Posts Tagged ‘Sri Lanka’

Pakistan: Anti-forced marriage campaign launched

January 18, 2019
Dia Praxis, also known as, Dialogue in Practice, a transnational diaspora organisation based in Norway and Pakistan, has teamed up with Pakistani public policy and gender reforms specialist Salman Sufi to launch a campaign against forced marriages.

The project, launched at an event held in Oslo on Thursday, is not limited to Pakistan and will eventually apply in all Saarc countries that have legislation in place against forced marriage.

Panel at the launch event of the anti-forced marriage campaign.
Panel at the launch event of the anti-forced marriage campaign.

For this project, Dia Praxis, which has worked extensively with the Norwegian Ministry of Foreign Affairs, has teamed up with Sufi, author of the Punjab Protection of Women against Violence Act 2016 and founder of South Asia’s first survivor centric anti-violence against women centre, to help victims of forced marriages in Pakistan from the expatriate Norwegian-Pakistani community.

Speaking at the event, Nina Bjorlo of the Norway Police said the initiative is aimed at tackling the issue plaguing the diaspora community, adding that she had dealt with such cases during her work at the Norwegian Embassy in Islamabad.

Sri Lanka’s ambassador in Norway, Arusha Cooray, who was in attendance as well, said she was pleasantly surprised at some of the work done in Pakistan to combat gender-based violence, adding that it will be a great avenue for both countries to collaborate on.

Pakistani public policy and gender reforms specialist Salman Sufi at the launch event of the anti-forced marriage campaign.
Pakistani public policy and gender reforms specialist Salman Sufi at the launch event of the anti-forced marriage campaign.

The anti-forced marriage campaign also proposes the establishment of a Saarc-wide hotline where a collective database will be maintained of tips and complaints of forced marriages.

Furthermore, the blue print of violence against women centres already established in Punjab will be made available to Saarc countries for replication. The proposed centres will be used to rescue victims and provide them with shelter.

The campaign also proposes a strategy to establish an airlines alliance operating from within the EU and other countries where expatriates from the Saarc region reside. Under this alliance, the airlines will team up to provide brochures with helpline numbers in seat pockets and specific codes for victims that are in distress and are being forced to travel.

Under the project, calls to the helpline numbers and text codes will be free and victims will be able to use certain codes and texts to alert immigration and custom authorities upon arrival.

Embassies of concerned countries will be connected with these helplines in order to facilitate immediate repatriation of victims with the help of local law enforcement.

The campaign proposes that under this project, forced marriage victims residing within the Saarc region will also be able to use the same hotline to provide them with immediate support.

Saarc governments that already have legislation in place barring forced marriage will be provided with implementation mechanisms that have already been developed.

Local NGOs and organisations working on the issue will also be made part of the campaign. Starting from Pakistan, India, Afghanistan and Sri Lanka, the campaign aims at getting the entire Saarc bloc on board.


China’s The Belt and Road Initiative Is a Corruption Bonanza

January 17, 2019

Despots and crooks are using China’s infrastructure project to stay in power—with Beijing’s help.

Malaysian Prime Minister Najib Razak (left) shakes hands with Chinese President Xi Jinping during the welcome ceremony for the Belt and Road Forum in Beijing on May 15, 2017. (Kenzaburo Fukuhara-Pool/Getty Images)

Malaysian Prime Minister Najib Razak (left) shakes hands with Chinese President Xi Jinping during the welcome ceremony for the Belt and Road Forum in Beijing on May 15, 2017. (Kenzaburo Fukuhara-Pool/Getty Images)

When former Malaysian Prime Minister Najib Razak was ousted from office in May 2018, it’s possible that no one was more dismayed than officials in Beijing.

After all, Najib had granted China extraordinary access to Malaysia. Across the country, huge China-backed infrastructure projects were being planned or breaking ground. But as China’s presence in Malaysia swelled, a scandal was engulfing the prime minister’s office. Najib was accused of massive corruption linked to the development fund known as 1MDB. As the election neared, his opponent, Mahathir Mohamad, alleged that some of the Chinese money pouring into Malaysia was being used to refill the fund’s graft-depleted coffers.

Now, Malaysia’s anti-corruption commission is investigating those claims. And last week, an explosive Wall Street Journal report exposed the most damning evidence yet: minutes from a series of meetings at which Malaysian officials suggested to their Chinese counterparts that China finance infrastructure projects in Malaysia at inflated costs. The implication was that the extra cash could be used to settle 1MDB’s debts. According to the report, Najib, who has denied any part in corruption, was well aware of the meetings.

If true, the report puts tangible proof behind widely held suspicions that China exploits corrupt regimes to propel its Belt and Road Initiative (BRI). The BRI requires China to build infrastructure in other countries—a process that’s fraught with official approvals, feasibility studies, stakeholder engagement, and other bothersome procedures. In corrupt countries, however, many of these obstacles can be bypassed with bribes and back-room dealing—in fact, some of the red tape exists primarily to extort money from businesses. For this reason, it’s easy to understand why China might prefer working with corrupt regimes.

But not just China benefits from corruption in BRI projects. In many cases, the leaders of BRI-recipient countries see the projects as opportunities to sustain and legitimize their own corruption, as well.

Many countries that receive BRI investments suffer from high levels of corruption. On the TRACE Bribery Risk Matrix, most rank in the lower 50 percent, and 10 are among the riskiest 25 countries in the world. They often have opaque legislative processes, weak accountability mechanisms, compliant media organizations, and authoritarian governments that don’t permit dissent.

For politicians in these countries, the BRI offers an array of tools for enabling corruption: injections of easily diverted cash, dazzling infrastructure to placate the citizenry, and the imprimatur of a cozy relationship with one of the world’s most powerful nations—all of it wrapped up in a virtual guarantee that their wealthy benefactor will, at the very least, look the other way if any improprieties should surface, so long as the project in question gets built.

Malaysia has come to embody this dynamic. The new government has unearthed what it says are numerous abnormalities embedded in the previous administration’s deals with China. For instance, a Chinese state-owned enterprise was paid $2 billion in advance for two Malaysian pipeline projects that it had barely started construction on. Another BRI project, Malaysia’s East Coast Rail Link, was so expensive that authorities suspect its cost was artificially inflated. All of these projects have been suspended while the new administration reviews them.

