Adani Port: The United States will provide $553 million for a port terminal in Sri Lanka that is being developed by Adani group. This as both Washington and New Delhi are looking to curb China's influence in South Asia.
The investment comes from US government's largest infrastructure investment in Asia -International Development Finance Corp. The DFC in a statement said it will bolster Sri Lanka's economic growth and “its regional economic integration, including with India, a key partner to both countries”.
DFC mentioned that it will be working along with sponsors like John Keells Holdings Plc and Adani Ports & Special Economic Zone Ltd., relying on their local experience and high quality standards. This funding is part of a global acceleration of DFC investments that totaled $9.3 billion in 2023.
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The DFC’s funding will create “greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region,” said Scott Nathan, the DFC’s chief executive officer.
Meanwhile, an US official has mentioned that financing the Lanka port is emblemtic of the country's commitment to be more engaged in development projects across the Indo-Pacific.
The DFC was launched under the Trump administration with an aim to aid developing nations while advancing US foreign policy goals. As per a new report by AidData institute at William & Mary in Virginia, the funding has accelerated after the covid-19 pandemic and the agency has helped Washington close the development spending gap with China’s much more higher-profile Belt and Road Initiative.
The funding also comes at a time when Sri Lanka is highly indebted to China. Before the economic meltdown, China had invested in Sri Lanka's ports and highway projects. By the end of last year, China had invested about $2.2 billion as the Island country's biggest foreign direct investor. As per Bloomberg, US officials have publicly criticized Sri Lanka’s little-used southern Hambantota port as unsustainable and part of what it calls China’s “debt-trap diplomacy.”
India also wants the Chinese influence in the South Asian sea to reduce. Colombo's port is one of the busiest in the Indian Ocean, given its proximity to the international shipping routes. The port sees nearly half of all container ships passing through it. As per DFC the port has been operating at more than 90% utilization for two years.
Many of the Indian lawmakers criticised Adani group's investment in Sri Lanka's port project as opaque. This new investment by DFC comes as an endorsement for the group that is facing allegations of short-selling.