China's Hambantota Deal Is Bad News For Both Pakistan And India

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AUG 2, 2017 @ 03:35 AM 29,857 12 Stocks to Buy Now
China's Hambantota Deal Is Bad News For Both Pakistan And India

Panos Mourdoukoutas , CONTRIBUTOR
signed early last week, which gives China Merchants Ports Holdings—an arm of the Chinese government--70 percent stake in the Indian Ocean’s prominent outpost.

The Hambantota port expansion begun with loans from China. But when Shri Lanka could not pay back the loans, Beijing converted these loans to equity, in essence turning Sri Lanka into a "semi-colony," as was the case with China’s own Southern ports after she lost a war with European powers--though in a subtle way.

The taking over of Hambantota by Beijing is bad news for both Pakistan and India -- for different reasons.

For Pakistan, the deal will serve as a model for the future of CPEC (China–Pakistan Economic Corridor), a huge transportation network connecting China to the Arabian Sea at Pakistan’s Gwadar Port. Like Hambantota, CPEC started with loans that will eventually be converted into equity, as it seems very unlikely Pakistan will ever be in a position to pay them back. This means that Beijing will one day own CPEC, and collect tolls from every vehicle that makes use of it.

For New Delhi, the Hambantota deal is bad news because it’s one more step to encircle and pacify India by Beijing. China’s enormous investment in CPEC, and port infrastructure in the Indian Ocean, serves much more than trade. It advances Beijing’s “String of Pearls” strategy, as well as its unofficial agenda to encircle India through its arch-rival, Pakistan.


To be fair, the Hambantota port will make it easier for India to trade with Sri Lanka. But it could also be used as a naval station for China should the two countries ever engage in a full-scale war.

Meanwhile, China’s growing presence in Sri Lanka undermines India’s efforts to influence the foreign policy of the country.

That could explain India’s efforts to contain China’s Indian Ocean agenda by forming alliances with US and Japan, and by performing a joint naval exercise in the Malabar in the Bay of Bengal last July.

Still, the prospect of a Pakistan debt problem or an open confrontation between India and China are very unlikely, at least for the time being. That’s why investors in the region have chosen to focus more on market fundamentals rather than on the geopolitics of the region, driving shares in all three country markets higher recently.

But that could change, if tensions between China and India’s new allies, America and Japan, continue to flare.

Index/Fund

12-month Performance

2-year Performance

IShares China (FXI)

19.19%

7.87.32%

Global X MSCI Pakistan (PAK)

2.12%

1.88

iShares S&P India 50 (INDY)

21.78

18.48%

Source: Finance.yahoo.com 7/28/2017

My recent book The Ten Golden Rules Of Leadership is published by AMACOM, and can be found here.
https://www.forbes.com/sites/panosm...ews-for-both-pakistan-and-india/#3d8410a1715b

Nah... it's good for Pakistan... whether it's good or bad for India... we don't care.

 

[Anish1]

Deal is okay for India

1. We kicked out Chinese military aspect which was earlier going to be there.

2. As the hambantota port is an empty port ( no commercial traffic ) it is okay to let Chinese burn their money in it.

3. Chinese economic maritime trade can't be stopped by any power on this planet

 

[Areesh]

No bad news for Pakistan. For india may be but who cares.

 

[Jackdaws]

From what I understand, all assets within a country's borders can be nationalized by the regime. Egypt nationalized the Suez Canal. If I remember correctly, Cuba too nationalized American assets in Cuba. If the Chinese push too much, all the Pakistanis and Lankans need to do is nationalize any such Chinese equity. There might be something in the contract which has a dispute resolution mechanism - but if a government decides to nationalize any such asset, you aren't going to be able to do much.

 

[Han Patriot]

From what I understand, all assets within a country's borders can be nationalized by the regime. Egypt nationalized the Suez Canal. If I remember correctly, Cuba too nationalized American assets in Cuba. If the Chinese push too much, all the Pakistanis and Lankans need to do is nationalize any such Chinese equity. There might be something in the contract which has a dispute resolution mechanism - but if a government decides to nationalize any such asset, you aren't going to be able to do much.

With neighbors like India, who wouldn't want the Chinese in IOR? Pakistan actually invited China to build a base in Gwadar according to a Pakistani diplomat. SL is just using the China card to pressure India, nice play and smart move, you have to give it to the Lankans, they know the Indians in and out. How they fck up the peace corp in the 80s and Rajiv got roasted.

