The China Syndrome

To Westerners, most things that happen in Asia are eminently forgettable—the continent is just too far away, the culture too difficult to relate to—the recent exception is China, because of the COVID pandemic.

Sri Lanka is the most beautiful place you never heard of—an Indian Ocean pearl with a troubled history. South Asia contains six countries: Nepal, Bangladesh, Pakistan, India, Sri Lanka, and Bhutan. Of these, Sri Lanka scores highest on the Human Development Index and second highest in per capita income—at an average of $2,500-$5,000, we could go for a mid-point of $3,600 to make the math easy, and settle at three hundred bucks a month.

There’s a warning about touting at Bandaranaike airport that trades six months imprisonment against 25,000 rupees—that’s 124 dollars, so a month in jail is worth twenty bucks, not three hundred—clearly a low-wage economy.

Different cultures open your mind—when I came out of the airport immigration area, I was confronted with a duty-free store where a large motorbike was on sale. A number of small shops to the right sold washing machines, tightly wrapped in plastic—I’m still perplexed about how you can buy duty-free when entering a country. When I left Sri Lanka, I half-expected to see washing machines finding their way onto departing flights—when you’re poor, anything is fair game.

Like my ancestors, I came in search of spices—black pepper and cinnamon. In my quest, I ended up in a market in central Colombo. There was little to be found, and I knew how Columbus must have felt in his search for the treasures of the Indies.

I (anti)gravitated upstairs past a sign that admonished “SPITTIN IS PROHIBITED” and arrived at the fish counters—who says wet markets are out of fashion?

The stall guys soon realized I wasn’t a buyer. “Looking, looking!” they shouted down the hall, wagging their heads. The boss man was a tall, burly fellow—mid-fities, massive head shaved close.

We got talking. Portugal came up, and the inevitable reference to Cristiano Ronaldo. I showed him some pictures of Atlantic fish just like the ones in the right-hand bin and explained that in Madeira they have a black variety—peixe espada preto.

He reminded me that the Portuguese had been in town five hundred years ago—I placed my hands together in the eastern greeting and apologized. “No, no!” he said, half-miming half-shouting.

He wagged his head violently. “We were better off then.”

My new friend stuffed his left hand repeatedly into his pocket, illustrating the universal trick of disappearing cash. Politician Magician.

A tuk-tuk took (sorry) me across town—precision driving at its best, with the jalopy sometimes perpendicular to road traffic and missing oncoming vehicles by inches—the driver would be a champion video gamer.

The landscape changed from wide palm-lined avenues lining the bay to narrow, crowded streets—boys hauling handcarts battled tuk-tuks, art deco buses bullied everyone out of the way, pedestrians and cars dodged each other on street and pavement… I sat back and smiled, watching my driver navigate by the app, an Uber-tuk in 2021. Ah, Asia…

And suddenly, there they were—the spices we’d come so far to seek. Ginger at thirty cents a pound—I felt the thrill of the old explorers, as the bearded navigators stuffed the carrack hold with spice. At Walmart, the price is four bucks a pound, so the magic markup is still there.

Black pepper, turmeric, fat rolls of cinnamon bound in elastic, chili peppers—not native to the island but introduced by the Portuguese from West Africa—and delicious miniature garlic cloves the size of a nutmeg. All this in Pettah, the historic outdoor market—the monsoon rain pouring down in sheets, the air warmer than body temperature, not another white face in sight. Take a deep breath of the pungent air—”Unchanged, all through the ages, the legions of disenfranchised people of Asia.

As in Africa, South America, and other parts of Asia, China has taken over from the US when it comes to foreign aid. In Sri Lanka, one of the recurrent themes is the port of Hambatota, which is currently leased to China for ninety-nine years.

The naysayers accuse the government of handing over the port to China—the current expression, popularized by Mike Pence, is debt-trap diplomacy. The orangutan’s former veep maintained that the Chinese modus operandi is to finance development projects in poor economies through loans—when the country defaults on the loan, the Chinese lender (i.e. the government) recovers the asset.

Hambatota is a case in point. The Sri Lankan opposition argues that a 99-year lease is tantamount to ownership—the government strongly contests that view.

The fact is that the Hambatota process is hardly cut and dried. The Canadians funded a feasibility study in 2003—the new port was financially viable. Sri Lankan politics slow-walked the process, but President Mahinda Rajapaksa pushed the work forward. In 2006, a Danish consultant, Ramboll, agreed with the Canadians. Ramboll sugested a first-stage bulk cargo port to drive income—this would be used to fund the second-stage expansion into a container port.

Sri Lanka approached India and the US for funding but were rejected. Enter China Eximbank, who agreed to put up the capital—China Harbor (which I bet you never heard of) would build the port.

Which they did, on time and on budget. The twenty-five-year war with the Tamil tigers finally ended in 2009, and the president rushed into phase 2 without building up revenue. By 2012, the Sri Lankan government borrowed another 757 million bucks from Eximbank, bringing the loan up to over a billion dollars. Modestly, the president named the port after himself.

In 2015, Rajapaska lost a snap election and the Sri Lankan economy began to unravel. With outstanding loan repayments to Japan, the World Bank, the Asian Development Bank, and China, the big squeeze was on. In 2017, Sri Lanka paid 1.4 billion dollars in debt service—Hambatota was only five percent of that.

Colombo secured an IMF loan to avoid default, and closed a deal with China Merchants for the ninety-nine year lease. Did Sri Lanka use the lease payment of $1.12 billion to pay back China Eximbank?

Nope, they used it to boost their foreign exchange reserves. Whether ninety-nine years is a lease or a repossession is a moot point—given the back and forth, this doesn’t seem to be a China debt-trap—just a lot of mismanagement.

An old Sri Lankan aphorism states that ‘a well-told lie is worth a thousand facts.’

Unfortunately, that doesn’t seem to be a Sri Lankan exclusive.

The India Road, Atmos Fear, Clear Eyes, and Folk Tales For Future Dreamers. QR links for smartphones and tablets.

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