The Sunday Leader

US report accuses China of using “debtbook diplomacy” with Sri Lanka

The Chinese Government is leveraging billions of dollars in debts to gain political leverage with developing countries across Asia and the Pacific including Sri Lanka, a new report presented to the US State Department claims, according to CNN.

The independent report, written by a pair of Harvard University scholars, identified 16 countries targeted by the Chinese government for “debtbook diplomacy, ” with Pakistan, Djibouti and Sri Lanka identified as being most vulnerable.

According to the report, in some cases the huge debts grow to a size too large to pay back, allowing Beijing to leverage the loans to “acquire strategic assets or political influence over debtor nations.”

This could allow the Chinese Government to extend its influence across the Indian Ocean and the Pacific, encircling India and Australia as well as helping to consolidate its position in the South China Sea, the report said.

Last month, Australian Prime Minister Malcolm Turnbull said he viewed “with great concern” any foreign military bases being built in the South Pacific, following reports Beijing was in talks with Vanuatu to host Chinese forces.

According to the new report, Vanuatu, just 2,500 kilometers (1,553 miles) off Australia’s coast, has taken at least $270 million in Chinese loans in the past decade, worth 35% of its GDP. Both China and Vanuatu have strongly denied there were ever discussions over a PLA military presence on the island.

There is also concern in Washington that China is poised to gain control of a major commercial port in Djibouti, where the US and China have military bases.

A US State Department official told CNN Tuesday it encouraged China to promote and uphold internationally accepted best practices in infrastructure development and funding.

“We need to ensure recipients have options that allow them to retain their sovereignty and future control of their economies,” the official said.

According to the report, there are a number of ways in which Beijing and state-owned enterprises leverage debt to help China’s strategic aims.

In one case, infrastructure built with Chinese loans, has then been leased back to Chinese interests to pay off the original debt.

In 2017, an unprofitable Sri Lankan port built with billion-dollar loans from Beijing was leased to Chinese state-owned firms for 99 years to help repay the country’s debts.

The report’s co-author Sam Parker said there were concerns these ports could be used by Chinese naval vessels once they were under state control. “There’s definitely the potential where they can have it go from commercial, to occasional visit, to logistics, to humanitarian and then maybe finally a military base,” he said.

In the Pacific, nations such as Vanuatu, Papua New Guinea and Tonga all owe the Chinese government billions of dollars in loans, encircling US allies Australia and New Zealand.

Meanwhile Chefitz said Beijing has used infrastructure incentives in the South China Sea to help break any broad opposition to the Chinese government’s territorial ambitions in the contested sea.

Former Australian Foreign Minister Gareth Evans is quoted in the report saying Laos and Cambodia, each of which has borrowed more than $5 billion, are now “wholly owned subsidiaries of China.”

The US State Department will be briefed on the report in the near future. But both authors said there appeared to be nothing the United States could do to offset China’s growing advantage.

“The US government isn’t going to throw 1 trillion dollars at this problem. It’s not going to absorb the debt of our private sector companies and it won’t be able to focus the entire government in one effort for 20, 30 or 50 years as China is able to do,” Chefitz said.

At his daily press conference, Chinese Foreign Ministry spokesman Lu Kang said said China’s foreign policy was based on “mutual respect and win-win cooperation.”

“As for other parties, they shouldn’t be presumptuous based on their own views — nor should they assume economic cooperation between developing countries always have ulterior political motives,” he said.

Many of the loans are being given out as part of China’s signature Belt and Road infrastructure program, which gives loans to developing nations to fund ports, railways and other initiatives across Asia, Europe and Africa.

Report co-author and Harvard scholar Gabrielle Chefitz said the loans under the Belt and Road plan, as well as China’s other development grants, take a very different form to previous US programs such as the Marshall Plan. (Colombo Gazette)

1 Comment for “US report accuses China of using “debtbook diplomacy” with Sri Lanka”

  1. Trevor Jayetileke

    The World has changed since the Marshall Plan of 1945.
    In the contemporary World the US under President Trump is not anymore interested in Europe or the Asia Pacific. The US under President Donald Trump is trying to stop the decline of the US which is under acute stress after years of looking after the Whole World for long as I could remember and has got nothing in return except the gratitude of Australia and smaller states that has been receiving US aid like Sri Lanka and Israel. If not for the US and China the Asia Pacific will still be under LTTE Terrorism stress that was internationalized our Good old friend Mrs.Indira Gandhi in 1983. Sri Lanka will not allow any country to undermine the US and will be neutral.
    Australia and Sri Lanka is a better bet to handle the Asia Pacific as we share a common destiny in the IOR-ARC region and Kindred Spirits join us as one. SL also has leverage of the International sea lane and now has extended sea bed. The Asia Pacific can only be buttressed by Chinese Money and US Energy Security and SL will ensure that we will serve the World without fear and favor. By the way our Navy may need a Air Craft Carrier to carry out its responsibility as Patrol Boats will not be sufficient for Sea Area which has swelled to 25 times our land area. God Bless SL.

Comments are closed

Photo Gallery

Log in | Designed by Gabfire themes