The excess money generated by these projects was allegedly siphoned off by the Najib administration to pay down 1MDB’s debts. But while Chinese largesse may have kept these deals in the dark for a while, Malaysian voters were ultimately able to hold their prime minister accountable at the ballot box.

Not every country has that option. China’s investments in oil- and gas-rich Central Asia have allowed autocratic regimes in that region to flourish. A prime example is Kazakhstan. The Kazakh government, a veritable kleptocracy, is extremely corrupt. On Transparency International’s 2017 Corruption Perceptions Index, Kazakhstan ranked in the bottom third of 180 countries.

Not only have BRI projects financed this government, but they’ve helped make its leadership genuinely popular as ordinary Kazakhs interpret the flashy new infrastructure as a symbol of progress. This has been crucial for the country’s rulers, since the health of the Kazakh economy is highly dependent on oil prices and economic fluctuations in Russia. In an analysis of Chinese investment in Kazakhstan, a study from the George Washington University found that “Chinese aid, loans, and partnerships … enhance the Kazakh leadership’s ability to stay in power.”

China, of course, struggles with its own share of corruption. In fact, some of China’s own infrastructural marvels have been built through means that were less than scrupulous. President Xi Jinping’s anti-corruption purges have frozen some of that at home. In its construction projects abroad, however, Beijing’s approach seems to be “whatever works.” In no part of China’s lengthy declaration of the BRI’s principles is any attempt made to discourage corruption. And according to a report by Transparency International, no charges have ever been brought in China against a company, citizen, or resident for corrupt practices committed overseas.

If anything, the BRI has revealed that, for Chinese officials acclimated to corrupt environments at home, executing overseas projects through unsavory means comes somewhat naturally. Like many undertakings in China, BRI projects are subject to the slippery Chinese concept of guanxi—systems of mutually beneficial relationships that grease the wheels of many a business transaction. In China, bringing a sprawling, unwieldy infrastructure project to completion without guanxi can seem an impossible task.

But without proper policing, these mutually beneficial relationships are ripe for corruption. A recent study found that “guanxi has profound influence on almost all social interactions in China, whether it is in the government or in business. As such, it blurs the line between normal guanxi relationships and corrupt practices, making corruption an intrinsic characteristic of the Chinese government, as well as the Chinese society.”

While Chinese corruption at home doesn’t threaten to bankrupt the government, Chinese corruption in smaller, poorer countries sometimes does. For some of these countries, China’s BRI project is the biggest infrastructural endeavor they’ve ever attempted—a high-stakes gamble collateralized with mountains of debt. When such projects are approved by local leaders more interested in enriching themselves than in weighing the cost for their country, locals can find themselves crushed beneath the weight of white elephants.

Laos may face this fate. At China’s behest, Laos is building a railway from its northern border to Thailand with a large loan from a Chinese bank. The $6 billion project was championed by the country’s former deputy prime minister, Somsavat Lengsavad, a fluent Mandarin speaker with close ties to Beijing. Somsavat almost single-handedly ushered the project through the Lao bureaucracy, despite warnings from the International Monetary Fund that it threatened the country’s ability to service its debts.

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Chinese President Xi Jinping, right, shows the way to Philippine President Rodrigo Duterte during a welcome ceremony outside the Great Hall of the People in Beijing, China.   AP/Ng Han Guan, File

Why Somsavat was so keen on the railway remains unknown, though corruption is rife in Laos, and bribery in foreign-built Lao development projects is common. One foreign diplomat working in Laos says the regular visits to Vientiane by Chinese emissaries “don’t just flatter Lao officials—concrete things get exchanged between Chinese and Lao delegates at these meetings.”

Laos should look to Sri Lanka, where Hambantota Port was built by China under former President Mahinda Rajapaksa. When Rajapaksa faced an electoral challenge in 2015, money earmarked for the port’s construction somehow found its way into the president’s campaign coffers. In the end, Rajapaksa lost the election, and the port proved so unprofitable that the new government was forced to hand it over to China in a debt-for-equity swap.

Deals such as this are a reminder that, for China, the BRI is as much a foreign-policy instrument—and sometimes a domestic political move—as it is an economic program. BRI projects that are aimed at advancing China’s strategic goals, or that are launched by party officials chiefly interested in signaling their loyalty to Xi, will often not produce the kind of economic returns that would pass muster in a cost-benefit analysis. This is why China needs leaders like Najib, Somsavat, and Rajapaksa to get such projects approved, despite their dubious value to the country they’re built in.

But just as China needs these politicians, they need China, too. The relationship between China and corrupt BRI partners is symbiotic and, often, more complex than simple bribery. In Malaysia’s case, it increasingly appears that the Najib administration’s defining aspect, the 1MDB fraud and its subsequent cover-up, relied heavily on infusions of BRI cash. Indeed, if Najib had not been voted out of office last May, his alleged rerouting of Chinese investments might be ongoing to this day. But the problem with leveraging BRI projects to enable homegrown corruption is that once you’re caught, you’re on your own, and China is on to the next big thing.

Will Doig is a journalist covering urban development, transportation, and infrastructure. He is the author of “High Speed Empire: Chinese Expansion and the Future of Southeast Asia.

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Xi Jinping (R) is discussing ways to improve bilateral ties with Tanzanian President Jakaya

Image result for Xi Jinping in Africa, pictures

President Xi Jinping met in Xiamen with President Jacob Zuma of South Africa

India Makes Trouble for Pakistan at Terror Financing Conference

January 12, 2019
.— File photo courtesy of FATF
.— File photo courtesy of FATF

The Pakistani delegation explained that all the actions recommended by the FATF had been taken and a compliance report submitted to its headquarters.

The delegation also made it clear that it would be the Pakistan government’s decision whether or not to publicise actions taken against banned organisations and would not succumb to desires of any specific member.

Most other members seem satisfied with Islamabad’s efforts against money laundering, terror financing

Pakistani officials also made it clear that they would not respond to verbal questions from adversaries but would be ready to provide comprehensive responses if written queries were submitted.

