<p><strong>Syllabus Section: International Matters</strong></p>
<p><strong>Why in News?</strong><br />
• After strong opposition from trade unions across the country, Sri Lanka has unilaterally pulled out of a 2019 agreement with India and Japan for developing the strategic East Container Terminal (ECT) at the Colombo Port.<br />
Background:<br />
• In 2019, India and Sri Lanka signed a memorandum of understanding for “co-operation on economic projects”. The development and operation of the container terminal was one of the projects in the MoU.<br />
• India had roped Japan into at least two of the projects listed in the MoU – the ECT, and an LNG Terminal/Floating Storage Regasification Unit (FSRU) in Kerawalapitiya/Colombo with a piped gas distribution system along with retail outlets for CNG etc — believing this would ensure the project comes through.<br />
• As per a Memorandum of Co-operation signed by the previous Maithripala Sirisena-Ranil Wickremesinghe administration, the Sri Lanka Ports Authority would have 100 per cent ownership of the ECT.<br />
• The Terminal Operations Company (TOC) conducting all East Container Terminal operations was to be jointly owned, with Sri Lanka retaining a 51% stake, and the joint venture partners 49%, according to a statement by the Ports and Shipping Ministry at the time.<br />
Issue:<br />
• Although India and Sri Lanka have seemingly friendly ties and much cultural affinity and people-to-people contact, the relationship is complex — and the majority Sinhala-Buddhist public opinion is layered with the memory of Indian intervention in the ethnic conflict.<br />
• Unlike Chinese projects, big projects by India have always faced opposition in Sri Lanka.<br />
• Sinhala-Buddhist politicians either ride such opposition opportunistically when it suits them, sometimes using this as a pretext over the real reason, or are reluctant to go counter to the public sentiment for fear of being attacked for surrendering to India.<br />
• For this reason, India had roped Japan into at least two of the projects listed in the MoU – the ECT, and an LNG Terminal/Floating Storage Regasification Unit (FSRU) in Kerawalapitiya/Colombo with a piped gas distribution system along with retail outlets for CNG, etc — believing this would ensure the project comes through.<br />
• However, the old relationship between Sri Lanka and Japan has undergone changes as China’s footprint over Colombo has grown.<br />
• Just before the 2020 elections, port workers striking against the agreement ended their protest only after (now Prime Minister) Mahinda Rajapaksa assured them that there would be no Indian involvement in the port.</p>
<p><strong>Source: The Indian Express</strong></p>