For more than a century people have been gathering to watch the sun set over the Indian Ocean at the historic Galle Face Green in Sri Lanka’s capital Colombo.
But the view from the colonial-era promenade is changing, fast.
A vast land reclamation project is reshaping the famous seaside vista. A walk along the famous beachfront now takes in a flotilla of dredgers and the sound of giant machinery, all working round the clock to create more than two square kilometres of extra land off the north end of Galle Face Green.
It will be the site for the futuristic Colombo Port City, a project local politicians hope will spearhead the city’s bid to become a new Singapore-like economic hub in the Indian Ocean.
Colombo Port City is also a showcase for Beijing’s Belt and Road initiative, the scheme championed by China’s President Xi Jinping to build trade and infrastructure networks across the world. The developer is CHEC Port City Colombo, a subsidiary of China’s state-owned infrastructure giant, China Communications Construction Company.
In a sign of how important the project is to China, Xi himself cut the ceremonial ribbon to launch the project in 2014.
David Brewster, a Sri Lanka specialist at the Australian National University’s National Security College, likens the project to a Chinese company building a huge island off Sydney’s Bondi Beach and then putting a new city on it. “It makes you realise how extraordinary China’s ambitions can be,” he said.
It is the single biggest foreign direct investment in Sri Lanka ever.
Once the $1.4 billion land reclamation phase is completed, a finance and logistics hub will rise on the site featuring skyscrapers, luxury hotels, high-end health facilities, a marina and entertainment venues.
But the transformation of Colombo’s shoreline has been controversial – environmental criticisms beset the project from the start and the viability of the grand scheme is questioned.
China’s role in the project has also raised concerns in Sri Lanka’s giant neighbour India, which is suspicious of Beijing’s intentions in the region.
Brahma Chellaney, professor of Strategic Studies at the Delhi-based Centre for Policy Research, says the Colombo Port City project has strategic “implications” for India. “By increasing Chinese leverage over Sri Lanka through debt-trap diplomacy, it promises to give China a strategic foothold in the Sri Lankan capital,” he says. “Chinese projects can quickly acquire a strategic dimension.”
Political turmoil in Colombo during the past fortnight is likely to have stoked India’s unease. Sri Lanka was plunged into constitutional crisis on October 26 when the country’s president, Maithripala Sirisena, removed elected prime minister Ranil Wickremesinghe, and suspended parliament.
Sirisena then appointed the man he defeated in the 2015 presidential election – former president Mahinda Rajapaksa – as the new PM. Wickremesinghe claims his removal from office is illegitimate and has refused to step down.
Tens of thousands have taken to the streets of Colombo during the past week to protest the government’s dismissal, and the speaker of Sri Lanka’s parliament, Karu Jayasuriya, has warned of potential for violence if MPs were not summoned to resolve the stand-off.
Rajapaksa, a controversial but popular politician, is considered close to China and his political resurgence has been cast as a win for Beijing. China’s ambassador to Sri Lanka, Cheng Xueyuan, was among the first diplomats to meet Rajapaksa after he was sworn in as PM last month.
As president from 2005 to 2015, Rajapaksa used forceful military tactics to end the civil war which had plagued Sri Lanka for more than a quarter of a century.
China became a crucial ally during the bloody conflict between separatist Tamil Tigers and the Sri Lankan army, especially during the closing stages of war when the Rajapaksa regime became increasingly isolated on the international stage. Beijing provided military assistance and vital political support amid allegations of war crimes and the threat of international sanctions.
Once the war was over, Sri Lanka borrowed heavily from China to fund new infrastructure projects in a bid to deliver a postwar economic dividend. The Port City Colombo project was one of several big construction deals Rajapaksa’s government struck with Chinese firms during his presidency.
About 65 per cent of the “saleable” or “marketable” land reclaimed for the Port City project will be held by the developer on a 99-year lease, with the remainder going to the Sri Lankan government.
CHEC Port City Colombo said in a statement the construction of buildings was scheduled to start next year and be “implemented in three stages over a 25-year period … to become the new international financial centre serving the South Asian region”.
Port City Colombo is on the doorstep of the huge markets of the Indian subcontinent and the government is considering a special regulatory regime for the precinct to encourage overseas firms to locate there. Advertising hoardings around the site claim Port City Colombo, also known as Colombo International Finance City, will be “the economic focal point of South Asia”.
But there’s an even more contentious Belt and Road project in Sri Lanka.
