China’s impregnable fort in Sri Lanka, India’s tension may increase

Debt-ridden Sri Lanka is moaning, but like a vulture, China is eyeing that opportunity. After Hambantota and Colombo Port, now China is going to build another port in Sri Lanka. With a massive investment of $2 billion, a Chinese state-owned company will build a logistics hub in Sri Lanka. The objective is clear, to make full use of the material resources of debt-ridden Sri Lanka.

Significantly, after being financially bankrupt, Sri Lanka has sought loans from everyone from the World Bank to the IMF. Some help has also been received, but that much help is not enough to boost the economy. Sri Lanka needs huge help. In such a situation, it is not in a position to reject China’s offer. China was also looking for such an opportunity. He had taken the Hambantota port on lease. Which he uses as a military base. Now China’s government company China Merchandise Group has made an announcement. It is going to build a huge logistics complex at Colombo port. The cost of which is estimated to be around $392 million.

What is going on in Sri Lanka and how did it happen?

Simply put, Sri Lanka’s economy is in tatters. Years of mismanagement by the country’s ruling elite and Mahinda Rajapaksa’s insistence on not turning to the International Monetary Fund (IMF) have added to Sri Lanka’s economic woes. Sri Lanka is currently battling hyperinflation, budget and account deficits, an undervalued currency and a ballooning foreign debt that can no longer be repaid. Following the 2009 civil war, the country (or rather its ruling political elite) took on massive debt to help with war expenses and to undertake excessive, unnecessary and costly infrastructure projects that had little practical effect or Return was expected. The COVID-19 pandemic devastated Sri Lanka’s tourism, which was the country’s main source of foreign exchange. Currently, the country must work with international institutions to help restructure its debt to China and other lenders.