There has always been a conflict between the optimal use of Chinese loans in the national interest and Rajapaksa’s personal ambitions
Two weeks back, an Indian space mission, Chandrayaan 3, landed in the hitherto unexplored South Pole of the moon, making India the first country to achieve the feat. The mission cost
US$ 75 million, according to the Indian Space Research Organization. Last week, India followed up with a rocket to the Sun to explore solar radiation. The total cost of the mission was US$ 45 million. Interestingly, both recent Indian space missions, as groundbreaking as they are, cost less than the Hollywood blockbuster, ‘Interstellar’, which had a total budget of US$ 165 million. That would say a lot about the unique Indian ingenuity and its cost-conscious engineers.
In Sri Lanka, Mahinda Rajapaksa built an airport in the jungle, funded by a Chinese loan of US$ 225 million. As expected, it ended up being a white elephant -- and would remain so until the government finds a foreign investor. Not content with his idiosyncrasy, Rajapaksa forced Sri Lanka Cricket to splash Rs 5 billion in a cricket stadium built by Chinese SOE, China Harbour. The Committee on Public Enterprise (COPE) inquiry found the stadium worth less than half the price tag: Rs 2 billion. Besides playing a once-in-full-moon international cricket match, the stadium built in the elephant-roaming jungle has little utility. Sports infrastructure of colossal cost like Hambantota International Cricket Stadium are not made to cater to dynastic ambitions of tinpot strongmen, but to provide a base for talent development, training, and probably to host a sports academy.
Rajapaksa continued with his building spree. In an afterthought after chit-chat with some government-friendly television journalists, he spent US$ 113 million on a Chinese loan to build Lotus Tower in order to house a multi-module broadcasting facility. The project was yet another white elephant, opened without the broadcasting facility and is unlikely to recoup the original investment.
These are all well-known cases of mismanagement, corruption and backhanded deals that infested Chinese loan diplomacy in Sri Lanka. 
However, there is more. Consider the following list of current or ongoing road projects in Hambantota funded by the Exim Bank of China as of 2020, according to the Department of External Resources.
The entire cost of the above projects alone is US$ 2 billion, and all that is to build an expressway in his fiefdom. These are not development projects but vanity projects in a callous dynastic enterprise.
These are also graft-ridden and cost inflated. In contrast, the entire cost of the Colombo- Katunayake Expressway, one of the few useful Chinese loan-funded development projects, was US$ 292 million. The JICA-funded Colombo monorail project, which would have economic multipliers far exceeding other projects, was estimated to cost US$ 1.5 billion.
JICA funded Katunayake International Airport’s second terminal was about US$ 570 million at the current exchange rate.
A future government should conduct a forensic review of the actual cost of the Rajapaksa era loan-funded projects and trace where the looted money had gone.
Family over country
China is right to be blamed for vanity projects, but that is not unique to Chinese loans in Sri Lanka. A state-led infrastructure development drive partly funded China’s skyrocketing growth for the last two decades. The Chinese themselves later recognized a good part of them as wasteful investment in ghost cities and deserted airports, a fallacy that the Mandarians in Beijing are now trying not to replicate. They have beaten the temptation for the stimulus of the kind of past, even while the Chinese economy is slowing down.
Some half-baked analyses keep harping on the Chinese geopolitical calculations on its investment in Sri Lanka, including the prospect of a Chinese naval base in Hambantota. That is baloney. Such analysis fails to pay attention to domain (domestic) factors in the host countries that might have facilitated the expansion of Chinese economic footprints; the same domestic factors may push back if they feel threatened or violated by Chinese power. The fungibility of power in its various dimensions, such as economic vs. military, differs vastly across the domain conditions.
Chinese loan diplomacy and Rajapaksa’s dynastic ambitions
China’s loan diplomacy was primarily mercantilist and less geopolitical. But, the mercantilism of China alone would not have accomplished its success in Sri Lanka without favourable domestic conditions that welcomed Chinese economic involvement. The fusion between mercantilism of Chinese loans and Rajapaksa’s personal and political ambitions, and, of course, the country’s infrastructure backlog facilitated the speedy expansion of Chinese economic presence. Rajapaksa and his acolytes claim their embrace of Chinese loans was in the national interest. However, as anyone can see, the resource utilization has been guided by Rajapaksa’s dynastic ambitions.
There has always been a conflict between the optimal use of Chinese loans in the national interest and Rajapaksa’s personal ambitions. The latter won the day, and the country was left with a long list of white elephants and highways with inflated price tags built in his rural backyard.
It is interesting that Rajapaksa, who borrowed an eye-watering US$ 1.4 billion from China, the second phase at the commercial rate, to build the Hambantota port, then faltered when a Chinese SOE offered to build a 10,000-acre export zone to feed the port. Claiming land from the locals is a lot harder than taking loans from China. The project was scaled down to 1,000 acres but is still in limbo as villagers chase away surveyors who go to demarcate the land, so much for hosting a foreign military base.
Also, Rajapaksa, who generously borrowed to build infrastructure and other development hardware, vacillated to put in place the software, the mandatory economic reforms, trade liberalization and business-friendly laws to facilitate the growth for such reforms would be opposed by a horde of vested groups, some of whom were his own lackeys. If Rajapaksa had used them in the national interest and implemented domestic economic reforms, Chinese loans would have made an economic miracle in Sri Lanka. But none of that was in his interest. In his small world, all he wanted was to build a rural fiefdom like the one he had seen in his formative years as the Bandaranaikes in Attanagalle.
For billions he squandered on wasteful infrastructure, he invested a fraction on what really matters: education, universities and vocational training. That was probably because an educated and ambitious generation of youth would have seen through what he, his siblings and his offspring really are. Chandrika Kumaratunge rightly described him as nothing more than a village lawyer. He reigned over surrounded by bums and yes men and was offended by intelligentsia unless they themselves were bootlicking sycophants.
For a country to have quality growth, it should have quality leaders. However, leaders are only as good as the people who elect them. In Sri Lanka, they got the leader they deserved, and he and his brothers, with handpicked Gotabaya giving the final touch, crashed the country to its nadir. But for one thing, we should thank Rajapaksa: He showed his voters what a bunch of suckers they have been all too long. I doubt whether the majority got that message, though.
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