Hambantota Harbour and an Exile’s Return – Geo-Political Dimensions of an

Invasive Species

Guest Column by Nuwan Peiris 2007 August

Overview

Writer in this Article analyses the intervention of two Asian superpowers in Sri Lanka, namely
China and India, in a bid to gain supremacy in the case of the former, and a proxy-battle to
maintain it’s natural defense-perimeter in the case of latter. Chinese involvement in a harbour
project (Hambantota) in the down-south of the island has given this battle a renewed intensity.
This Article further examines the geopolitical background that led to this battle, and looks how
“energy security” becomes the core for geopolitical change in the South Asian landscape.

1. Background

“You must never believe that the enemy does not know how to conduct his own affairs. Indeed, if
you want to be deceived less and want to bear less danger, the more the enemy is weak or the
less the enemy is cautious, so much more must you esteem him.”

Art of War - Niccolò Machiavelli

In Machiavellian sense the Chinese presence in Sri Lanka became weak when ruling UNP
(United National party) was ousted by political maneuver by President Chandrika Kumaratunge
by taking over three Ministries in 2003. Why did it happen? Did anyone predict it? Is there an
oil-factor in it? How would all this have a say in Hambantota Harbour? So far, no one has given
a detailed account on the underlying geopolitical waves.

Sri Lanka is small island placed in the tip of the Indian Peninsular just 32 miles off the South
Indian coast of India, to the southwest of the Bay of Bengal and to the southeast of the Arabian
Sea; and affectionately known as the “pearl of the Indain Ocean”.

Prime Minster Wickremesinghe of UNP who was on an official visit to Washington at time of the
maneuver realized that his wings were clipped, yet he was spared as the Prime Minister. (Prime
Minster and President are from two parties who had formed a ruling alliance). The background to
this remains complex and at best speculative. Some speculate the hand of India. Wickremesinghe
Administration played their cards wrong when they tried to get China involved in the petroleum
sector. Not for the first time, South Asian geopolitics played a decisive role in the domestic
power balance.

How did this problem start? The Indian Oil Corporation entered the petroleum retail sector in Sri
Lanka. Out of nearly 360 Government petroleum retail outlets in Sri Lanka, 100 now belong to
the Indian Oil Corporation. In the meanwhile, Sinopec (Hong Kong) Ltd, a Chinese owned
company, sought entry to the petroleum retail sector but failed.
At the time of President Kumaratunge – Wickremesinghe clash, the Chinese involvement in
petrochemical industry was growing. Delhi knew if they loose their petroleum foothold in Sri
Lanka, it would bring the energy hungry Beijing dragon close to Indian shores. This is perhaps
what Washington wanted – to balance the geopolitical scales in the region through Beijing.

What was the petrochemical-climax? The then Pro-Chinese UNP regime lost substantial political
ground when the then President took over three ministries belonging to UNP. This virtually
marked the way out for China. Then came the rise of Indian petrochemical dinosaurs in Lankan
landscape. The Hindustan Petroleum, meanwhile, was eyeing the petroleum retail sector in the
island despite assertive opposition of some Lankan quarters. Had these initiatives succeeded,
India would have ended up as Sri Lanka’s petrochemical emperor, controlling the entire retail
and wholesale sector; and finally monopolizing the exploration and development of oil reserves
off Jaffna/Mannar.

Writer would give two reasons for the later diminishing role of China in Sri Lanka:

1. US$ 3 Billion post-tsunami reconstruction grants and pledges – we could see no assertive
Chinese role. (No post-tsunami politics for them!)

2. India’s involvement in the clearing/mapping of the Trincomalee and Colombo harbours

after the tsunami.

Was this the geopolitical anti-climax? Yes. China-factor, by this time, was a distant memory.

Did the exile come back? Yes. Recollect what Kissinger said:

“By geopolitical, I mean an approach that pays attention to the requirements of equilibrium.
Henry Kissinger in Colin S Gray, G R Sloan. Geopolitics, Geography, and Strategy. Portland:
Frank Cass Publishers, 1999.

