2023-06-18 11:10:14
On the new artificial peninsula of “Port City Colombo”, the gaze is lost. Prohibited to the public, the spit of sand which extends over 269 hectares facing the seafront of Colombo, the capital of Sri Lanka, offers the spectacle of lonely workers and construction sites in suspense. On reservation, only the “Beach Park” bar offers a semblance of life with rare customers, diplomats and Russian and Chinese businessmen.
The peninsula must become a luxurious marina. For more than 1.3 billion euros, the China Harbor Engineering Company is at work to build shopping centers, hotels and residences. Launched in 2014, this controversial project could be another missed bet of the former head of state (from 2005 to 2015) Mahinda Rajapaksa, prime minister from 2019 to 2022.
With the support of China, its disproportionate ambitions have led to the construction of a number of unused and loss-making works. In his stronghold of Hambantota, in the south of the island, a new port had to be ceded, in 2017 and for a period of 99 years, to the China Merchants Port Holdings Company. In the heart of Colombo, there is great fear that “Port City” will experience a similar fate.
popular revolt
Stuck in a historic economic crisis, Sri Lanka is running out of options. Plagued by corruption and disastrous management, the island nation defaulted on its public debt of 46 billion dollars (42 billion euros) in April 2022. Everything got carried away with the failure of an agricultural reform and tax cuts, in the wake of the Covid-19 pandemic. The lack of foreign currency has led to shortages of food, medicine, electricity and fuel. Angry people took to the streets, forcing Prime Minister Mahinda Rajapaksa to resign and then his younger brother, President Gotabaya Rajapaksa, to flee the country last July.
It was a seasoned politician, Ranil Wickremesinghe, who was appointed to straighten out Sri Lanka. He negotiates debt restructuring with creditors. The negotiation is taking place without much transparency, but hope has been there since the International Monetary Fund (IMF) approved, in March, an emergency loan of 2.9 billion dollars (2.6 billion euros) . To get it, it was necessary to obtain agreements with India, Japan, and especially China, very reluctant. Because Sri Lanka is the first country on the new Chinese Silk Road to go bankrupt, a textbook case observed by other nations in difficulty.
A painful austerity program
To impose an austerity programme, Ranil Wickremesinghe brought the 22 million inhabitants into line, repressing opponents and postponing elections. Raising taxes, cutting spending and removing subsidies followed. “But our economy, which shrank 8% last year, continues to decline, as the cost of living rises and wages stagnate”warns economist Ahilan Kadirgamar. “The economic recovery is not there”for its part admitted the IMF, whose aid is conditional on the implementation of reforms, particularly in the fight against corruption.
In the streets of Colombo hovers the illusion of a certain normality. “But I can’t pay anything and I can’t get by with my 3,000 rupees (€9) a day”explains Mohammed Zarur, a worker from the poor neighborhood of Slave Island. “Malnutrition and poverty levels could get worse and we don’t know how people will be able to meet their needs”worries Bhavani Fonseka, analyst at the Center for Policy Alternatives.
India advances its pawns
“Sri Lanka is in dire straits, resume Ahilan Kadirgamar. And the great powers, China, India or the United States, concerned about their geopolitical interests, take advantage of the situation. » Flying to the aid of Sri Lanka last year, India is seeking to counter China’s regional influence. The Indian conglomerate Adani has already won, in 2021, a project of 659 million euros for a port terminal in Colombo, and has just invested another 442 million for two wind farms in the north of the island.
It is now the turn of Sri Lanka’s state-owned enterprises to be put up for sale to repair the balance sheet. Seven of them, including Sri Lanka Telecom, are on the list announced this month by Ranil Wickremesinghe. “It is impossible to keep them and repay the loans”, he dropped in front of the press. And to warn a country ashore: “Rebuilding a bankrupt nation cannot be done using traditional methods. »
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A country in great difficulty
Sri Lanka is facing 35% inflation and GDP is expected to shrink this year by 2%, after falling 7.8% last year.
China is Sri Lanka’s largest creditor country. Its debt to China amounts to more than 6 billion euros (out of a total debt of 42 billion euros).
According to the UN, 17% of the population is today in a situation of food insecurity. However, the situation is improving, as this rate was 28% in 2022.
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