COLOMBO: India’s National Security Advisor Ajit Doval, who was in Colombo on November 27 and 28, has smoothened India-Sri Lanka relations which were fraying at the edges because of the notion in New Delhi and Washington that China has begun to influence the island nation’s economic decisions and strategic thinking.

The statement from the Presidential Media Division issued on Saturday, did not mention specific projects on which there was agreement, but it did say that the discussion between President Gotabaya Rajapaksa and Doval was “highly fruitful” indicating agreement on key issues.

Informed sources said that the long-pending tri-nation project, involving Sri Lanka, India and Japan, to develop and run the strategically located Eastern Container Terminal (ECT) in Colombo port will now see the light of day.

India-Sri Lanka and the Maldives have also agreed to set up a Secretariat in Colombo to coordinate maritime security programs. This decision had been taken when the National Security Advisors of India, Sri Lanka and the Maldives met on Friday in Colombo.

Top sources said that President Gotabaya Rajapaksa is very keen that Sri Lanka should honor the Memorandum of Cooperation (MoC) which was signed between Sri Lanka, India and Japan on the development and operation of the ECT in May 2019.

Both the ECT and the Maritime Security Secretariat are deemed by India to be extremely crucial for its security in view of rival China’s ingress into the Indian Ocean and the South Asian landmass.

A Chinese state-owned company is already ensconced in Colombo harbor running the Colombo International Container Terminal (CICT) adjacent to the Eastern Container Terminal (ECT). India’s desire to be at Colombo port is also rooted in the fact that the port is critical for Indian transshipment. Seventy to eighty percent of Colombo port’s business is accounted for by Indian transshipment.

From Sri Lanka’s point of view, the above mentioned verbal agreements, meet its need to keep immediate neighbor India in good humor and also balance its relations with China. Sri Lanka’s mounting economic dependence on China has the raised the hackles in New Delhi and Washington triggering heightened diplomatic activity.

According to the official press release, President Gotabaya and NSA Doval agreed that infrastructure development projects initiated with the assistance of India should be completed expeditiously. Doval readily agreed to bring Indian investments to Sri Lanka in accordance with President Gotabaya’s penchant for securing investments rather than loans to build war-torn and COVID-hit Sri Lanka.

As many as 15 joint venture projects for which MoUs were signed in 2017 are still pending, raising concerns in the Indian Prime Minister’s office in Delhi.

In his talks with Prime Minister Mahinda Rajapaksa on Friday, Doval agreed to accommodate the Lankan PM’s request to build low-cost houses as it had already done in war-torn North and East and in the plantation areas populated by Tamils. In turn, Doval sought the Lankan PM’s enhanced role in re-building COVID-hit South Asian economies. The India NSA praised the role Prime Minister Mahinda Rajapaksa has already been playing in this regard.

Maritime security is very important in the fast-changing world, with India and the US worried about China’s expansion, and with terrorists, drug smugglers and human traffickers having a free-run of the seas. In this context, Friday’s one-day discussion on it between India, Sri Lanka and the Maldives at the NSAs’ level held here on Friday was critical.

However, Doval’s visit was very much more to do with seeing that India does not lose out its economic foothold in Sri Lanka to China. With South Asian countries including Sri Lanka giving primary importance economic and infrastructural development, it was not surprising that economic development projects and their implementation dominated Doval’s talks with President Gotabaya and Prime Minister Mahinda Rajapaksa. Doval expressed India's willingness to identify and invest in new fields that could contribute to the economic growth in Sri Lanka.

Container Terminal

One of the most critical economic development projects in Sri Lanka, and one with regional geo-political implications, is the Eastern Container Terminal (ECT) in Colombo port.

In August 2016, the then Sri Lankan Minister of Ports, Arjuna Ranatunga, announced that an Indian company will be invited to develop the ECT in Colombo port for geo-political reasons. He added that the then Prime Minister Ranil Wickremesinghe was keen on India’s involvement. An Indian company even submitted a proposal. But the then President, Maithripala Sirisena, scuttled foreign involvement saying that national assets like ports should not be given to foreign entities.

However in May 2019, a Memorandum of Cooperation (MoC) was signed by Sri Lanka, India, Japan to jointly develop and run the ECT. A Terminal Operations Company (TOC) was to be set up for conducting all operations. In the TOC, Sri Lanka would retain a 51% stake, and the joint venture partners purchase a 49% stake with India accounting for 15%. A 40-year loan at an interest rate of 0.1% was expected from Japan to fund the project.

But the project again got stalled because the port workers protested saying that national assets should not be given away to foreign entities. They disregarded the fact that the Chinese are running the CIC Terminal adjacent to the ECT without any workers’ resentment or strikes. Apparently, the workers were being instigated and abetted by nationalist elements within and outside the Rajapaksa government.

Arguments by Sri Lanka’s shipping experts and even SLPA officials that ports cannot be run in the present world without the involvement or approval of major international shipping lines fell on deaf ears. But President Gotabaya Rajapaksa understood the argument and was keen on proceeding with work in the ECT as per the MoC signed with India and Japan.

In the meanwhile, COVID-19 hit Colombo port and there was a worker shortage which in turn badly affected loading and unloading. Handling of containers had fellen by 50% said Gen. Daya Ratnayake, chairman SLPA. 20,000 containers were stuck in Colombo as many ships by-passed Colombo and headed for other ports in the region.

The ECT, which now has three cranes needs more, as Colombo port is already very congested. The ECT is now handling cargo from other terminals to ease congestion in the latter. But there is a backlog of 20,000 TEUs. “It will need another four to five days to clear the backlog,” Ratnayake said stressing the need to finalize the deal to get foreign collaboration for the development of the ECT.

Given the cordial discussions on economic cooperation between President Gotabaya and Ajit Doval, there is light at the end of the tunnel for the hard-pressed Colombo port and the delayed ECT.