The sources said the Indian delegates then filed a total of 28 questions with the FATF, which were shared with the Pakistani delegation.

Pakistan assured the FATF that responses to the questions would be provided in the next review meeting scheduled to be held in Paris on Feb 17-18. All the questions raised by the Indian delegates pertained to actions taken to block terror financing.

The sources said that Pakistan also told the FATF that there was no need for amendments to anti-money laundering laws and the Paris-based financial watchdog accepted Pakistan’s view.

While the action plan presented by Pakistan was accepted by the FATF as reasonable, the country would now follow up with implementation through strengthening of agencies and processes to combat money laundering and terror financing under international obligations.

The Pakistani delegation was led by Finance Secretary Arif Ahmed Khan and comprised representatives of the State Bank of Pakistan, National Counter Terrorism Authority, Federal Investigation Agency, Federal Board of Revenue and Financial Monitoring Unit.

An official claimed that the FATF had highlighted a few matters that were doable by May this year, but progress would need to be registered by February this year. A broader examination of the full compliance with international commitments will take place at another meeting in May, possibly in Sri Lanka or Australia.

Officials said the FATF had gone through the report dispatched by Pakistan last week before the review meetings with the Pakistani delegation involving questions and answers about the performance so far and the way forward. They said the FATF team appeared convinced over the steps and measures taken by the authorities to combat terror financing and money laundering in line with the UN resolutions.

The Pakistani delegation explained the implementation status of plans for various government agencies. Its report identified Pak-Afghan and Pak-Iran borders as key routes for terror financing and money laundering and reported that a total of 4,643 suspected transactions had been identified and blocked since 2015, including 3,677 suspected transaction reports and 966 financial intelligence reports.

A total of 1,167 transactions were seized last year alone, including 975 STRs and 210 financial intelligence reports.

Published in Dawn, January 12th, 2019

Money and Muscle Pave China’s Way to Global Power

November 27, 2018

Beijing is leveraging its commercial and military might to redraw the terms of trade, diplomacy and security, challenging the liberal democratic order.

Under a merciless sun, a dozen Chinese construction workers survey an empty expanse of desert, preparing to transform it into the heart of a new Egyptian capital.

The workers are employed by China’s largest construction conglomerate through a $3 billion contract from an Egyptian company, with financing from Chinese banks. They are erecting a thicket of 21 skyscrapers, one as tall as the Empire State Building.

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The presence of Chinese labor and largess on the sands of Egypt is a testament to China’s global aspirations. After centuries of weakness and isolation, China is reclaiming what its leaders regard as its natural destiny — supremacy in Asia, and respect around the planet. Through the ventures in Egypt and elsewhere, China is exploiting its formidable economic clout to expand its geopolitical influence, directing investment to woo governments that control vital assets.

A traditional ally of the United States, Egypt controls the Suez Canal, a vital shipping passage where a threat to access could impede China’s movement around the globe. In constructing a central piece of the futuristic capital, China is ingratiating itself with the canal’s ultimate gatekeeper, President Abdel Fattah el-Sisi, while rendering his grandest visions dependent on friendly relations with Beijing.

China’s reach for commercial expansion along with diplomatic influence guides an array of Chinese undertakings, from rail networks and highways taking shape across Africa and Latin America to ports and power stations being constructed in Eastern Europe and South Asia. In Southeast Asia, Chinese entrepreneurs are engineering a crop of web companies just as China projects growing military power in the South China Sea.

Little more than a decade ago, China’s forays beyond its borders were mainly about bringing home energy, minerals and other resources, often from countries forsaken by the West as pariah states like Iran, Sudan and Myanmar. In foreign policy, China pursued a sole obsession — peeling off diplomatic recognition of Taiwan, the self-governing island that Beijing claims as its territory. Even as China skirmished with neighbors over contested islands, it accepted the dominance of the United States Navy.

Those days are over.

Under the muscular leadership of President Xi Jinping, China has cast off previous restraints, rejecting deference to an American-dominated global order as an impediment to national revival. In matters of commerce and national security, China is competing with the United States, even in traditional American spheres of influence.

From a Chinese perspective, this reordering is merely an overdue reversion to historical reality as Beijing demands consideration commensurate with its stature.

In the telling of the ruling Communist Party, China’s modern history is the story of Chinese mastery degraded by colonial depravity. China is the land that invented the compass, gunpowder, paper and printing, amassing stupendous wealth while Europe was still backward. Then came centuries of humiliation — Britain’s profiting from forcing opium on the populace, Japanese brutality, demeaning lectures about human rights from hypocritical Americans. Now, China is intent on securing its own fate.

“China wants to be a great power in the world,” says Paul Heer, a former chief national intelligence officer in East Asia for the United States, who now teaches at George Washington University. “They think the rest of the world owes them recognition, and a return to what the Chinese see as their rightful place.”

Nowhere are China’s designs clearer than in Asia. China has overtaken the United States as the leading trading partner with Asian nations while pushing back against American naval primacy in the South China Sea. China is disrupting American alliances in the region, from Japan to Singapore to Australia.

Beyond its backyard, China’s ambitions are boundless. It celebrates its Belt and Road Initiative, a vast collection of infrastructure projects around the world, as the means of recreating the Silk Road, the trails navigated in ancient times by merchants carrying goods between Asia and Europe.

“Xi Jinping is leading a China that has influences in all corners of the globe,” says Zhang Baohui, a professor of international relations at Lingnan University in Hong Kong. “The 2008 financial crisis in the West was the turning point for China. Beijing started to embrace a triumphal mind-set, and pursued global leadership with new confidence on the back of the West’s perceived flaws.”

China’s assertive role in world affairs is grounded in its domestic needs. It is at once spreading into new markets, generating fresh demand for its factory wares just as growth slows at home. It is projecting military strength and influence when the legitimacy of the Communist Party rests on bolstering economic fortunes and international esteem.

Among its neighbors, China’s rise provokes fears that an unwanted piece of history is being resurrected — the old tribute system that cemented China’s status as the Middle Kingdom. For centuries, other nations bowed in recognition of China’s imperial might, bestowing gifts on the emperor and accepting vassal status to secure trade and peace.