2. Hambantota and the Geopolitical Net

A silver-line appeared in the Chinese sky with President Rajapakse’s visit to China in late
February. China and Sri Lanka signed an agreement on an "establishment of friendship city
relationship" centering Hambantota district. The agreed Hambantota Development Zone includes
developing a harbour in Hambantota with a tank farm and a bunkering system.

The small town of Hambantota is located in the far down-south of the island. In 2 A.D. it was
part of the Kingdom of Ruhuna, and was home to a busy harbour called “Godapavata Pattana”
just few miles west of Hambantota. Ships sailing from west/east and vice versa used Godapavata
Pattana as a commercial maritime hub. It formed part of the maritime silk-route and continues to
unearth its past wonders today thanks to a collaborative German-Lankan archeological research
team.

At present, this small town has lost its former political glory and economic vibrancy. The present
President whose political epicenter is this small town is determined to bring back the lost glory to
his native village. Hambantota, in addition, is the geographic margin between the East and the
South, and the last stronghold Sinhala city of the South with several military bases including the
Weeravilla Airport; and further serves as a strategic logistical-military base to Sri Lankan East –
say like centrally situated town of Anuradhapura to Jaffna Peninsular.

Back in 2005, attempts were made by then President Chandrika to implement the construction of
Hambantota Bunkering and a Tank Farm Project by the Chinese government during the visit of
Chinese Premier Wen Jiabao to Sri Lanka. The project was to be undertaken by Chinese Harbour
Engineering Company and an estimated sum of Rs.1.5 billion (US $ 15m) was to be then
invested. In 2007, the present incumbent, Mahinda Rajapakse, took a renewed interest in
carrying the project forward.

The US$360 million contract agreement was signed on March 12th, 2007 for the construction of
the Hambantota Harbour between the Sri Lanka Ports Authority (SLPA) and the Consortium of
China Harbour Engineering Company Limited (CHEC) and Sino Hydro Corporation Limited.
During the first phrase of the project is the construction of a jetty and an oil terminal. Later the
Port would be developed to handle 20 million containers annually. The first phase would be
completed in 3 years and the whole project would be completed in 15 years. Many question the
economic wisdom of this project, especially attracting new generation vessels with draft
exceeding 18 m. China may not see any economic advantage from this project. Yet she has
decided to grant 85% of the total amount under a special subsidized loan scheme.

Delhi has taken the role of China rather nonchalantly. An account in the Hindustan Times in
2005 said that "India feels that it is unnecessary to bid for it [Hambantota] given the fact that it is
already refurbishing the World War II-vintage oil-tank farm at Trincomalee with 99 giant tanks.
Out of these, only 35 can be put to use in the near future." It was further noted "There isn't
enough business in Sri Lanka to make expansion worthwhile even in Trincomalee. India also
does not consider the Hambantota project to be of a great strategic value, either. For India, a
presence in Trincomalee makes much more strategic sense." (Trincomalee (Trinco) is situated
towards north of the island)

Asia Times Online quoting a Delhi official said “that while the Hambantota project gives the
Chinese a foothold in Sri Lanka, this cannot be interpreted as a decline in India's role on the
island. Geographic proximity, ethnic links and close ties between India and Sri Lanka cannot be
eroded by a few projects and agreements with other countries.” Seemly, it is a benign neglect on
the Indian part.

The Port deal inked would bring China to the doorstep of India. Though China has no grip on
Trincomalee, they have quite swiftly moved much closer to Trinco and Rameshwaram.

3. The “H’ factor – The New Pearl

Titled "Energy Futures in Asia" by Booz Allen Hamilton (defense contractor) for the Pentagon in
an “internal report” mentions about the "pearls" in a string. These pearls could be seen in
Chinese naval presence. It starts from Gwadar in Pakistan, at Chittagong in Bangladesh, in
Myanmar, Cambodia and Thailand, pulling to South China Sea. Add to all this, “Hambantota” –
the “H” factor – the new pearl in the necklace – which is “Made in China”.

