The Sri Lankan government’s decision to review, and in effect suspend, the $US1.4 billion, Chinese-backed Colombo Port City (CPC) project has strained relations between Beijing and Colombo. The review was announced in January shortly after Maithripala Sirisena defeated President Mahinda Rajapakse in the presidential election and formed a new government led by the opposition United National Party (UNP).

The agreement to build the port facility was signed when Chinese President Xi Jinping visited Sri Lanka last September. The plan was to construct a modern 500-acre (230 hectare) city, with hotels, apartments and office buildings, on earth fill near the seafront of Colombo harbor. About 200 acres were to be held by China Communications Construction Company (CCCC), the main contractor, on a 99-year lease. Another 50 acres were to be granted outright.

Since coming to power, Sirisena and the UNP-led government have rapidly shifted foreign policy away from Beijing and towards Washington and New Delhi. High-level exchanges have already taken place between Sri Lanka and the US and India. The government’s decision in January to review the port project was another clear signal that it was distancing itself from China.

The Chinese government sent special envoy Liu Jianchao in early February to discuss the possible cancellation of the port project. After the visit, Liu said “The project will continue only after being re-evaluated. We respect the decision by Colombo.” His comments suggested that the government confronted legal problems in cancelling the contracts for the construction.

The Sri Lankan government has based its review on environmental issues, alleged corruption and investment figures that were supposedly inflated by the Rajapakse government. Moreover, the decision on the huge project appears to have generated differences within the government over how to proceed.

An article in mid-February in the US-based Foreign Policy noted that Sirisena had appeared to give approval for the port project so as to avoid “a misunderstanding” with China. “That raised eyebrows, because his [Sirisena’s] election was widely seen as a blow to China’s budding friendship with Sri Lanka; former President Mahinda Rajapakse had steadily moved Sri Lanka closer to Beijing,” it stated.

At the same time, Foreign Policy noted that Prime Minister Wickremesinghe attempted to “walk back” Sirisena’s approval in comments to parliament. The fact that the fate of the project was being closely followed in the US makes clear that the Sri Lankan government was under considerable pressure from Washington and its allies. (WSWS)