The United States plans to provide over $550 million in funding for the development of a deep-sea container terminal in Sri Lanka. This initiative is widely regarded as a strategic move to counter China’s growing influence in the Indian Ocean region.
Sri Lanka occupies a pivotal position along the world’s most heavily traveled shipping route, connecting the Middle East and East Asia, making its maritime resources of significant strategic value.
The upcoming Colombo West International Terminal is planned to have a length of 1.4 kilometers (approximately 0.16 miles) and a depth of 20 meters (about 66 feet), with a projected annual container capacity of 3.2 million units.
The construction of the Colombo West International Terminal is being undertaken by a consortium led by India’s Adani Group. This Adani-led facility is expected to cost approximately $700 million and is situated near a neighboring Chinese-operated jetty within the capital’s extensive port. The U.S. government-run International Development Finance Corporation (DFC) has announced its commitment to provide $553 million in funding for the Adani-led project.
The project, funded through private loans, is positioned as a significant investment in essential infrastructure for the South Asian island nation. It has the potential to elevate Colombo into a top-tier logistics hub at the crossroads of major shipping routes and emerging markets as stated by the corporation.
The DFC was established half a decade ago in reaction to China’s extensive global infrastructure development initiative, recognized as the Belt and Road Initiative. Under this initiative, Beijing annually allocates substantial investments, amounting to tens of billions of dollars, for the construction of transportation networks, including roads, railways, ports, and airports, primarily in developing countries, to stimulate international trade.
Certain projects within the BRI have sparked controversies, one notable example being Sri Lanka’s Hambantota Port located on its southeastern coast. Sri Lanka incurred significant debt from China to develop not only the port but also other infrastructure components, such as an airport and a city constructed on reclaimed land.
These projects have struggled to generate sufficient revenue to cover the loans, leading to a significant development in 2017 when Sri Lanka leased the Hambantota seaport to China. The arrangement involved a 99-year lease to a Chinese company, which raised concerns about Beijing’s utilization of “debt traps” as a means of exerting influence in foreign nations.
China’s maritime activities in the vicinity of Sri Lanka have triggered concerns, particularly for the regional power, India, in recent years. In 2014, two of China’s submarines utilized the jetty operated by China near the Adani development, despite vehement opposition from New Delhi.
Both India and the United States have voiced worries that a Chinese presence in Hambantota could grant Beijing a military advantage in the Indian Ocean. Additionally, last year, the port played host to a Chinese research ship that India has accused of engaging in espionage activities.