Beijing now confronts accusations that it is directing investments to ensnare partners in debt traps as a means of seizing their assets. Last year, Sri Lanka handed control of a port to a Chinese venture after failing to pay back Chinese loans. Malaysia recently canceled a pair of projects involving Chinese financing. Faced with pushback abroad and concerns about mounting debts at home, China is reassessing the breadth and cost of its global ventures, although the scope remains vast.

For the Western powers whose order has prevailed since the end of World War II, China poses a foundational challenge. The United States and its victorious allies erected institutions that were — at least rhetorically — designed to keep the peace by promoting trade and fair competition. The World Bank and the International Monetary Fund have dispensed aid with conditions, though frequently drawing accusations that they have failed to comply with their standards on protecting human rights and the rule of law.

China’s investments come with no such strictures. China bankrolls autocrats who control geopolitically valuable real estate. China demands only that its companies gain a piece of the action while recipients eschew criticizing Beijing.

China’s challenge to the Western-dominated order is amplified by the reality that its primary architect, the United States, is now led by an avowed nationalist. As President Trump wages a trade war and derides international cooperation, he has generated doubts about the perseverance of the liberal democratic philosophy the United States has long championed.

Mr. Xi has sought to fill the vacuum. He has cast himself as the leader of the rules-based international trading system, even as China faces accusations of stealing intellectual property, subsidizing state-owned companies and dumping products on world markets at unfairly low prices.

“What’s happening in the United States gives China this golden opportunity to portray itself as the defender of the international order,” says Jessica Chen Weiss, a China expert at Cornell University.

Threatening Competition and Cohesion

If the new Silk Road is in part about moving goods from Chinese factories to customers in the rest of the world, the trail seems certain to pass through Central and Eastern Europe.

Already, Chinese investment has turned the Greek port of Piraeus into the busiest shipping hub on the Mediterranean, a gateway to the rest of the European Union, with its 500 million consumers. China has promised to help finance the construction of a high-speed rail link from the Serbian capital, Belgrade, to the Hungarian capital, Budapest. It has also pledged to turn the region into a transportation corridor laced with highways, airports, rail, ports and power stations.

This reality frames the proceedings of the “16-plus-1” group, an economic bloc that China has forged with 16 Central and Eastern European nations. Its latest summit meeting convenes on a drizzly day in July in the Bulgarian capital, Sofia. Officials from the 16 governments — among them the newest, least-affluent members of the European Union — pose for photos with the delegation from China, the one nation wealthy and ambitious enough to finance their visions.

Leaders in the rest of the European Union construe the group as a stealth assault on the rules and cohesion of their bloc. In offering financing for infrastructure projects, China has positioned itself as an alternative to European Union development funds.

Europe’s money comes with rules protecting labor and the environment, while requiring that projects be awarded to companies on the basis of competitive bidding to ensure fair competition. China tends to distribute its funds with far simpler demands: Chinese companies must gain work, free of competition, while Beijing secures an international ally.

European Union officials are especially worried that Chinese money could weaken the pressure Europe is applying on members that have been breaching democratic norms. Europe has threatened to withhold development funds from Poland and Hungary as punishment for their turns toward authoritarianism. Both have packed courts with government-friendly judges and menaced the press.

“It’s a mutually beneficial cooperation based on mutual trust without any kind of attempts to interfere into domestic issues,” Hungary’s foreign minister, Peter Szijjarto, says in an interview before the summit meeting in Sofia.

Bulgaria has high hopes for Chinese investment on highway projects linking its ports. The Bulgarian government has broken with other European Union members in declining to join international statements condemning China’s human rights record. As Bulgarian officials prepare at the gathering to meet China’s premier, Li Keqiang, they plan to stick to business.

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Philippines would be better off shunning Chinese investment altogether, Capital Economics says — Malaysia, Sri Lanka and Pakistan tell the story

November 24, 2018

Philippine President Rodrigo Duterte risks repeating the mistakes made by other countries in the region that suffered from rising debt by accepting Chinese infrastructure investments, a London-based think tank warned.

Duterte plans to spend trillions of peso to bridge the Philippines’ infrastructure gap, and to do so he sought Beijing and other countries’ help for funding to reduce strain on his government’s budget.

Manila and Beijing on Tuesday signed 29 bilateral deals, including new plans for increased infrastructure investments and a preliminary agreement to cooperate on oil and gas exploration in the disputed South China Sea, part of which is the West Philippine Sea.

In a commentary on Thursday, Capital Economics said given the “corruption problems” associated with Chinese infrastructure projects and the Philippines’ current account gap “already approaching unsustainable levels,” Chinese investment “could make problems worse.”

Chinese President Xi Jinping (L) gestures as Philippines’ President Rodrigo Duterte (R) looks on during a state banquet at the Malacanang Presidential Palace in Manila on November 20, 2018. Chinese President Xi Jinping called his visit on November 20 to long-time US ally the Philippines a “milestone”, as he aimed to boost blossoming ties on the promise of billions of dollars in backing for mega-projects.

Pool/AFP/Mark R. Cristino

The think tank cited Sri Lanka and Pakistan’s recent dealings with Chinese loans as a cautionary tale for the Philippines.

“The upshot is that while improvements to the country’s infrastructure are desperately needed, the pace of increase needs to be managed properly in order to avoid further balance of payments strains,” Capital Economics said.

“If Chinese plans do eventually go ahead, the Philippines would need to row back on its own spending plans,” it added.

Some analysts believe Chinese President Xi Jinping’s Manila visit early this week did not yield material gains for the Philippines, saying the deals signed in the presence of Duterte and the Chinese leader were in broad strokes and vague.

Critics have warned that the Philippines could be the next victim of what they say is China’s “debt trap diplomacy,” where Beijing gives “friendly” loans to bankroll infrastructure projects in financially weak states in exchange for control over strategic assets.

Debt trap?

Duterte’s ambitious plan to upgrade the Philippines’ dilapidated infrastructure has led to twin deficits on the budget and current accounts, pressuring the peso, and fueling inflation concerns.

The Duterte government has been pushing for a wider budget gap to accommodate increased spending on infrastructure. High demand for imports of construction-related goods has reversed the country’s current account surplus to a deficit, which was estimated to be equivalent to around 1.9 percent of gross domestic product in the first half of 2018.

