For China, Hambantota offered an important port that would bring raw material, such as minerals and metals from Africa and oil from the Middle East, via the Indian Ocean to China’s own ports. For Sri Lanka, whose economy is still struggling to recover from a devastating decades-long civil war, not to mention the impact of the 2004 Indian Ocean tsunami, the Chinese money offered an important financial lifeline—until it didn’t. The port didn’t get the traffic it had hoped for, didn’t get the cargo that was expected, and didn’t create the jobs that were promised. Sri Lanka still had to repay its loans, though—and not just to China. Almost all of the revenue that Sri Lanka's government generates goes toward servicing its massive debt. The only solution that Sri Lanka could come up with was to lease the port back to China for 99 years and repay China with money from the lease. [...]
China views its actions through its own national-security prism. It goes to countries in Africa, Asia, and Latin America that have a hard time securing international financing; offers them easy terms; builds desperately needed roads, railways, and ports; and uses the newly built facilities to transport raw material to feed its growing economy and population. There are advantages from the perspectives of both China and the countries receiving the loans. For one thing, Brad Parks, executive director of AidData, said in an email that factors that make China an attractive investor include its “policy of non-interference in the domestic affairs of its partner countries.” [...]
But the U.S. and its allies in the region, primarily India and Japan, worry that projects like Hambantota in Sri Lanka and the seemingly easy terms of China’s loans put regional economies at a distinct disadvantage—not to mention putting the U.S. and its allies at a strategic disadvantage. Speaking Wednesday at the Center for Strategic and International Studies in Washington, Rex Tillerson, the U.S. secretary of state, warned that the Indo-Pacific region could fall victim to China’s “predatory economics.” He said China’s actions “result in saddling them [the countries in the region] with enormous amounts of debt.”
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