What is String of Pearls: Hambantota Port Deal Between Sri Lanka and China (Download PDF)

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A geopolitical theory on potential Chinese intentions in the Indian Ocean region building a network of Chinese military and commercial facilities and relationships along sea lines of communication extending from the Chinese mainland to Port Sudan.

Hambantota Port Deal between Sri Lanka and China

Hambantota Port Deal between Sri Lanka and China

Hambantota Port Deal between Sri Lanka and China

Hambantota Port Deal

Critical as these sea lines run through major maritime choke points:

  • Strait of Mandeb
  • Strait of Hormuz
  • Strait of Malacca
  • Lombok Strait
  • Strategic maritime centers in Pakistan, Maldives, Sri Lanka, Bangladesh, and Somalia.

Sri Lanka is selling 70 % stake of the strategic Hambantota deep-sea port to China for US $1.1 despite trade union opposition and protests over security fears, including from India. Hambantota port is deep-water port in the southern tip of Sri Lanka among the busy east-west shipping lanes connecting Europe and Asia.

Details on Hambantota Port Deal

  • During 99-year lease agreement, Chinese CMPort to invest US $1.1 billion in the port and marine-related activities
  • CMPort to only be responsible for commercial operations
  • Srilankan port authority to handle operations, security, and services.

Reason for Deal from Sri Lankan Side

  • Agreement proves profitable and helps repay loans taken on to build the port.
  • Port had construction cost of more than $361m, with the Export-Import Bank of China providing a large chunk of financing. As port was underused since its opening in 2010, Sri Lanka was finding it hard to repay the loans.
  • Only 44 ships handled by the Hambantota port since 2015, making it an unprofitable venture

Importance of Port for Chinese

  • Expected to play a key role in China’s Belt and Road initiative (BRI)
  • With port located on a key international shipping lane between Europe and Asia- deal gives advantage to China in the bunkering business providing fuel to ships.

Local Oppositions

Loss of land and use of port by the Chinese military are two primary concerns.

Trade unions staged a strike against the deal crippling fuel distribution.

International Concerns

  • Chinese President Xi Jinping the “One Belt, One Road” project in May, pledging billions of dollars building ports, highways and power grids in about 60 different countries, linking China to much of Asia, Europe and Africa.
  • Neighboring India has also voiced concerns that China could use the deep-sea port in the Indian Ocean to dock military vessels.
  • Sri Lankan government claims it to be commercial agreement to help Sri Lanka with debt servicing
  • India apprehensive that port part of Chinese ‘string of pearls’ surrounding India and dock its military vessels.

- Published/Last Modified on: August 21, 2017

International Relations/Organizations

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