READ: Philippines’ current account buffer deteriorates further in H1

“Given the relatively high level of foreign currency debt in the country, and with inflation well above target, a sharp fall in the peso would pose a major threat to the economy,” Capital Economics said.

A surge in Chinese infrastructure investment in Pakistan has led to a wider current account deficit, prompting Pakistani officials to seek a bailout from the International Monetary Fund amid a crashing currency.

Struggling to pay its obligation, Sri Lanka in December last year gave the strategic port of Hambantota to Beijing on a 99-year lease as a way of repaying Chinese loans. Meanwhile, Malaysia has recently canceled a number of Chinese-backed projects due to worries about corruption.

READ: Malaysia’s Anwar cautions Philippines on ‘dubious’ infra loan deals

Of the 10 big-ticket projects in the pipeline that China promised to finance, the Philippines has so far completed only two loan agreements — the $62.09 million Chico River Pump Irrigation Project and $232.5 million New Centennial Water Source Kaliwa Dam Project in Rizal.

Philippine policymakers have repeatedly said the country won’t fall into an alleged “debt trap” with China.

“Given the experience of other countries in the region which have suffered from rising debt and increased corruption, the Philippines would be better off shunning Chinese investment altogether,” Capital Economics said.


U.S. Embarks on Tortoise vs. Hare Investment Race With China

November 13, 2018

HONG KONG—The U.S. has launched a new strategy aimed at ramping up investment in Asia to vie with Chinese President Xi Jinping’s overseas infrastructure-building spree, as Beijing grapples with setbacks to its sprawling program.

But China has a head start—and a state-led model that makes it easier to finance and build on a large scale. Mr. Xi’s Belt and Road initiative has offered hundreds of billions of dollars for railways, bridges and ports in dozens of countries, expanding its strategic influence along the way.

Among the recipients are economies that have struggled to attract U.S. investment or adequate financing from multilateral banks.

The Trump administration is looking to change that by helping the private sector invest. In October, President Trump signed into law the Build Act, which creates a new development finance agency that offers loans, loan guarantees and political-risk insurance to private companies.

Mr. Trump said last year that this strategy would offer “strong alternatives to state-directed initiatives that come with many strings attached,” a reference to Beijing’s plan. The goal, proponents say, is to encourage businesses to invest in low-income countries and spur growth with projects that make economic sense.

The Build Act allows for $60 billion in U.S. development financing around the world under the new agency, the U.S. International Development Finance Corp. The IDFC merges existing programs, doubles the current agency’s spending cap and has the authority to own equity stakes in projects, giving it more flexibility to choose and guide them.

The U.S. sees Belt and Road as a tool used by Beijing to advance its strategic and military interests. A number of Trump administration officials and U.S. lawmakers describe the risks of China using “debt traps” to gain control of sensitive infrastructure and “predatory economics” to undermine the autonomy of debt-burdened countries.

Some new governments in Asia also see it that way. Many developing economies initially embraced China’s plans, which pledged to address, at least in part, Asia’s infrastructure spending needs, estimated by the Asian Development Bank at $1.7 trillion each year through 2030.

But elections have delivered setbacks to China, including the suspension of $20 billion in projects in Malaysia, Pakistan’s shifting strategy to combat an emerging financial meltdown and the ouster of a China-leaning government in the Maldives. Some newly empowered politicians said China-backed projects approved by previous governments promoted corruption, saddled their countries with debt and threatened their sovereignty.

So far, however, for countries facing dire infrastructure needs, “there aren’t many specific or visible alternatives to China,” said Amitendu Palit, a senior research fellow at the Singapore-based Institute of South Asian Studies. “China is still their best bet.”

China’s political leaders are able to steer investment decisions, and the country is often willing to fund projects in high-risk markets that others avoid.

The first section of Pakistan’s Multan-Sukkur Motorway, a key leg in the China-Pakistan Economic Corridor, was inaugurated in May. The new government in Islamabad is looking for help to manage the debt burden of its Belt and Road projects.
The first section of Pakistan’s Multan-Sukkur Motorway, a key leg in the China-Pakistan Economic Corridor, was inaugurated in May. The new government in Islamabad is looking for help to manage the debt burden of its Belt and Road projects. PHOTO: AHMAD KAMAL/ZUMA PRESS

“China has giant state-owned enterprises that are directed by organs of the state to make huge investments, even investments that are of questionable commercial value,” said Jeff Smith, a research fellow in the Asian studies program at the Heritage Foundation. “The U.S. political and economic system is not designed to play this game.”

The Trump administration has earmarked $113 million for digital, energy and infrastructure projects in the Indo-Pacific region, in what Secretary of State Mike Pompeo described as a “down payment on a new era in U.S. economic commitment.”

“With American companies, citizens around the world know that what you see is what you get: honest contracts, honest terms, and no need for off-the-books mischief,” Mr. Pompeo said in July.

China has said its Belt and Road loans aren’t debt traps, and that its financing is aimed at boosting economic and trade links.

In Washington, there is “a lot of debate and consternation about how to respond” to China’s plans, said Mr. Smith.

One effort involves leveraging regional alliances. A U.S. government agency that will be absorbed into the IDFC signed an agreement with Japan and Australia in July to jointly mobilize investments, echoing U.S. security alliances in the Indo-Pacific.

With Japan’s record of infrastructure development, including this bridge that opened in Bangladesh in 2005, the U.S. is looking to Tokyo to help mobilize investment in Asia.
With Japan’s record of infrastructure development, including this bridge that opened in Bangladesh in 2005, the U.S. is looking to Tokyo to help mobilize investment in Asia. PHOTO: MAJORITY WORLD/UIG/GETTY IMAGES

Tokyo has experience in infrastructure financing in developing countries in Southeast Asia, where it is involved in a range of projects, including railways and energy production. Prime Minister Shinzo Abe said in 2015 that Japan would provide $110 billion to fund Asian infrastructure projects over five years.

Japan has expanded its operations, searching for investment opportunities in South Asia and offering loans to countries such as Bangladesh for ports and bridges.

