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Home > News > Columnists > Arindam Hazare

Colombo port adds to India's China woes

October 29, 2007

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The race to build Sri Lanka's [Images] newest and most competitive terminal as part of the South Harbour project in the Colombo port has begun, with five of the best of corporate names locally and in the global shipping arena officially confirming their interest with detailed plans and information.

The bid called for by Sri Lanka's ministry of ports and aviation is for a three-berth terminal to handle around 2.4 million twenty-foot equivalent units, or TEUs, per year. Construction costs have been estimated at more than $500 million.

In the fray are: Current operator of the Queen Elizabeth Quay in Colombo port, John Keells Holdings PLC-South Asia, Gateway Terminals in partnership with Pembinan Ridzai Berhad, the owners of Westports Malaysia Sdn Bhd, financial giants Hayleys Limited and holdings company Carson Cumberbatch & Company Limited in partnership with French shipper CMA CGM Group's port arm Terminal Link, Singapore's PSA International Pte Ltd partnering logistics conglomerate Aitken Spence Shipping Ltd, Hong Kong's Hutchison Port  Holdings and Hanjin Shipping with its local agents Navigation Maritime.

One of these five bidders, the Hong Kong-based Chinese company Hutchison Port Holdings, was barred by India last year from participating in a project to build a container port in Mumbai, citing security concerns, states an Associated Press report published in the International Herald Tribune of August 30, 2006.

According to this report, the HPH was the only candidate out of 10 that was barred, with security clearance being denied. It is believed that the presence of an Indian naval base near the Mumbai port was the reason for denial of permission to the HPH, controlled by Hong Kong tycoon Li Ka-shing, who has strong ties with Beijing [Images].

Reportedly, this is also not the first time Hutchison has faced security concerns related to its port operations overseas.

Conservatives in United States Congress are supposed to have warned against allowing the company to expand its interests in Panama, accusing it of being an agent for China and posing a long-term strategic risk to American interests in the Panama Canal.

Over the years Sino-Indian relations have undergone times of both war and peace, with both competing to be the premier Asian power. The two countries are widely regarded as emerging superpowers in the region.

While world attention is becoming increasingly focused on these two rising Asian powers' phenomenal economic growth and political clout, how Beijing and New Delhi manage their bilateral relationship will be critical for regional and global peace and prosperity in the years to come.

Chinese President Hu Jintao's visit to India in November 2006 was the first high-level visit in a decade, a decade that has experienced rapid expansion of ties in political, economic and security spheres.

The bilateral relationship has been marked by regular high-level visits, growing cooperation on a range of international and regional issues and the establishment of a strategic and cooperative partnership for peace and stability.

In July 2006, the two countries reopened the historical Nathu La pass � which means meaning 'Listening Ear' and standing at 15,000 feet which was closed in 1962 after China's invasion -- to promote border trade further.

Despite progress in bilateral relations over the past few years, mutual suspicions remain, partly due to the dynamics of security dilemma and structural conflicts between the two Asian giants.

India has watched China's phenomenal growth in economic and military areas with alarm. Likewise, China is paying close attention to India's growing military power and its nuclear and missile development, as well as the significance and implications of a warming US-India relationship, marked by growing defence ties and the nuclear deal.

Meanwhile, China is increasingly making its presence in the region felt.

In March 2007, Pakistan President General Pervez Musharraf [Images] formally opened the Gwadar port in Pakistan's Balochistan province, the country's third port. It will be completed with financial and technical assistance from China, which has so far provided 80 per cent of the initial development costs.

Once completed, the Gwadar port will rank among the world's largest deep-sea ports.

With this investment, China takes a giant leap forward in gaining a strategic foothold in the Arabian Sea and the Indian Ocean. Its presence in the Indian Ocean will further increase its strategic influence with major South Asian nations, particularly Bangladesh, Nepal, Pakistan and Sri Lanka.

The Gwadar port is said to be part of the Chinese naval expansion along the Asian and African coasts called the 'string of pearls' initiative, according to a US Department of Defence report.

It entails the maintenance of ports and bases at strategic places in the region. A presence in Gwadar provides China with a 'listening post' where it can 'monitor US naval activity in the Persian Gulf, Indian activity in the Arabian Sea and future US-Indian maritime cooperation in the Indian Ocean,' states Zia Haider, an analyst at the Washington-based Stimson Center.

A report titled 'Energy Futures in Asia' produced by defence contractor Booz Allen Hamilton for the Pentagon notes that China has already set up electronic eavesdropping posts at Gwadar, which are monitoring maritime traffic through the Strait of Hormuz and Arabian Sea.

China's foothold in the Arabian Sea has understandably set off alarm bells in India. For India, China-Pakistan collaboration at Gwadar and China's presence in the Arabian Sea heightens the feeling of being enveloped by China from all sides.

A foothold in the West Port of Malaysia's Pelaboham Kelang port may also be regarded as yet another strategic move in this regard, adding to India's woes.

China is steadily extending its reach into South Asia with its growing economic and strategic influence in the region. In keeping with its economic expansion, China has invested wisely and has deepened its influence in the region, especially with India's immediate neighbours, by skilfully deploying economic incentives to draw Bangladesh, Nepal, Pakistan and Sri Lanka into its orbit.

Both China and India would 'like' Sri Lanka, which conveniently occupies a strategically important heft of the Indian Ocean stretching from the Middle East to Southeast Asia, on 'their side.'

Beijing has longstanding, exclusive, and friendly relations with Colombo, but very much to Beijing's convenience, the prolonged ethnic conflict in Sri Lanka has strained relations between Colombo and New Delhi, with India having a Tamil-majority state of its own, forcing her to tread cautiously in mediating the conflict.

China, however, has no such balancing act to perform, and is only too happy to support Sri Lanka's territorial integrity.

China recently dropped anchor at yet another of its 'pearls' in the Indian Ocean, with its involvement in the Hambantota port development project. Although the Chinese role in this project may not be just about influence in Sri Lanka, the fact remains that it brings China's presence close to Indian shores.

Besides, with Hambantota, China's attempts to envelop India has been further consolidated, by lurking in waters too close home. And now, with the Chinese company Hutchison Port Holdings in the final fray to get a foothold in the strategic Port of Colombo, what of India?

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