China’s planned $1.1 billion investment in Hambantota port located in Sri Lanka is currently on hold until the island nation manages to clear its legal and political issues, sources told Reuters. This puts Sri Lanka in a tight spot: the nation needs the money, but it won’t placate local opposition.
According to an article by Reuters, the agreement signed last December stipulates that China Merchants Port Holdings, a state-run company, will purchase an 80 percent stake in the port.
Another agreement between China and Sri Lanka details the planned development of a 15,000-acre industrial zone in the Hambantota port, which Sri Lanka hopes to finalize after the purchase of the shares.
Fierce opposition backed by trade unions and Mahinda Rajapaksa, former president of Sri Lanka, hamper the billion-dollar investment, however.
In addition, a source close to the former president also told Reuters that Rajapaksa plans to challenge the agreements in court.
The next hearing is scheduled on March 3.
“We will follow the rule of law. We have the patience to wait,” said Yi Xianliang, Chinese ambassador to Sri Lanka, in an interview with Reuters, when asked whether China will observe the ruling of Sri Lanka’s court.
Rajapaksa remains a prominent and influential foe of the current Sri Lankan administration.
As a result, Beijing has officially declared it will hold off the agreement until Sri Lankan officials and authorities resolve the matter, saying that the port deal and the planned industrial zone are linked to each other.
“If we just have the port and no industrial zone, what is the use of the port? So you must have the port and you must have the industrial zone,” Yi told Reuters.
Sri Lankan Finance Minister Ravi Karunanayake, however, cleared that China has not made any preconditions, echoing the Chinese ambassador’s statements.
According to Reuters, China might bid its time before finalizing both deals and wait until May, when Sri Lankan Prime Minister Ranil Wickremesinghe travels to Beijing for an official state visit.