Dispute deepening fast

China is now caught in a bind. It can neither go back to the position that obtained before June 16 without losing its face nor can it risk triggering a war with India which may not be confined to Doklam but spread to the skies and the seas as well with unpredictable and undesirable consequences for Beijing. New Delhi has handled the situation with both maturity and firmness. It has refrained from engaging in a slanging match with China in using provocative and vituperative language. At the same time, it has made it clear that threats and intimidations will not work. That is why the Chinese have launched a verbal rather than a real war. For all its bluff and blaster, the PLA has not dared to fire a single shot at the Indian side to free 'our own territory' from 'illegal' Indian occupation.

But the Sino-Indian rivalry has other dimensions as well. China has now started what has come to be known as its 'debt-trap diplomacy'. It means lending billions of dollars to neighbouring countries for the development of roads, ports, airports, etc. on a high-interest rate. When the debtor country is unable to repay the loan, Beijing uses its leverage to obtain proprietary rights on the projects built with its help. It has happened in Myanmar, it is happening in Pakistan and now it is happening in Sri Lanka. And in every country, it is facing resistance from the local people.

In Sri Lanka, China has just acquired a 70 per cent stake in the strategically located Hambantota port on the Bay of Bengal in the southern tip of the island nation. The construction cost of the port was more than $360 million. The Export-Import Bank of China financed the Hambantota project liberally. Today the principal and interest have assumed huge proportions. Last month, Colombo was forced to hand over 70 per cent stakes in the project to a State-run Chinese company, China Merchants Ports Holdings, by signing an agreement of $1.2 billion which gave the company the right to operate the port for 99 years and Sri Lanka to offset a large chunk of its debt.

India was greatly concerned as the port is strategically located on the international shipping route to the Malacca Strait. An added reason for the concern was that during the previous regime when Mahinda Rajapaksa was the President, Chinese submarines were allowed to dock at the Hambantota port. Even this year, three months ago, China again sought permission for docking a submarine at Hambantota port but the Sirisena government denied it. To allay India's fears, Sri Lanka assured that the port will be allowed to be used only for commercial purposes. It will not be allowed to dock naval ships of any country. But all said and done, China has acquired control of the port. In the land adjoining Hambantota, Sri Lanka is building an industrial zone spread over 15,000 acres with Chinese loan. The project has met with stiff resistance from the local people who fear that the area will eventually become a 'Chinese colony'.

India, however, is not sitting idle. It has offered to operate Sri Lanka's second international airport at Mattala, just 40 kms from Hambantota. The airport, built during Rajapaksa's time, could not become profitable. Just a couple of flights were operating daily. Last year, the Sirisena Government invited 'expression of interest' for running the airport on a PPP basis. Eight proposals were received but the Sirisena government has reportedly shown interest only in the Indian proposal. Currently, an official committee is believed to be evaluating it. India proposes to invest $205 million and Sri Lanka $88 million in the project. If the Indian offer is eventually accepted, India will have a presence close to Hambantota, breathing down the neck of the Chinese, as it were.

The latest Chinese incursion – or attempt at incursion – in Ladakh shows that China is probing India's defence preparedness in the border. More such attempts at other places are likely. As far as Doklam is concerned, the stalemate may continue till the party congress of the CPC later this year. Xi Jinping who is believed to be interested in getting a second term, perhaps thinks the present warlike situation will be advantageous to him in retaining his control over the party and the government.