U.S. Announces $553 Million Deep-Water Terminal Project in Sri Lanka

The U.S. has announced a $553 million project to build a deep-water shipping container terminal in Sri Lanka‘s Port of Colombo as it competes with China in international development financing. The project, known as the West Container Terminal, aims to transform Colombo into a world-class logistics hub and expand its shipping capacity to cater to growing economies in the Bay of Bengal.

DFC Supports Sri Lanka’s Prosperity and Allies’ Position in the Region

The project is being financed by the United States International Development Finance Corp (DFC), which has committed $553 million in private loans. DFC Chief Executive Officer Scott Nathan stated that the project will create greater prosperity for Sri Lanka and strengthen the position of U.S. allies in the region without adding to Sri Lanka’s sovereign debt. The commitment signifies the importance of Sri Lanka as a partner in the Indo-Pacific region for the U.S.

Background on China’s Belt and Road Initiative

The DFC was established in response to China’s Belt and Road Initiative. Through this initiative, China has been investing billions of dollars each year in infrastructure projects worldwide to promote trade and goodwill towards China. However, some of these projects, including Sri Lanka’s Hambantota Port, have faced financial difficulties, leading to concerns over China’s debt-trap diplomacy.

Competition between India, China, and the U.S. in Sri Lanka

Both India and China are vying for influence in Sri Lanka, which is strategically located on one of the world’s busiest shipping routes. China has already invested in expanding facilities at the Colombo port and is developing the Port City project, raising concerns over Chinese dominance in the region. The U.S. aims to compete with China in the Indo-Pacific region through its development finance efforts.

Narrowing the Gap with China in Development Financing

A recent report from AidData suggests that the U.S. is catching up with China in terms of development finance. While China remains the largest official source of international development finance, the U.S., through the DFC, has significantly increased its loans to low- and middle-income countries. Both China and the U.S. are striving to balance the need for rapid project delivery with environmental and social safeguards.

Conclusion

The $553 million investment in Sri Lanka’s West Container Terminal demonstrates the U.S.’s commitment to competing with China in the international development financing arena. By providing critical infrastructure, the U.S. aims to transform Colombo into a major logistics hub and strengthen its alliances in the region. The project also highlights the ongoing competition between India, China, and the U.S. for influence in Sri Lanka. While China remains the dominant player in global infrastructure finance, the U.S. is narrowing the gap and focusing on sustainable financial transactions.

Source: U.S. counters China’s Belt and Road with announcement of $553m investment in Sri Lanka port