Dubbed as Burma Rama – B. Raman – a RAW officer, in an excellent write-up, in “Gwadar,

Hambantota & Sitwe: China's Strategic Triangle”, relates how “H” factor forms a strategic
triangle checkmating India. First take Deep Sea Hub Port developed by China in Gwadar in
Pakistan. Gwadar is just 72km from the Iranian border and 400 km east of the Strait of Hormuz,
a major channel of world oil supplies.

This would serve as a western outlet for Chinese exports and energy supplies. Thus it would
reduce the dependence on choke points like Malacca Straits vulnerable to disruptions and pirate
attacks. Oil/gas tankers to China from the Gulf and Africa could be discharged in Gwadar, then
pumped by a pipeline through Kashmiri territory to Xinjiang. Pakistan further agreed with China
to set up a Special Economic Zone (SEZ) in Gwadar. This Zone is entirely for Chinese use to
produce goods for export in Africa. The cost advantage is immense.

The political and economic apron of China would be nicely laid to reach Gulf and Africa.
Further, tank farms in Gwadar would be a vantage for Chinese Navy. As B. Raman points out;

“The Chinese interest in Gwadar is not just economic and energy supplies related. It is much,
much more. It is of immense interest to its Navy---as a port of call, as a refuelling halt and as a
listening and watch tower to monitor developments in the Gulf---particularly the movements of
the US Navy.”

The other point in the triangle is Sitwe in Myanmar. China mainly intends to lay pipelines to
Yunnan – province in the far southwestern corner of China – from Sitwe. The third point is
Hambantota in the strategic triangle. This means in the game of China Vs India played in Sri
Lankan grass – it is now “advantage China”.

4. Compromising Energy Security

Perhaps impending consequences of the Indian blunder is not military – at least in short term. It
is the energy security that is compromised. As we are aware, “energy security dynamics” is
relatively a new field in this region, especially big nations invest large political capital to gain
strides. India grows at over 8% of the GDP and consumption accounts for 60% of GDP and
consumes nearly 3% of the world's total energy. And this consumption is expected to double in
the next 15 years. Yet India has only invested a sum less than US$ 4 billion in the energy sector
as opposed to China where their total investment accounts for US$ 40 billion.

West's energy watchdog “International Energy Agency” said in a recent monthly Oil Market
Report that India's oil demand in 2007 is expected to rise by 3.4 per cent from last year to 2.7
million barrels per day. Given the seriousness of this, India could never compromise on energy
security. In April 2007 Indian Planning Commission Deputy Chairman Montek Singh Ahluwalia
said in Tokyo that the demand for energy is expected to grow, but would grow below the rate of
economic growth due to increased energy efficiency. Still, India could not afford to ignore the
energy resources scattered within the vast Indian Ocean basin.
Being conscious of the above challenges that laid ahead, Indian legislature realized the
importance of a strong national policy on energy. This gave birth to government’s 2000 proposals
of Hydrocarbon Vision 2025. This serves as a blueprint for Indian petrochemical businesses.
State-owned companies like the Oil and Natural Gas Corporation (ONGC) and Oil India Limited
(OIL) which explores and exploit, and the Indian Oil Corporation (IOC), which secures oil from
abroad, would to shape the direction of energy national policy under the Ministry of Petroleum
and Natural Gas through the Directorate General of Hydrocarbons (DGH) and the Oil
Coordination Committee. Knowing that, 50% of the Indian Ocean basin lies within a 1,000 mile
radius of India, the challenges that lie ahead for India are vast.

The commercial challenges that India face in the entire Ocean Continent would be determined by
the presence of other superpowers in neighbouring countries located in the Indian Ocean. For
now, Chinese presence in Hambantota has altered the Sri Lankan geopolitical equation; and the
writer notes the following spillover effects on Sri Lankan policies;

1. Sri Lankan government would not hesitate to cooperate more with China in Off-shore oil
exploration, thinking less of India: – This is already seen in Mannar basin adjoining Indian
Cauvery basin where China, like India, was offered an oil block for exploration without
bidding.