Last December Sri Lanka formally handed over a controlling stake in the financially troubled Hambantota port to the Chinese state-owned company China Merchants Port Holdings on a 99-year lease.
The deal to give a Chinese state-owned firm control over a strategically located port set off diplomatic alarm bells, especially in India, which has long been troubled by what security analysts call Beijing’s “string of pearls” – a network of Chinese assets and allies in the Indian Ocean encircling the Indian subcontinent.
Colombo has repeatedly claimed that no Chinese naval facility will be permitted in Sri Lanka, but Brewster says Delhi is worried that Beijing’s influence will eventually reach the point where the Sri Lankan government “simply cannot say no”.
When the long lease of the Hambantota port was announced China’s official news agency Xinhua tweeted: “Another milestone along path of #BeltandRoad.”
The United States has not hidden its displeasure about the deal.
Last month, US Vice-President Mike Pence drew attention to US concerns about Hambantota in a high-profile foreign policy speech critical of China. He singled out the port as an example of how China uses “debt diplomacy” to expand its influence, and said Sri Lanka had taken on a “massive debt” to let Chinese state-owned companies build the facility.
“Two years ago that country could not afford its payments, so Beijing pressured Sri Lanka to deliver the new port directly into Chinese hands,” he said. “It may soon become a forward military base for China’s growing blue-water navy.”
The comments suggest the US is sceptical about Sri Lanka’s assurances that Hambantota port will not be used for military purposes.
The port, located in Rajapaksa’s home district on Sri Lanka’s southern coast, was built with loans from China and opened in 2012. Despite its favourable location adjacent to the busy Indian Ocean sea lane linking the Suez Canal and Malacca Straits, the port has failed to attract much business.
The Sri Lankan government has denied it came under pressure to hand over the management of the port to the Chinese company.
But Brewster says the Hambantota episode has become “exhibit A” for those who worry about the strategic impact of China’s Belt and Road Initiative. “Others in the region are looking at Sri Lanka, and especially Hambantota, and asking how they can avoid that happening,” he says.
And it seems likely that deal will result in greater foreign involvement in Sri Lanka’s infrastructure.
India is expected to respond by taking a stake in the Mattala Rajapaksa International Airport, a little-used airport not far from the Hambantota sea port.
“Geopolitical rivalry between big powers sometimes yields odd results,” says Brewster.
In Colombo it’s not hard to find critics of China’s growing influence in Sri Lanka. The popular Sinhalese-language Ada newspaper posted a video on its website in September titled “How China is invading Colombo” set to traditional Chinese music. It includes a series of photographs depicting Chinese signage on construction sites, shops selling Chinese groceries and Chinese workers around the city.
But many are not so disparaging.
Barana Waidyatilake, a research fellow at Colombo’s Lakshman Kadirgamar Institute of International Relations and Strategic Studies, says despite “a level of concern about the implications of certain Chinese projects”, the Sri Lankan public is “cautiously accepting” of China’s growing presence.
Dushni Weerakoon, executive director of the Institute of Policy Studies, a government-linked think tank in Colombo, points out that China has been willing to provide capital for postwar investment plans more quickly, and with greater flexibility, than more traditional sources, including Western governments and international development banks.
China has been a crucial source of investment for the country as it seeks to emulate the success of Asian tigers like Singapore or Malaysia. “Western countries might give some political support but there is little economic support to back that,” says Weerakoon.
Sri Lanka has long had high levels of public debt. While China’s share of Sri Lankan borrowing has grown sharply during the past decade, analysts estimate Chinese lenders hold only about 10 per cent of the total, a smaller share than the Asian Development Bank, the World Bank and Japan.
Weerakoon rejects claims that Sri Lanka has been enticed into a debt trap and now has no option but to follow orders from Beijing. “That’s really not so,” she says.
One Western diplomat based in Colombo also warns against overestimating China’s influence over Sri Lanka and stressed the level of cultural and political sway India has over its near-neighbour.
“China is no match for India’s soft power here,” the diplomat tells Fairfax Media. “China has capital and the ability to build things but not much else. There’s not much cultural affinity with China.”
Chinese investment is crucial for Sri Lanka, a developing nation still recovering from a long civil war and with aspirations to become an economic hub to rival Dubai to the west and Singapore to the east. “Western nations have been slow to back up political rhetoric with economic action and China has filled the vacuum,” says Weerakoon. “The West has been slow to realise what is going on.”
By Matt Wade