Last year, I visited Sri Lanka on my usual winter Asian getaway.
It’s a beautiful country with kind people (once you get to know them) and a rich culture from which I drew much inspiration. Yet, most locals aren’t inclined to welcome you with wide smiles and open arms.
Instead, you’re apt to get those distrusting looks, as if your sheer existence has wronged them. So, one evening, when I met a Dutch ex-pat who had lived there for 15 years, I asked why that was. Why do the people of this beautiful island feel so devastated? And why are people here so distrusting and turned off by foreigners?
“After all, we are their main income source,” I said.
“They are slaves,” he said, “slaves in their own country.”
He explained how Sri Lanka’s government borrowed billions of dollars from China to build “white elephant” projects. And when those projects inevitably failed, China seized their lands as collateral.
That piqued my curiosity.
After a few beers, I went back to my B&B, popped on the laptop, and plunged into what turned out to be a mind-bending rabbit hole that revealed an ominous pattern (or plan) stretching way beyond this island.
But first things first…
How Sri Lanka Lost its Sovereignty to China
Sri Lanka forged closer ties with China in 2009.
The island nation had ended a 30-year, devastating civil war and was ready to revive its economy. So Sri Lanka’s then-president, Mahinda Rajapaksa, turned to his allies for money to build out infrastructure.
China was happy to chip in, especially for projects in strategic maritime locations—such as the Hambantota port or the second airport at the southern tip of Sri Lanka.
These projects were sold to the public as history-defining moments that would elevate the island into a developed economy. But the reality proved to be a bit different.
Upon opening, Sri Lanka’s Mattala Rajapaksa International Airport (HRI) quickly earned the name of the “world’s emptiest airport.” And by 2018, all international airlines had left.
In the end, Mattala became a mere parking lot and a transit zone for a few passing cargo aircraft.
This was the same with the ambitious Hambantota port.
One year after it opened, it hadn’t docked a single ship because someone hadn’t bothered to remove a huge rock blocking the waterway to the port. Even when the blockage was blasted away, the port serviced only 34 ships in 2012.
So much for the promised “primary bulk cargo handler for shipments to and from Pakistan and Bangladesh,” or “the gateway between India and China,” or the “50,000 indirect jobs.”
But many knew this would happen from the get-go. Feasibility studies showed that these projects didn’t make much commercial sense. And even Sri Lanka’s former biggest lenders, such as India, refused to fund them.
But none of that deterred China.
Because China’s ambitions weren’t about money – it had plenty of it already.
It was about control.
When the Hambantota port failed and defaulted on its loan, Sri Lanka’s government handed over ownership to China as part of a debt-for-equity swap agreement. (More on that later.)
The port gave China control of territory just a few miles from its fierce rival, India.
It also became a strategic base along a waterway as part of their century-long master plan…
The Debt Trap to Build “Belt and Road”
Hambantota’s takeover wasn’t just about the control of Sri Lanka.
For Beijing, Sri Lanka is just one piece of the puzzle in China’s Belt and Road project —a network of modern trade routes linking China to Europe. It’s Xi Jinping’s imperialistic whim to build the “Silk Road” of the 21st century.
When completed, it will stretch from China through central Asia, along the eastern shores of Africa, and all the way to Europe:
Since its launch, China has initiated over 1,500 projects in 50 countries worth $1.9 trillion, according to a Silk Road Briefing analysis. They are building ports and laying railroads, pipelines, and roads.
Of course, such a colossal infrastructure investment has mind-blowing commercial value. If put to good use, it could usher in a new era of trade in the region’s underdeveloped economies.
The problem is, Xi’s motives behind this build-out go far beyond commerce.
A Commercial Project…Really?
China has always claimed Belt and Road is a purely commercial initiative.
But we all know that’s not true – especially not to US intelligence.
For years, US intelligence has been warning that China is forcing impoverished economies into debt traps to “colonize” their strategic lands for China’s military bases (in reality, no different than the US has done over the last decades.)
And it doesn’t take remarkable intelligence to see what’s happening.
In 2017, on the soil of China’s biggest debtor, Africa, Xi built China’s first overseas military base. In the small town of Djibouti, he stationed 2,000 troops just a few miles off the US Navy’s base.
Then last December, US intelligence reported that China is in the final stages of establishing its now permanent base in Equatorial Guinea. This will be the first Chinese naval base in the Atlantic.
And guess what?
So it should come as no surprise that these “commercial projects” in strategic locations piled up mountains of unrepayable debt and were forced to surrender their assets to China, who, in turn, transformed them into military operations.
“In 2006, the China Exim bank and the Government of Equatorial Guinea signed a $2 billion oil-backed buyer’s credit facility agreement for the development of the Port of Bata [potentially China’s first naval base on the Atlantic] as a modern deep-sea port facility. The China Communications Construction Company completed construction work for the port’s expansion in December 2014. The following year, the Industrial and Commercial Bank of China signed a similar $2 billion financing deal to support infrastructure development, local activities of Chinese businesses, and the government itself. The China Exim bank extended the government a credit line of half a billion dollars. Bata Port was eventually inaugurated in 2019.
All the while, declining revenues due to corruption, mismanagement, and periods of slumping oil prices meant that Equatorial Guinea was becoming increasingly indebted to China.”
You don’t say…
Not only that, China recently introduced a warmongering policy called “Military-Civil Fusion.” Among other things, it requires that any infrastructure project must be adapted to the People’s Liberation Army’s needs.
