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International relations

Sri Lanka drops India and Japan from port partnership

Surprise unilateral decision follows strikes by labor unions

Shipping containers are seen at the main port in Colombo, Sri Lanka. The country's cabinet decided Monday that the East Container Terminal at the port would be wholly owned by the Sri Lanka Ports Authority.   © Reuters

MUMBAI -- Sri Lanka has pushed Japan and India out of a port project in its capital of Colombo, opting instead to move forward alone, amid pressure by unions at the facility.

The country's cabinet decided Monday that the East Container Terminal at the Port of Colombo would be wholly owned by the Sri Lanka Ports Authority, scrapping the original partnership in a move that has bewildered and frustrated its erstwhile partners.

The three countries had signed a memorandum of understanding in May 2019 to develop the terminal. Sri Lanka would have held a 51% stake in the development and operation of the facilities, with India and Japan owning the rest.

President Gotobaya Rajapaksa had said just last month that the project would move forward as planned, and India's Adani Group conglomerate had been slated to take part.

"We have told the Sri Lankan government that this unilateral decision is regrettable," said a senior official at the Japanese Embassy in Sri Lanka.

An Indian government spokesman urged the Sri Lankan government to return to the deal, saying "all sides should continue to abide by the existing understandings and commitment," the Press Trust of India reported.

Internal politics played a major role in the decision. Labor unions at the port had objected vehemently to the deal, with more than 20 launching a strike last year and threatening another in late January.

Some observers have speculated that Chinese influence may have played a role as well.

The cabinet also suggested that Sri Lanka would work with India and Japan on the port's western terminal instead. But "there's been no information about it, and we haven't received an official proposal," a Japanese Embassy representative said.

Sri Lanka's cabinet previously decided in September to halt a light rail project being supported by Japan.

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