Lanka is currently in $58.3 billion debt to foreign financiers, and 95.4% of all government revenue is currently going towards paying back its loans. Of this, about $8 billion is owed to China alone, of which $1.4 billion was borrowed by the Sri Lankan government for constructing the Hambantota port.
Since these investments are not bringing in revenue as projected during the - rather hasty and secretive - planning & approval, the state is handing over its assets to Chinese companies on long-term lease:
- 80% of its Hambantota port has been handed over for 99 years, to China Merchants Holdings.
- Colombo’s South Container Terminal is a 35-year Build-Operate-Transfer (BOT) arrangement with the same company
- IZP, a Chinese informational technology company, has been put forward as a potential purchaser of Mattala International Airport.
So is there a pattern here? Borrow on easy terms, belatedly discover that the revenue model was flawed, and grudgingly hand over your land and assets to the foreign lender?
LINKS & REFERENCES
* (2017) ET - http://economictimes.indiatimes.com/news/international/world-news/obor-summit-in-china-know-what-it-is-and-why-india-is-not-attending/articleshow/58656653.cms
* (2017) IE - http://indianexpress.com/article/what-is/china-one-belt-one-road-project-obor-4653564/
* (2017) IE - Belt Road Initiative - http://indianexpress.com/article/explained/china-belt-and-road-initiative-in-giant-trade-belt-road-to-new-growth-rush-4651727/
* (2017) FT - One belt, one road and many questions -- https://www.ft.com/content/d5c54b8e-37d3-11e7-ac89-b01cc67cfeec
* (2017) - Bloomberg - https://www.bloomberg.com/view/articles/2017-05-17/can-china-afford-its-belt-and-road
* (2017) Wanda Bullish on India - http://m.indiatoday.in/story/china-one-belt-one-road-meet-india-boycott-wang-jianlin/1/955695.html
* (2017) Express edit - https://www.google.co.in/amp/indianexpress.com/article/opinion/editorials/after-the-no-show-india-china-one-belt-one-road/lite/
* (2017) The Guardian - https://www.theguardian.com/world/2017/may/15/eu-china-summit-bejing-xi-jinping-belt-and-road
* (2017) Dawn, Pakistan - CEPC for Pakistan - A Colonial Enterprise? - https://www.dawn.com/news/1333244
* (2016) Wire -- https://thewire.in/40388/one-belt-one-road-shaping-connectivities-and-politics-in-the-21st-century/
Hanbantotta - China's own port in Sri Lanka
* (2017) Forbes - India Tells Sri Lanka: You Can Take Your Port And Shove It - https://www.forbes.com/sites/wadeshepard/2017/01/21/india-tells-sri-lanka-take-your-trincomalee-deep-sea-port-and-shove-it/#14a10f915f88
* (2016) Forbes -- https://www.forbes.com/sites/wadeshepard/2016/07/31/china-to-sri-lanka-we-want-our-money-not-your-empty-airport/#27d0ecb21beb