When the bills became due, the government couldn’t repay them. Sri Lanka, now minus Mahinda Rajapaksa, was forced to go to its Chinese backers cap in hand—essentially to hand over ownership of the port in a debt-for-equity swap. Although Sri Lanka claims to have retained control over management of the port, the details are suspiciously murky. China now has plans to build a big Special Economic Zone around Hambantota. This may eventually drive some demand for shipping, but it is hard to see it ever becoming the global shipping hub it was once touted to be. [...]
Similar claims are being made about the China-Pakistan Economic Corridor now being constructed in Pakistan at a cost of somewhere like US$40 billion-$100 billion, with some fearing it will create a “debt trap” for Pakistan. [...]
This is where the world’s emptiest airport comes in. India is proposing to spend around US$300 million to buy out Sri Lanka’s debt to China in return for a 40-year lease over Hambantota airport. But India’s future plans for the airport are hazy. Maybe a flight school? A new destination for Indian weddings? There seems little chance that it will turn a profit.
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