Vicious Rants of an Angry Yellow Man

 The country of Sri Lanka is in an economic crisis.  I am no economist and I can't explain how the situation got so dire for Sri Lanka.  But after some research, I can say for sure the Western narrative of the China debt trap is too blame is bogus.

The critics of China say that after loaning money to Sri Lanka and building its port and airport, China now owns the port and may eventually turn it into a military base!   But the debt Sri Lanka owed to China for the constructions are very small amount of its total international debt.  In fact the total amount Sri Lanka owes China is only about 10% of its total debt.  Japan is also owed 10%.  Most of the other 80% are owed to banks affiliated with the IMF, World Bank and the Asian Development Bank.  The first two are controlled by the U.S. and Europe.  The ADB is controlled by Japan and the U.S.  So to say that China is using debt to control Sri Lanka is laughable.

The deal that Sri Lanka made with China during the crisis is that 70% of the port will be leased to China for 99 years and 30% to be kept by Sri Lanka.  In exchange China gives Sri Lanka 1.12 billion dollars which was used to service debt to other foreign banks.  Before the port was built, feasibility studies were done by Canadian and Dutch firms.  So it is believed that it can be profitable.  If the Chinese company that takes over now can produce profits, it will get 70% and Sri Lanka gets 30%.  Will it work?  Too early to tell but in 99 years the port will revert to Sri Lanka control.  Sort of like the British deal with Hong Kong.  Except China gives money to get the deal and not use gunboats to force the deal.

So Sri Lanka has not lost its port to China.  Certainly no military base is being built.  If 90% of the debt in owed by someone other than China, why is China being accused of a debt trap.? As I said about the accusation of Chinese debt traps in Africa, if the Western countries are so concern then just give these countries a better deal than China.  These countries are not stupid. They won't take the worse deal.

By the way, I think I wrote this before.  The only high finance guy on Wall Street who was convicted of fraud during the last economic disaster in 2008 was from Sri Lanka.  I found it hard to believe then that he was the only guilty person during the financial meltdown.  Now I find it hard to believe that no Western financial institution has anything to do with the Sri Lanka meltdown.