Sri Lanka's cabinet 'clears port deal' after security concerns addressed

COLOMBO - 25 July 2017: Sri Lanka's cabinet cleared a revised agreement for its Chinese-built southern port of Hambantota on Tuesday, a spokesman said, after terms of the first pact sparked widespread public anger in the island nation.

The port, close to the world's busiest shipping lanes, has been mired in controversy ever since state-run China Merchants Port Holdings, which built it for $1.5 billion, signed an agreement taking an 80 percent stake.

Chinese control of Hambantota, which is part of its modern-day "Silk Route" across Asia and beyond, as well as a plan to acquire 15,000 acres (23 sq miles) to develop an industrial zone next to it, raised fears that it could also be used for Chinese naval vessels.

Sri Lankans demonstrated in the streets, fearing loss of their land, while politicians said such large scale transfer of land to the Chinese impinged on the country's sovereignty.

Under the revised pact, two companies are being set up to split the operations of the port and allay concerns, in India mainly but also in Japan and the United States, that it won't be used for military purposes.

"The cabinet approved the deal and now it needs parliament approval. We will send it for approval this week," cabinet spokesman Dayasiri Jayaseker said.

A Chinese embassy spokesman said it had no comment to make on the deal. A source close to the Chinese Embassy in Colombo said both sides had reached a compromise and that Sri Lanka's concerns had been addressed.

"They emphasized that they wanted to maintain balanced relations with other countries. But the deal is still beneficial for China in terms of revenue," the source said.