SThey posed in the pool, they ransacked the closets and they now claim to have found “millions of rupees” in the mansion of ousted President Gotabaya Rajapaksa. The protesters who set fire to the residence of Sri Lanka’s hated President and the home of Prime Minister Ranil Wickremesinghe are fueled by anger.
The people on the island are hungry, they need fuel for mopeds, outboard motors and buses, school is canceled and medicine is practically non-existent. An import has not been possible for months because the country has no more dollars. The Rajapaksa clan has allowed the country to degenerate – and obviously enriched itself.
Now there are a lot of question marks: behind the urgently needed emergency aid from abroad, behind the mountain of debt of the strategically important island and behind China’s role before its collapse. On April 12, the government in Colombo had to declare, for the first time in the history of the island, that it could no longer pay its foreign debt. Loans from multilateral organizations such as the Asian Development Bank (ADB) or the World Bank were excluded.
Sri Lanka has a crushing external debt
At the end of May, the country appointed negotiators for the restructuring of its debts, and at the end of June a delegation from the International Monetary Fund (IMF) negotiated with the government and the central bank in Colombo. Overall, Sri Lanka’s foreign debts amount to around 51 billion US dollars.
China is Sri Lanka’s largest bilateral donor. There are many rumors about Beijing’s behavior on the important island in the Indian Ocean. There are also different statements about China’s share of the debt; the analysts from Reuters come to around 19 percent.
One thing is certain: at the beginning of 2000, loans from China accounted for less than one percent of Sri Lanka’s total debt; The largest donors were the World Bank and the Asian Development Bank (ADB). But up until 2010, the Chinese massively promoted the construction of major infrastructure projects – airports, ports, power plants and highways.
China is building a big city at the port
The interest rates were quite 6.5 percent, which made the loans for the impoverished country expensive. Today, an artificial sand island in Colombo catches the eye: the China Harbor Engineering Company is building Port City on behalf of the government, which is to become a business and service center and was only visited by the Chinese Foreign Minister a few months ago.
As early as 2017, the debt service to be paid increased, while revenue from exports stagnated. Beijing jumped into the breach, this time under the evocative name of the New Silk Road (BRI): Between 2017 and 2021, $4.4 billion was said to have been borrowed from Beijing, while the repayment was $3 billion.
The new port of Hambantota keeps popping up in this context. Located to the south in the home region of the Rajapaksas, it is speculated that the family benefited greatly from its construction. It was funded by China and is also operated by the Chinese – leading to speculation about its use for the Chinese Navy right from the doorstep of wartime foes India.