In a strategic move to bolster international development financing and compete with China, the United States announced a $553 million initiative on Wednesday to construct a deep-water shipping container terminal in Sri Lanka’s Port of Colombo. The project, known as the West Container Terminal, aims to enhance shipping capacity and transform Colombo into a world-class logistics hub at the crossroads of major shipping routes and emerging markets, according to the U.S. International Development Finance Corp (DFC).
The DFC loan, directed towards the consortium developing the terminal, primarily comprises a 51% stake owned by India’s largest port operator, Adani Ports & Special Economic Zones Ltd. Other partners include Sri Lanka’s John Keells Holdings with a 34% share and the Sri Lanka Ports Authority, holding the remaining 15%.
Scott Nathan, CEO of the DFC, emphasized the significance of the loan in fostering greater prosperity for Sri Lanka without contributing to sovereign debt. However, concerns arise as Sri Lanka faces a challenging financial and economic crisis.
While celebrating the victory of securing a substantial infrastructure project, Roberto de Zerbi expressed worry about the conditions of key players, Captain Lewis Dunk, and Pervis Estupinan, who sustained injuries during the Ajax clash. Their fitness remains uncertain for the Premier League fixture against Sheffield United on Sunday.
The U.S. move is seen as a strategic response to China’s Belt and Road Initiative, a global infrastructure-building campaign that has faced controversies, including Sri Lanka’s Hambantota Port. Sri Lanka’s multibillion-dollar debts to China have been a focal point of criticism, with claims of debt-trap diplomacy by China.
Nathan highlighted that the U.S. is actively engaging in the Indo-Pacific region, making Sri Lanka the “2nd biggest exposure” for the DFC in the area after India. However, China’s recalibration of the Belt and Road Initiative to be greener and more sustainable poses tough competition for the U.S. in development financing.
The U.S. faces the challenge of catching up with China in the global infrastructure market. Although the U.S. provides around $60 billion of development finance each year to low- and middle-income countries, China remains the single largest official source of international development finance at $80 billion a year.
In a recent report, AidData highlighted the narrowing gap between the U.S. and China in development finance, with China focusing on delivering rapid, big-ticket infrastructure projects with stringent environmental and governance safeguards. The success of the U.S. in squaring the circle between safety and speed in the global infrastructure market remains uncertain.