2. Dual presence of “China and India” would give leverage to the Sri Lankan government to
bring other energy explorers to the shore without being intimidated by India (perhaps for a
better deal!): – The opening of 6 oil drilling blocks for competitive bidding in Mannar is a
case in point. Sri Lanka could now afford to send delegations to Washington, London, Dubai
or Singapore for bidding invitations. This promotes the Indian Ocean to be truly
international waters open to the world.

3. The possibility of internationalizing domestic issues like LTTE, in the long term (like
Nigeria), which could affect the Dravidian sensitivities of South India. One writer said
(referring to US in Mannar oil exploration); “It will be very hard for US Texaco to make
progress in Tamil Eelam sea without removing LTTE from U.S banned list; directly or
indirectly they have to deal with LTTE than GOSL for positive outcome!”

5. Unfolding Geopolitical Drama

Geo-strategically, Indian responses to Sri Lankan issues have been impulsive and erratic.
Resultantly, loosing the Lankan geo-political grip means they have allowed China to creep into
the Indian security perimeter – and it is right to say they are inside India. Indian Experts said,
time and over, that the Indian security perimeter extends from the Strait of Hormuz to the Strait
of Malacca, from Africa's east coast to the western shores of Australia. India may implement the
setting up of a high-tech monitoring post in northern Madagascar under the cover of combating
piracy/terrorism. Else markedly increase the aerial superiority in their scientific base in
Antarctica. But yet it is undeniable that China and Diego Garcia of US has already come under
her wingspan.
But now one thing is clear – and that’s for sure. Writer believes that Indians are still stuck with
the classical naval doctrine of K.M Panikkar, the architect of India's naval doctrine. Modern
brown-water naval strategy (naval expansion in their own ocean), leave aside blue-water (trans-
oceanic naval expansion), means that it not a bareboat naval expansion (like in Panikkar’s days)
but an apron cover of aerial, communication, and logistical forward-press. Quintessentially,
regional aerial dominance is vital, as the naval crafts in battle could be “sitting ducks”, if aerial
protection is lacking. Seeing that Weeravilla Airport which is few miles from Hambantota, the
dragon needs only one step to move close!

At time of writing, IOC is further proposing US$ 20 million investment in the aviation fuel
market by 2008. But should they stop from that? Sources state that IOC is also looking to open
up the East in a positive manner. (Do not forget the above-mentioned Weeravilla Airport).

From ACSA to Texaco – you name it – all this is added weight to Indian geopolitical
paraphernalia.

For the moment, the ONGC wants to explore petroleum reserves in the Palk Straits i.e. the
Sethusamudram. Yet on Sri Lankan side the involvement of Norwegians through TGS-NOPEC
to collect 2D seismic data, starting from the east coast of Sri Lanka, could not be lightly
presumed, perhaps with a 3D eye on petroleum prospects. Certainly the involvement of this
Norwegian company has raised eyebrows of some in Colombo. Perhaps given the possibilities of
energy exploration in the Sri Lankan ocean basin - and Mannar plus Weeravilla-Air factor – it is
a wise move for China to have come through the backdoor – Hambantota.

How would India take all this? For India, geopolitical equation in Sri Lanka is getting complex –
and the “H” factor is another added variable. With UAE sensing for an oil refinery in
Hambantota, Sri Lanka is fast becoming a feeding plate for too many.

Cometh the hour, cometh the dragon. Only time would tell what the final episodes of an
unfolding geopolitical drama. Let the writer leave the reader with few words of Chinese wisdom.

“When opponents present openings, you should penetrate them immediately. Get to what they
want first, subtly anticipate them. Maintain discipline and adapt to the enemy in order to
determine the outcome of the war. Thus, at first you are like a maiden, so the enemy opens his
door, then you are like a rabbit on the loose, so the enemy cannot keep you out.”- Art of War -
Sun Tzu.

(Writer is a Sri Lankan. He is also an Attorney, a Research Analyst, and a Freelance Journalist. The views
expressed by the author are his own. For comments on this article write to nuwan20044@yahoo.com)