India, Sri Lanka ink MoU for housing project deal in Hambantota

Sri Lanka has signed Memorandum of Understanding (MoU) with India to build 1,200 houses in strategically located southern port city of Hambantota. Of the 1,200 houses to be built, 600 will be constructed in Southern Province, while remaining will be built across Sri Lanka, through one model village in each of country’s 25 districts.

Background

Hambantota port is located right in middle of vital energy supply lines in Indian Ocean, connecting Middle East and East Asia. In recent times, coastal city of Hambantota had gained strategic significance after Sri Lankan government had decided to build massive deep-sea port and airport with huge Chinese loans.
In July 2017, Sri Lankan government had signed US $1.1 billion deal to sell 70% stake of strategic Hambantota deep-sea port to China to service outstanding $8-billion debt it owes China. The deal had fanned concerns of countries with competing strategic interests with China, particularly India and US. Local residents of Hambantota are also protesting selling of “national assets to foreign entities” leading to violent clashes.

Significance

The signing of MoU in Hambantota assumes significance as it takes India’s housing project to Sinhala-majority Southern Province.  Earlier India had constructed as many as 46,000 homes in Tamil-majority north and east, and 4,000 houses are being built in hill country in Central and Uva provinces, where several thousand Sri Lankans of recent Indian origin live and work. India also is taking steps to protect itself in Indian Ocean by allying itself with US and Japan in a bid to counter growing Chinese influence in IOR.

Month: Current Affairs - October, 2017