Tokyo has sought to differentiate itself from Beijing by emphasizing “quality infrastructure,” and framed its efforts increasingly as part of the broader Indo-Pacific strategy designed to counterbalance China. Japanese money remains more selective than China’s and isn’t available to many countries.

Infrastructure projects should “increase employment, help grow education opportunities for the workers, attract even more FDI and as a result make the loans easy to pay back,” Mr. Abe said in June, when he announced new efforts to mobilize billions of dollars in funding. “Infrastructure that stimulates self-sustaining cycles in this way is high-quality infrastructure.”

Construction of this breakwater, shown in May, is part of a port project in Colombo, Sri Lanka under China’s Belt and Road Initiative.
Construction of this breakwater, shown in May, is part of a port project in Colombo, Sri Lanka under China’s Belt and Road Initiative. PHOTO: CHEC/ZUMA PRESS

Write to Niharika Mandhana at

Washington ‘deeply concerned’ over Sri Lanka crisis, calls for upholding democratic institutions

November 10, 2018
In this file photo Sri Lanka's President Maithripala Sirisena waves to supporters at a rally in Colombo. — AFP
In this file photo Sri Lanka’s President Maithripala Sirisena waves to supporters at a rally in Colombo. — AFP

“The US is deeply concerned by news the Sri Lanka parliament will be dissolved, further deepening the political crisis,” the US State Department said in a statement on Twitter.

“As a committed partner of Sri Lanka, we believe democratic institutions and processes need to be respected to ensure stability and prosperity,” it said.

Sirisena is facing increased international pressure from the US, the United Nations (UN) and the European Union (EU) to allow parliament to vote on which prime minister should form a government.

‘Against the constitution’

Sirisena’s United People’s Freedom Alliance (UPFA) admitted ahead of the president’s stunning announcement that they had failed to secure enough cross-over MPs to win a confidence vote.

By avoiding a test of his majority on the floor of the House, Rajapakse will remain caretaker prime minister until elections are concluded and a new parliament meets on January 17.

Before signing the order sacking the parliament with effect from Friday midnight, Sirisena also inducted more ministers into his cabinet.

“At the moment we have 104 or 105 MPs,” UPFA spokesman Keheliya Rambukwella told reporters, adding that the Sirisena-Rajapakse group hoped to secure support from “crossover” legislators.

The admission, which came despite Sirisena’s earlier claim that he had the support of 113 legislators when he sacked Wickremesinghe, had fuelled speculation that he would go for snap elections.

The leftist People’s Liberation Front (JVP), which regards the sacking of Wickremesinghe as unconstitutional, accused Sirisena of trying to consolidate his power grab.

“Dissolving parliament at this time is illegal and goes against the constitution,” JVP general secretary Tilvin Silva told reporters.

Sirisena suspended parliament to give himself more time to engineer defections, according to the opposition.

Several legislators have said they were offered millions of dollars to switch allegiance and at least eight have already jumped to the president’s side.

Wickremesinghe, who has not left his official Temple Trees residence since his sacking, maintains that the action against him was unconstitutional and illegal, and insists his group can muster a majority.

Image damaged

Under pressure from the UN, US and the EU to allow a parliament vote, Sirisena agreed three times to lift the suspension but changed his mind each time.

The EU said on Friday, before the dissolution, that the crisis had scarred the Indian Ocean island’s international reputation.

The EU, in a joint statement with Norway and Switzerland, called for parliament to reconvene and hold an immediate vote.

“Any further delay could damage Sri Lanka’s international reputation and deter investors,” the statement said.

Wickremesinghe late on Thursday thanked his supporters and urged them not to give up in the showdown.

“You have not let this country be plunged into the darkness of dictatorship. For this inspiring effort, I want to thank everyone who has risen to fight for democracy and justice,” Wickremesinghe said in a video posted on Facebook.

The power struggle on the island of 21 million people has paralysed much of the administration, according to legislators on both sides of the dispute.


Behind Sri Lanka’s turmoil, a China-India struggle for investments and influence

November 8, 2018

Gleaming cranes stretch out on the waterfront in the Sri Lankan capital Colombo as Chinese companies construct a $1.5 billion new commercial district, including hotels, marinas and a motor racing track. They have already built a giant container terminal nearby and a huge port in the south.

Now India, the traditional power in the region, is muscling into port and other projects, pushing back hard against China.

Image result for Colombo port, construction, photos

The big fear for India is that Sri Lanka, just off its southern coast and on one of the world’s busiest shipping routes, could become a Chinese military outpost.

But the battle is creating political turmoil in Sri Lanka. A bust-up between President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe over how far to accommodate Indian interests is a key reason the nation’s unity government has just fallen apart, government officials and foreign diplomats said.

Wickremesinghe, who was fired on Oct. 26 and replaced by veteran pro-China politician Mahinda Rajapaksa, told Reuters about arguments at a cabinet meeting chaired by the president last month over a proposal to grant development of a Colombo port project to a Japan-India joint venture.

“There are arguments in the cabinet, sometimes heated arguments,” he said.

Wickremesinghe did not name the president but said: “There was a paper put forth to not give it to India, Japan.”

He added that he insisted that the ultimate decision should respect a memorandum of understanding signed between India, Japan and Sri Lanka.

It was the first account of what transpired in the Oct 16 meeting and the government’s pushback against India.

Wickremesinghe declined to respond when asked if he believed the China-India struggle was behind his firing. But Rajitha Senaratne, a former government minister who attended, confirmed the president and the prime minister had argued at the meeting.

Two Sri Lankan officials, as well as a Western diplomat and an Indian government source, who were all briefed on the meeting, corroborated the minister’s account.

The president’s office did not respond to requests for comment. Sirisena told a public meeting on Monday his political rivals were trying to drive a wedge between him and the Indian government by painting him as anti-India.

The Indian foreign ministry said Delhi was committed to giving developmental assistance to Sri Lanka.

In a statement last week, the Chinese embassy in Colombo rejected allegations China was involved in a conspiracy to change Sri Lanka’s leadership, saying it does not believe in such interference.

Japan did not respond to a request for comment on the sacking of the government. But Wickremesinghe and an official from the Japan International Cooperation Agency said a $1.4 billion soft loan for a light railway project in Colombo was on hold.


