India shocked as Sri Lanka cancels international partnership for ECT project

Giving in to the mounting pressure of local workers Unions, the Sri Lankan government cancels the 2019 agreement including India and Japan in a major port project.


Pulling out of the 2019 agreement with India and Japan, the Sri Lankan government said on February 1, 2021 that the East Container Terminal (ECT) at the Colombo port will be completely operated and owned by the Sri Lanka Port Authority (SLPA), reported The Hindu.

The decision came following intense pressure by Sri Lankan Port union workers opposing any foreign role or investment in the ECT project, where nearly 70 percent of the transhipment business is linked to India. Incidentally, the Indian government had nominated the Adani Group to take over the development.

According to The Indian Express, President Gotabaya Rajapaksa was steadily losing popularity among people for allowing the 2019 agreement to stand. Around 223 Sri Lankan unions from various sections of society, including trade unions and civil societies groups, declared support for the port trade unions in their struggle against privatisation. Some people even quoted his own presidential manifesto that was contrary to this 2019 agreement, said a senior leader.

The original agreement stated that 49 percent of the ECT project would be operated by India and Japan, with its port authority retaining the majority stake. However, reneging on this understanding, the island country instead invited the two countries to develop the nearby West terminal on a Public-Private Partnership (PPP) basis. It also assured India that there would be no further troubles on the West Terminal offer.

An official from Colombo claimed that the West Terminal offer is better commercially for India because it gives 85 percent stake for developers as opposed to the ECT stakes. The alternative terminal is also the same in terms of security, size and depth. The only difference between the two terminals is that the West terminal needs to start from scratch. However, the final decision has to come from the Indian government, said the official.

Less than a month ago, Indian Foreign Minister S. Jaishankar visited Colombo to garner support for the 2019 deal that also involved the Adani Group. Accordingly, a spokesperson from the Indian embassy in Colombo said that the Sri Lankan government has consistently conveyed its commitment to the project for the last three months. As such, the spokesperson in an email letter to the Kashmir Reader said that all sides should continue to abide by existing understandings and commitment.

Spokespersons for Adani, the Japanese embassy in Colombo and Sri Lankan President Gotabaya Rajapaksa remain silent on the subject.

Sri Lanka plays an important factor in the battle for influence in South Asia between traditional powers India and China, which have been making increasing inroads there. Recently, the Indian government has noted with concern, the growing influence of China on Sri Lanka.

In 2016, China took over Hambantota port after Sri Lanka failed to keep up with debt repayments. It is also involved in the construction and operation of a neighbouring port terminal in Colombo as well as other critical infrastructure.

Meanwhile, Indian peasants continue their struggle against the anti-farmer, anti-people policies such as the labour codes, the three farm laws, the Electricity Bill 2020, Vadhavan port project, UAPA and CAA 2019.


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