Sri Lanka’s economy is in danger of collapsing. Sri Lanka has been cited by several geopolitical experts as an example of China’s “strategic trap diplomacy” or “debt-trap diplomacy.”
Sri Lanka has experienced its worst economic crisis as a result of foreign debts and loans from China. Food, fuel, and all other critical commodities are in low supply in the country right now. The country, which is heavily in debt, is unable to meet the needs of its own citizens.
“After the 2009 conflict with the rebels, Sri Lanka appealed to China for financial help,” opposition leader Sajith Premadasa told an International news organization. Sri Lanka’s overall external debt increased to more than $45 billion as a result of borrowing from other countries, with roughly $8 billion coming from China.”
The Humbantota Port was built using a $1.2 billion loan from China. The island was unable to operate the port and repay the Chinese debt. They negotiated and gave the Chinese a 99-year lease on the strategically important and vital port, which was adjacent to the international marine route.
“Hambantota port is no longer under Sri Lankan jurisdiction,” said Shashi Dhanatunge, an economist and former chairman of a shipping business as well as vice chairman of the civil aviation authority. The debt-ridden country handed up the port city to China in 2017 as it struggled to pay off multiple Chinese companies’ debts. Whatever money it made was spent on debt repayment.”
“The financial fiasco in Sri Lanka was exacerbated by a loan from China, followed by the COVID outbreak and the failed port city project,” he said, adding, “Now Lanka is living on a credit card provided by India because China refused to reschedule and offered only another loan, which could lead to the sale of more national assets.”
In an interview with foreign news channel, former Sri Lankan cricketer and former minister of petroleum and aviation Arjuna Ranatunga called the decision to hand over the port to China “wrong,” adding, “They don’t know who is their friend and who isn’t.”
