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PM in China: New ties with economic superpower

13 August 2016 12:24 am - 0     - {{hitsCtrl.values.hits}}



As part of what is widely seen as a major foreign policy shift by the National Government, Prime Minister Ranil Wickremesinghe will today begin a six-day official visit to underline the new relationship with Beijing.  The complex, international, geopolitical dimensions or dynamics today involve socio-economic and political issues. So is it with the Sri Lanka-China relationship.

The new chapter involves socio-economic and political factors with the world’s new economic superpower. Yesterday, on the eve of Premier Wickremesinghe’s China mission a new agreement was signed in Colombo for the controversial Colombo Port City Project which is now being described as the Colombo Financial City Project with extensive facilities for business, offshore Banking and leisure.  Former President Mahinda Rajapaksa had built up close political and socio-economic relationship with China to such an extent that powerful neighbours were quite alarmed. During the campaign for the presidential election on January 8 last year, the rainbow coalition led by Maithripala Sirisena and Ranil Wickremesinghe heavily attacked Mr. Rajapaksa’s pro-China policy and vowed that the new government would cancel or suspend the 
Colombo Port City project. 

The National Government leaders alleged the project would have serious environmental consequences for Sri Lanka while it was also riddled with kickbacks and corruption. The Colombo Port City project was indeed suspended. India, the United States and other Western countries expressed full support for the new foreign policy of the national government but they did not or could not come up with the financial and economic assistance that Sri Lanka needed to overcome its gigantic debt crisis with the total loan and interest repayments amounting to a staggering Rs. 9000 billion. In addition, the China Harbour Engineering Company (CHEC) with which the former Government had signed the contract for the multi-million dollar Colombo Port City Project was demanding compensation amounting to as much as US $ 143 million for the suspension of the project and the losses caused by the ensuing delays. 

According to most analysts, much credit for working out the new business deals and economic-political ties with China was the International Trade and Strategic Development Minister Malik Samarawickrama, the United National Party’s former General Secretary and front-line business magnate. He reportedly worked out the new agreements during visits to China with the full support of the Prime Minister who is his close friend and classmate. 

Recently Premier Wickremesinghe told the Cabinet, the Chinese Company had agreed to withdraw its compensation claim. He also presented other documents regarding commercial aspects of the new agreements with China and matters relating to the administration and legal issues of the new Colombo Financial City. According to our sister newspaper, The Sunday Times, some SLFP ministers wanted time to closely study the documents saying they felt the issues related to an important matter of national interest. Reportedly there was a strong exchange of words, especially between the Premier and Minister Faiszer Mustapha. President Maithripala Sirisena had to intervene and sort out the issue. The main issue was the compensation claim by the Chinese Company which revealed that losses were incurred due to staff retrenchment costs, termination costs of contractors, overhead costs, equipment idling costs, remobilisation costs, losses due to price fluctuation, financial charges by banks, losses from rupee depreciation, loss of material from the landfill and costs relating to resumption of work.

The Premier explained to the Cabinet and to Parliament this week, the major changes in the contracts signed by the former regime and the contract  signed yesterday for the Colombo Financial City Project. He said that in the original plan there was provision for night racing. That had been abandoned and as a result a large extent of marketable land would be available. Of this, two hectares may be allocated to the Chinese company as a gesture of goodwill and gratitude for waiving off the compensation claims. The Project Company has agreed to set up public parks, roads and walkways for the people.  We hope that while building closer ties with China, the National Government would also maintain a non-aligned policy of fostering political, trade and economic relationships with the international community. Non-alignment which began during the Cold war now has new dimensions whereby Sri Lanka could proactively get involved in the global growth process through a policy described as a socialist market economy -- a middle part between socialism and capitalism. It is a creative feature of this creative era.    

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