India had been pushing Sri Lanka for the award of an estimated $1 billion contract for a second foreign-operated container terminal in Colombo. It has pointed to a memorandum of understanding (MOU) Sri Lanka signed in April 2017.

Reuters has reviewed unpublished documents from that MOU and it lays out a blueprint for projects India would be involved in, including an oil refinery, roads, power stations and the container terminal. The agreement also includes room for Indian involvement in the development of industrial zones.

The cabinet meeting was supposed to give clearance for the port project but President Sirisena said the country, already mired in $8 billion of Chinese debt, couldn’t give any more of its assets to foreigners, according to Senaratne.

“There was a misunderstanding between the president and the prime minister,” said Senaratne, who was the health minister in the deposed cabinet. The Colombo terminal should be left to the state-owned Sri Lanka Port Authority, which was already developing the facilities, he quoted the president as saying.

Tension had been building between Sirisena and Wickremesinghe even before the clash over the port project. The president did not approve of some economic reforms, such as opening up the services sector to foreign investment, being introduced by the prime minister.

Sri Lanka is only one of a number of South Asian countries where the China-India rivalry has roiled domestic politics.

China has been constructing ports, power stations and highways in Pakistan, Bangladesh, Sri Lanka, the Maldives and Nepal, much of it now tied to its ambitious Belt and Road Initiative to connect China with countries cross Asia and beyond.

In September, the leader of the Maldives – who had courted Chinese investments – lost an election in a result seen as a setback to Beijing’s ambitions for the islands.


One of the officials briefed on the cabinet meeting said he was told Sirisena quoted U.S. Vice President Mike Pence’s warning last month that China was using “debt diplomacy” and the Hambantota port in the south could become a Chinese forward military base.

Sirisena told the cabinet Sri Lanka didn’t want this kind of international attention and vowed he wasn’t going to compound the problem by granting the Colombo deal to an outside party, this official said.

But Wickremesinghe, who has forged close ties with India and Japan to balance ties with China, said at the meeting that the cabinet had already approved the broader pact with India a year ago, he told Reuters.

He said the debt-burdened Sri Lanka Port Authority wasn’t in a position to build the terminal on its own, Wickremesinghe said he told the meeting.

“It wasn’t even an Indian project, Japan was going to be the majority partner with India at 20 percent,” Wickremesinghe said in the interview.

But the president not only rejected the proposal but shocked those present by turning on New Delhi, saying he was the target of an assassination plot and suggesting India’s foreign intelligence agency, the Research and Analysis Wing (RAW), was behind it, said officials who attended the meeting.

The Sri Lankan government later denied Sirisena named the agency, India’s equivalent of the CIA. India’s foreign ministry said Sirisena spoke to Indian Prime Minister Narendra Modi about the issue to ensure it didn’t lead to a diplomatic crisis.

But ten days after the cabinet meeting, Wickremesinghe was out and former president Rajapaksa was named in his place. Rajapaksa had ushered in Chinese investment when he was president from 2005-2015 and lost a presidential election to Sirisena after reports that RAW had helped build a coalition against him.


In Colombo, the increasing Chinese influence is there for all to see.

On the city’s ocean front, a part of the ocean is blocked from view because of the reclamation project that will eventually turn into the new commercial district. Giant billboards and wire mesh, including some signs in Chinese, close off the largest construction site in the capital.

There is a growing Chinese community of about 12,000 expatriates, up from barely a few hundred a few years ago. They are scattered in Colombo and Hambantota.

Modi’s government is determined to start to turn back the tide. It is aggressively pitching for projects next to Chinese investments, so China’s military does not get a free pass.

“India can ill afford to ignore the strategic advantage China has gained in Sri Lanka so close to peninsular India,” said Colonel R. Hariharan, a retired Indian army intelligence officer.

The Colombo port isn’t the only priority. In Hambantota, India is bidding to take control of an airport built next to the Chinese seaport even though it handles hardly any flights.

“We are fully in the game,” said an Indian government source. It kept its profile low, though, because of local sensitivities, the source said.

Additional reporting by Ranga Sirilal; Editing by Martin Howell and Raju Gopalakrishnan


India and China nervous spectators in Sri Lanka crisis

November 1, 2018

Rival Asian giants India and China are anxiously watching the constitutional conflict between contending prime ministers in Sri Lanka to see whose interests get the upper hand in their own strategic battle.

It is the second time in barely a month that the Indian Ocean has become a battleground between the powers, after the Maldives’ hotly disputed presidential election saw the eviction of a pro-Chinese leader.

Both may be minnows compared to the two giant neighbours that loom over it to the north.

But they sit on the key sea trade and oil routes from Asia to the Middle East and Europe making them vital strategic interests for the rival powers.

New Delhi and Beijing insist that they are watching from outside the political ring as Sri Lanka’s ousted prime minister Ranil Wickremesinghe slugs it out with Mahinda Rajapakse, the island’s former authoritarian leader named to take over by the president.

© AFP | India and China are closely watching the political crisis in Sri Lanka

But the stakes are high.

“With parliament suspended and all the political trickery between the two sides, the growing tensions are a worry for India and China,” said an Asian diplomat in Colombo.

China was quick to deny an accusation by a lawmaker from Wickremesinghe’s party this week that it was paying for Rajapakse’s attempts to win over rival deputies.

“Groundless and irresponsible,” said a frosty Chinese embassy statement in response to the allegations.

The constitutional crisis pits two very different characters against each other.

Wickremesinghe is a soft-spoken reformist technocrat and free market proponent seen as wary of China’s often one-sided economic deals and less suspicious of India.

Rajapakse is a seasoned political bruiser, deeply charismatic but tainted by an authoritarian decade in power that culminated in a ruthless military campaign against Tamil Tiger rebels which ended a decades long civil war but killed some 40,000 civilians and saw widespread atrocities.

He was also much closer to Beijing — billions of dollars of Chinese investment flowed into Sri Lankan infrastructure during his administration ranging from roads and ports to land reclamation in Colombo.

– Tightrope act –

Maithripala Sirisena, the final key character in Sri Lanka’s current political crisis trinity, vowed to change all that when he beat Rajapakse in a 2015 presidential election and put Wickremesinghe in charge of the government.

