Sri Lanka has pushed India and Japan out from the Colombo Terminal Project

Synopsis – Sri Lankan government has been forced to revoke a 2019 deal with India and Japan. The deal was to build the East Container Terminal (ECT) at Colombo Port. They cancelled the deal after facing intense resistance from trade unions across the region.

Background-

• Sri Lanka, Japan and India signed an agreement [MoC] to jointly develop the East Container Terminal at the Colombo Port in 2019.
• The MoC stated that the Sri Lanka will own 51 per cent stake. India and Japan will jointly own the remaining 49 per cent.
• However, Sri Lanka unilaterally made a decision on an existing tripartite agreement.

Significance of the ECT Project for India –

• First, the involvement of India and Japan is being seen as a big development.  It was also seen as a counter to the growing influence of China.
• Second, Important trading link- The Colombo Port is an important port for trans-shipment of goods coming to India.
• Third, it is seen as a collaboration between two Indo-Pacific partners [India-Japan]. It could prove to be better funding and development in the South Asia region.

What made Sri Lanka break the tripartite agreement on ECT project?

• First, pressure from Colombo port trade unions –The government of Sri Lanka was under intense pressure. Because the trade unions opposed port’s privatization and demanded cancellation of the 2019 agreement.
• Second, China’s involvement – there were reports the Chinese had played a role in inducing port unions to protest against India’s interest.

However, Sri Lanka has approved another proposal to develop the West Container Terminal [WCT] of the Colombo port with Japan and India. India has not commented on the proposal.

Way forward-

• The Sri Lankan government should be cautious that no international government or financial institution would like to make major investments if they cancel the deal due to pressure.

Source- The Hindu