SRI LANKA SCRAPS EAST CONTAINER TERMINAL AT COLOMBO PORT DEAL

SRI LANKA SCRAPS EAST CONTAINER TERMINAL AT COLOMBO PORT DEAL

 

WHY IN NEWS?

  • After the strong opposition from within, the Sri Lankan government was forced to revoke a 2019 agreement with India and Japan to develop the strategic East Container Terminal (ECT) at the Colombo Port.

KEY POINTS

  • The tripartite agreement, signed by India, Sri Lanka, and Japan, proposes to develop the ECT, which is located at the newly expanded southern part of the Colombo Port.
  • The ECT is located 3 km away from the China-backed international financial city, known as Port City, currently being built in Colombo.
  • A Chinese company was behind the controversial 2018 Hambantota port project, signed its first contract in the Port City last month.
  • It is also on the map of China’s Belt and Road Initiative (BRI).

INDIA’S REACTION

  • A few weeks ago, EAM S. Jaishankar visited Sri Lanka where he discussed the development of the stalled project.
  • India’s first response was that the island nation should not be taking a decision in a unilateral manner on an existing tripartite agreement.

COMPENSATORY OFFER BY SRI LANKA

  • After the decision on revoking the 2019 agreement, SL has approved another proposal to develop the west terminal of the Colombo port with Japan and India.
  • Commercially, the west terminal offer is better for India as it gives 85% stake for developers of the West Terminal against the 49% in ECT.

OUTCOME

  • For India, the strategic ECT project was important. Even the EAM has visited Colombo in January in this regard.
  • Critics of the Sri Lankan government anticipate many national and international impacts surrounding the latest decision on ECT.
  • Meantime, internationally an offended India can make life tough for Sri Lanka, isolating the tiny island nation, geo-politically and on the economic front.

The economic isolation will not help Sri Lanka at a time when the country is taking steps to revive the economy amid a pandemic.

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