 

[Makarena]

Honestly, I am kind of worried. No one should underestimate our ability to screw up something like this.

you either all in or you never step into it, don't flip flop. If you decide to go all in, I'm pretty sure your partner, the Chinese will be with you all the way in. After all, they have committed tens of billions to this project, no one want it to succeed more than them. But if you flip flop like sri lanka, they will become hesitant to pour more money and business into it. From what I see, that is the difference between countries that welcoming investment wholeheartedly and succeed, with those countries who accepted investment half hearted like it is a poison and later fail to grow their countries. Just learn from countries like singapore, open their countries for investment, make the regulation simple and fair for business, and you get yourself a developed nation. Don't let political populism poison the investment atmosphere just like in sri lanka. Don't you find it irony that who ever rule sri lanka think the investment must continue and who ever the opposition is think the investment must stop. You know something is already wrong from that.

 

[OnlyTheTruth]

"India is Sri Lanka's closest neighbor and friend. Our destinies are interlinked."-- Words of Maithripala Sirisena.

Above statement is true on so many counts.

 

[Jackdaws]

With neighbors like India, who wouldn't want the Chinese in IOR? Pakistan actually invited China to build a base in Gwadar according to a Pakistani diplomat. SL is just using the China card to pressure India, nice play and smart move, you have to give it to the Lankans, they know the Indians in and out. How they fck up the peace corp in the 80s and Rajiv got roasted.

Ok. Nice of you admit China is behaving like a hooker for these countries. We are in agreement there.
After they use you and you provide your service - you can return to your Japanese masters.

 

[Han Patriot]

Ok. Nice of you admit China is behaving like a hooker for these countries. We are in agreement there.
After they use you and you provide your service - you can return to your Japanese masters.

Huh, bro are you OK? We have a military base there? And that makes me a hooker? Since when Japanese are our masters? Btw, SL is owing us billions and just gave us 99 years control in Hambantota, wake up genius.

 

[Jackdaws]

Huh, bro are you OK? We have a military base there? And that makes me a hooker? Since when Japanese are our masters? Btw, SL is owing us billions and just gave us 99 years control in Hambantota, wake up genius.

Read again. They can nationalize if they want. China has a military base in Lanka???? Since when?

The Japanese are your masters since Nanking.

 

[Han Patriot]

Read again. They can nationalize if they want. China has a military base in Lanka???? Since when?

The Japanese are your masters since Nanking.

If Japanese are my masters since Nanking, then we are your masters since 62?

I never said we have a base in SL, I meant Gwadar, SL is a base in the making after we get political, sure they can nationalize it, pay back the billions first.

 

[Parousia]

Hambantota is China - Sri Lanka business.
CPEC is China - Pakistan business.

None of these has anything to do with India the sentimental pussy.

 

[karl wang]

Read again. They can nationalize if they want. China has a military base in Lanka???? Since when?

The Japanese are your masters since Nanking.

That Japanese commands was sentence to death and excuted by us.
Check the capitulation by your own eyes.
Nonsense only make you a idiot.
INSTRUMENT OF SURRENDER
(1) We, acting by command of and in behalf of the Emperor of Japan, the Japanese Government and the Japanese Imperial General Headquarters, hereby accept the provisions set forth in the declaration issued by the heads of the Governments of the United States, China, and Great Britain on 26 July 1945, at Potsdam, and subsequently adhered to by the Union of Soviet Socialist Republics, which four powers are hereafter referred to as the Allied Powers. We hereby proclaim the unconditional surrender to the Allied Powers of the Japanese Imperial General Headquarters and of all Japanese armed forces and all armed forces under the Japanese control wherever situated. We hereby command all Japanese forces wherever situated and the Japanese people to cease hostilities forthwith, to preserve and save from damage all ships, aircraft, and military and civil property and to comply with all requirements which my be imposed by the Supreme Commander for the Allied Powers or by agencies of the Japanese Government at his direction. We hereby command the Japanese Imperial Headquarters to issue at once orders to the Commanders of all Japanese forces and all forces under Japanese control wherever situated to surrender unconditionally themselves and all forces under their control.

 

[Parousia]

Read again. They can nationalize if they want. China has a military base in Lanka???? Since when?

The Japanese are your masters since Nanking.

China won the latest Sino-Jap war even with British & Indians played negatively in Myanmar.
But India got raped by China in 1962.

Fair enough? Kneel now my son.

 

[Dr Shaheryar]

Srilanka is getting this treatment because it failed to decide to be a part of Indian Nexus or China nexus. This is why these things are happening. Pakistan has already sided with China and out of US blocks. So please don't compare Srilanka to us.