The recent decision of the Adani Group to forgo a $553 million loan from the U.S. International Development Finance Corporation for building a deepwater port in Sri Lanka has raised a number of concerns among foreign policy analysts. This move is viewed as a considerable setback for U.S. foreign policy objectives in the region.
Michael Kugelman, director of the Wilson Center’s South Asia Institute, told The Washington Post that the denial is “more than symbolic.” He said it has strategic implications and cited that U.S. officials had seen the proposal as a key opportunity to confront the growing Chinese influence exerted through infrastructure investments throughout South Asia.
It was to become the single largest American investment in infrastructure in Asia to date, set up to compete with the Chinese Belt and Road Initiative. In the recent years, China has emerged as one of the key investors in various Sri Lankan infrastructure developments, particularly under the just-concluded Rajapaksa administration. The Colombo port venture was considered an endeavour between Washington and New Delhi to check Beijing’s growing presence in the Indian Ocean region.
The Colombo port terminal is a key part of one of the busiest ports in South Asia, with a strategic location for international shipping routes. Growing ties between Sri Lanka and China have raised concerns, not least because of China’s own port investments on the island.
On December 11, Adani Group announced in an exchange filing that it was forgiving the U.S. loan to self-fund the port project. The Chairman and founder of the Adani Group, Gautam Adani said, “The bolder your dreams, the more the world will scrutinize you. Every attack only makes us stronger.”
The move underlines the ongoing tensions in the region, with the U.S. trying to strengthen its influence amid the rise of China.