That should have encouraged India, which is desperate to stop China expanding its economic and military footprint in the Indian Ocean and other backyard states such as Bangladesh, Bhutan and Nepal.

But Wickremesinghe found the battle against Sri Lanka’s huge foreign debt too much.

Last year his government gave a 99-year lease on the Hambantota deep-sea port to China because it was unable to repay Beijing’s loans for the $1.4-billion project.

It was forced to deny US claims that China could set up a military base at the port.

India — a modest investor in power and railway projects in the north of the country — is meanwhile in talks to run Hambantota airport, another white-elephant project built with Chinese loans under Rajapakse.

The airport and port deals have not been good for China’s image.

Both projects have been held up by critics as an example of how China’s global largesse often comes with onerous repayment strings attached.

Delhi has turned on the charm with its own deals while in 2015 Narendra Modi became the first Indian premier to do a standalone visit to the island in 28 years, with a second visit two years later.

Many analysts see Sri Lanka riding a tightrope between India and China no matter who wins the power struggle in Colombo.

“They have been pulled into a perverse relationship with the Asian giants that none of the political parties can rectify easily,” Samir Saran, president of the Observer Research Foundation think-tank in New Delhi, told AFP.

“Rajapakse definitely favoured Chinese investment and there was a move away from it after he left, but it still wasn’t a complete break from China. It was more a move towards neutrality,” added Madhu Bhalla, a former East Asian department head at the Delhi University.

“In its struggle with China for influence in Sri Lanka, the Indian government will not be pleased if Mahinda Rajapakse establishes himself in power,” said Alan Keenan, a Sri Lanka specialist for the International Crisis Group.

“But already before the latest crisis, India and Rajapakse had been mending fences, as Rajapakse and his new party appeared increasingly likely to return to power (through elections) by late 2019 or early 2020.”

Guo Xuetang, director of the South Asian and Indian Ocean Research Center at Shanghai University, said “small countries” like Sri Lanka and the Maldives do not want to be anyone’s client state anyway.

“They do not want to be controlled by China, nor by India,” he added. Whether Sri Lanka chooses India or China in the future will be a “balance of interests,” said the specialist.


Chinese-style ‘digital authoritarianism’ grows globally: study

November 1, 2018

Governments worldwide are stepping up use of online tools, in many cases inspired by China’s model, to suppress dissent and tighten their grip on power, a human rights watchdog study found Thursday.

The annual Freedom House study of 65 countries found global internet freedom declined for the eighth consecutive year in 2018, amid a rise in what the group called “digital authoritarianism.”

The Freedom on the Net 2018 report found online propaganda and disinformation have increasingly “poisoned” the digital space, while the unbridled collection of personal data is infringing on privacy.

© AFP/File | Chinese officials have held sessions on controlling information with 36 of the 65 countries assessed by a human rights study

“Democracies are struggling in the digital age, while China is exporting its model of censorship and surveillance to control information both inside and outside its borders,” said Michael Abramowitz, president of Freedom House.

“This pattern poses a threat to the open internet and endangers prospects for greater democracy worldwide.”

Chinese officials have held sessions on controlling information with 36 of the 65 countries assessed, and provided telecom and surveillance equipment to a number of foreign governments, Freedom House said.

The accusations made by Freedom House are “without basis, unprofessional, irresponsible, and have ulterior motives,” said Chinese foreign ministry official spokesman Lu Kang at a regular press briefing in Beijing on Thursday.

Cyberspace is complex, he added, and requires “the global community, including governments, businesses, think tanks and media to adopt a constructive attitude to maintain it.”

The report found 17 governments approved or proposed laws restricting online media in the name of fighting “fake news,” while 18 countries increased surveillance or weakened encryption protection to more closely monitor their citizenry.

According to the researchers, internet freedom declined in 26 countries from June 2017 to May 2018. Gains were seen in 19 countries, most of them minor.

– China’s ‘techno-dystopia’ –

One of the greatest threats, Freedom House said, is efforts by China to remake the digital world in its “techno-dystopian” image.

It cited a sweeping Chinese cybersecurity requirement that local and foreign companies “immediately stop transmission” of banned content, and compels them to ensure that data on Chinese users is hosted within the country.

This has been followed by “hundreds” of new directives on what people can and cannot do online, and tighter controls on the use of VPNs to evade detection.

The report said leaked documents and other evidence suggest as many as a million Muslims may be held in internment camps in Xinjiang, many as a result of nonviolent online activities.

China appears to be using its big tech firms involved in telecom infrastructure to extend its dominance and gain an edge in surveillance, according to Freedom House.

Companies such as Huawei — largely banned from contracts in the US and Australia — are building infrastructure in many parts of the world including Africa and Latin America, according to Freedom House board chairman Michael Chertoff, a former US secretary of homeland security.

“This opens up a potential for exploiting information in these countries by having technological backdoors that can be used by the Chinese government to collect intelligence,” Chertoff said.

– Suppressing dissent –

The researchers said online freedom is facing threats in democratic and authoritarian states.

India led the world in the number of internet shutdowns, with over 100 reported incidents in 2018 so far, claiming that the moves were needed to halt the flow of disinformation and incitement to violence.

Similar actions were taken in Sri Lanka and elsewhere.

“Cutting off internet service is a draconian response, particularly at a time when citizens may need it the most, whether to dispel rumors, check in with loved ones, or avoid dangerous areas,” Freedom House researcher Adrian Shahbaz said.

“While deliberately falsified content is a genuine problem, some governments are increasingly using ‘fake news’ as a pretense to consolidate their control over information and suppress dissent.”

Shahbaz said more governments, including Saudi Arabia, are employing “troll armies” to manipulate social media and in many cases drown out the voices of dissidents.

“It has now become a tool of authoritarian diplomacy to deploy an army of electronic trolls,” he said.

The researchers said online freedom also declined in the United States in part due to the rollback of “net neutrality” rules which ensured that all data be treated equally, without “fast” or “slow” lanes for commercial or other reasons.

It said online freedom also faces threats in the US as a result of the reauthorization of a surveillance law and a “hyperpartisan” environment in social media marked by large disinformation efforts.