Could these failed “commercial projects” simply be a coincidence?
A Figment of the West’s Imagination?
For obvious reasons, Beijing has strongly denied these claims and has accused the West of spreading fake news to tarnish its image.
But let’s take a closer look at China’s “generous” loans to find out what’s really happening.
For starters, the money China loans to these nations aren’t based on standard loan terms. Instead, it’s collateralized through so-called debt-for-equity swaps. That means in the case of a default, creditors can seize the assets their debt was used for.
This is how Beijing took over the Hambantota port.
To play devil’s advocate, that’s a fair ask. When you are loaning money to poor, politically unstable countries, you surely want to have some — at least theoretical — collateral as a safeguard.
But if that’s indeed the case, why would China fund projects that are doomed to fail?
Why is China targeting projects in strategic military locations?
In addition to the port, China took over a good chunk of the beachfront in Sri Lanka’s capital, formerly its military HQ.
Via Sri Lanka’s the Sunday Times:
“In 2011, the government [Sri Lanka’s] sold 6 acres of Colombo beachfront property to a Hong Kong-based holding company, for $125 million. The site, now home to a luxury hotel, once held strategic importance to Sri Lanka, but the government was willing to sell it, says Perera, from the National Peace Council.
“That’s a very large amount of land, which was once where our military headquarters was,” Perera says. “It doesn’t require a so-called debt trap.” The government, he says, sold that land “outright.”
Why are billions of Chinese dollars going to projects on the west coast of Africa—which is outside the Belt and Road supply chains and conveniently opposite American shores?
(You can explore the interactive map of Chinese loans here)
See the pattern?
If Chinese loans were calculated investments, why didn’t China let Sri Lanka buy food and basic supplies when the island went into partial famine? After all, an all-out economic implosion isn’t in the interest of any creditor.
“Nearly all of that was thanks to a hefty $1.5 billion swap by the People’s Bank of China. But Sabry’s revelation confirmed what had been whispered within private banking circles in Colombo, the commercial capital: Sri Lanka cannot readily dip into the Chinese cash to pay for desperately needed food, fuel and medicines, or even to settle its maturing foreign debts.”
Why didn’t China restructure Sri Lanka’s debt to alleviate the debt crisis (that China itself created) and reduce the risk of default—if for nothing other than their own benefit?
“China refused to assist Sri Lanka which appealed to reschedule its huge Chinese debt burden in the face of the COVID-19 outbreak that has adversely affected the tourism sector, said a media report…
This debt burden was a result of China’s Belt and Road Initiative (BRI) projects like Hambantota Port and Colombo Port City for which Chinese agencies lent large amounts to Sri Lanka under stiff terms of repayment.
Further, China-assisted projects in Sri Lanka are likely to deepen the debt of the island nation. Moreover, locals of Sri Lanka are protesting against some of these projects which will affect their livelihood.
One of these projects is an industrial park attached to the Hambantota International Port which has incited violent protests by local people as they fear that the area would become a Chinese colony, reported the media organisation.”
Why were Sri Lanka’s officials borrowing from China when better and cheaper credit was available?
“Numbers crunched by Verite Research, a Colombo-based think tank, show that the interest rates on Chinese loans averaged 3.3%, versus 0.7% for Japan’s. And the maturity period averaged 18 years for Chinese debt, shorter than India’s 24 years and Japan’s 34 years.
None of this hindered the Rajapaksas’ appetite for Chinese credit, opening the door for the Asian powerhouse to fund over a third of 313 debt-funded projects in post-conflict Sri Lanka.”
It would appear that by that time, China had so much political leverage over the Rajapak administration it couldn’t refuse its dirty dollars despite more attractive funding options.
How the Elite Let China Weaponize the Third World
However you look at it, China’s predatory lending is a modern colonization of the Third World in pursuit of Xi’s imperialistic agenda. And it’s been going on for nearly a decade now.
So, why did our leaders sit on their hands this whole time?
Under the Trump administration, Mike Pence, former VP, was the first to call out China on its “debt-trap diplomacy.” That was 2018, a year after China’s first overseas naval base went up.
The short answer: money.
As Peter Schweizer revealed in his book Red Handed: How American Elites Get Rich Helping China Win, the Bush family, the Bidens, and other members of the American elite made lucrative deals with China to make this happen.
“We looked at those deals that the Bidens got. There’s basically five deals (totaling $31-million). And we looked at the businessmen in China who made that happen. And what we found is that in every single case, those businessmen had ties to the highest levels of Chinese intelligence…So, this is not just a corruption story now. It has a very strong tinge of intelligence, espionage, and spying,” Schweizer insisted. “
In their (admittedly weak) defense, maybe they didn’t believe China could pull that off. Maybe.
As Schweizer wrote, the elite thought that by giving China access to capital and technology, they could root out its imperialistic fantasies. (And, of course, make fortunes in the process.)
Things clearly didn’t go according to their plan.
Xi’s master plan of taking a page out of the American playbook is coming to life. His disguised military bases are popping up all over Eurasia and Africa. And soon, Chinese warships will be sailing across the oceans.
And given the lovely relationship between the current N. American political leaders and China, it’s not a matter of if but when China becomes the world power.
Is it too late?
I guess that depends on who you vote for next…
Seek the truth and be prepared,