A Deepening US-China Rivalry Hangs Over Sri Lanka’s Election

(Bloomberg) -- Sri Lankans go to the polls this weekend for the country’s first election since defaulting on piles of sovereign debt in 2022, when the nation plunged into its worst economic crisis across 70 years of independence. 

Off the coast of Colombo, the capital city, round-the-clock construction offers a possible glimpse of the future. 

Backed by several hundred million dollars of American funding, a unit of India’s Adani Group conglomerate and two local partners are undertaking a massive expansion of the city’s main port, the busiest in South Asia. 

The goal is to make Colombo an even bigger shipping destination, while slowly prying away the island nation from China, which has pumped billions of dollars into infrastructure projects across Asia and Africa.

The Colombo West International Terminal is one of Washington’s biggest investments in the region. Backed by a $553 million loan from the US Development Finance Corp., an agency created by the Trump administration in 2019 as an answer to China’s Belt and Road Initiative, the project underscores Washington’s ambitions in a key — if volatile — part of Asia.

“This project in particular serves deeper economic ties for Sri Lanka, India and the United States,” said Chulanee Attanayake, a researcher and expert in Sri Lanka’s foreign relations.

“This is not just an economic venture but it’s also a geopolitical statement,” she added.

Over the past few years, Sri Lanka became emblematic for the wrong reasons: a cautionary tale of a rising economy that mismanaged its finances and went bankrupt as a result. In the chaos that followed, inflation soared, family savings were decimated and street protests toppled the president at the time. 

The International Monetary Fund stepped in with billions of bailout dollars.

Ensuring the stability of Sri Lanka, an ethnically diverse nation south of the subcontinent, is now of increasing importance to China, India and the US, which are all jockeying for influence with lawmakers and investors. 

Over the last decade, a mix of Chinese and Indian developers have transformed downtown Colombo. New hotels, glass skyscrapers and a Chinese-funded “Lotus Tower” adorn the waterfront. 

A sprawling land reclamation effort adjacent to the port has set aside plots for office towers, luxury villas and a marina — with tax benefits to attract foreign investors. 

Much of the development ground to a halt during the 2022 economic crisis, which was brought on by factors including longstanding government deficits, high foreign debt and the devastating effects of the pandemic on tourism. 

Many critics also blame the overextension of Chinese loans used to fund unworkable infrastructure projects. 

Yet Sri Lanka, which for much of its recent history weathered a brutal civil war, has since turned a corner. And candidates in this week’s national election have been busy making their pitches for a rosier future.

The three-way race pits President Ranil Wickremesinghe — the incumbent whose administration negotiated the $3 billion IMF bailout — against two main challengers: the parliamentary opposition leader Sajith Premadasa and the populist Marxist Anura Kumara Dissanayake, also known as AKD. 

To secure the 48-month IMF bailout, Wickremesinghe’s administration raised taxes, hiked utility bills, reformed governance and undertook negotiations with creditors. Many of the measures are unpopular in the nation of 22 million, where per capita income is near a decade-low of less than $4,000. 

Wickremesinghe’s opponents want to reopen negotiations with the IMF. 

“We are a bankrupt country,” Premadasa told Bloomberg News. “We have to make sure that our policies promote national interests.” 

While none of the top candidates have proposed pivoting away from China, they’ve all supported a more balanced approach to international relations. 

Dissayanake’s leftist backers have called for more scrutiny of investment deals with foreign countries.

Pollsters say the race may head to a run-off for the first time in the country’s history. That could delay the result beyond a Sept. 21 vote. 

On Thursday, the government said it reached an agreement in principle over the restructuring of about $12.6 billion in bonds, following earlier deals with official creditors. 

Despite the uncertainty, signs of a broader turnaround are increasingly easy to spot. 

The Sri Lankan rupee rose more than 10% last year, and the economy has returned to steady growth boosted by improvements in the tourism and agricultural sectors. 

A boom in maritime shipping has also turned the Indian Ocean into a hive of activity.

The Colombo West International Terminal will be the fourth major center for receiving container ships in the Port of Colombo — and the only one backed by funding from the US government. Like other local terminals, it will be a center for transshipping, in which mega-vessels dock to swap cargo with smaller ships serving the region. 

That activity has helped make Sri Lanka an outsized player in global trade.

As regional trade has ballooned, several existing terminals are either at or over capacity, according to Drewry Maritime Research, a shipping research and consulting firm. 

When the US-backed terminal is complete, it’s set to add as many as 3.2 million container units per year in capacity, up almost 40% from current levels, according to Drewry. 

For now, the terminal is little more than a hook-shaped plot of sandy earth. 

On a recent gusty afternoon, the arrival of a fleet of remote-operated cranes and steady construction on a nearly mile-long jetty offered signs of progress. Project managers say the port is scheduled to begin its first phase of operations at the end of the year.

“Traditionally, the Japanese and the Chinese and the Indians have been here, but we would also like to invite big investment from the Western countries,” Sri Lankan Foreign Affairs Minister Ali Sabry said in an interview. 

The project “shows the growing strategic importance of Sri Lanka,” he added.

China has long dominated global infrastructure financing through its Belt and Road Initiative, particularly in low- and middle-income countries. 

Beijing has spent $11.2 billion worth of grants and loans on ports, highways and other infrastructure in Sri Lanka between 2006 and 2022, according to AidData, a research lab at William & Mary in Virginia. The US, by comparison, spent $97 million in that period. 

Beijing’s massive infrastructure loans have led to accusations that it’s an irresponsible lender and drives countries to default. AidData said in a November report, however, that China has been recalibrating its lending drive to be more sustainable. 

Globally, China spends $80 billion in development finance to low- and middle-income countries, AidData said, compared with $60 billion by the US. 

Still, the US has pitched itself as a more transparent alternative. 

The DFC has said its loan to fund the Colombo port won’t contribute to the country’s sovereign debt but declined to provide specifics on financing terms with the developer — a joint venture majority-owned by Adani, with smaller stakes held by Sri Lanka’s John Keells Holdings PLC and the Sri Lanka Ports Authority.

Perhaps the most telling example illustrating how China’s infrastructure effort can go awry is located a few hours south of Colombo, in Hambantota. 

There, the Sri Lankan government used Chinese loans as part of a major development push conceived by former President Mahinda Rajapaksa. 

But the project failed to attract the expected container-ship traffic, said Eleanor Hadland, senior analyst at Drewry. In exchange for $1.1 billion, the Sri Lankan government handed China Merchant Port Holdings Co. a 99-year lease on the port in 2017. 

With vast storage space on hand, it’s recently become a hub for automobile transshipments. 

Last year, AidData said Beijing has spent more money on the port than any other in the world — and that it was a top contender for a Chinese military base. 

Sabry, the foreign minister, said Sri Lanka would not tolerate a foreign military presence on its soil. 

Meanwhile, Colombo remains the site-of-choice for the thousands of ships that dock in Sri Lanka each year. 

Hadland described the US-backed project as “significantly less risky for the funding agency” given Colombo Port’s established place as a vessel hub. 

 

In an interview, Nisha Biswal, deputy chief executive of DFC, said Sri Lanka is at “the crossroads of all seafaring commerce that transverses the Indo-Pacific,” and expanding the port serves the interests of maritime traffic and the island. 

“This is a country that has been struggling economically, struggling with a lot of bad debt, and that has not yielded the economic returns for the country as it should have,” she said. 

--With assistance from P R Sanjai, Anusha Ondaatjie, Shruti Srivastava, Shadab Nazmi and Yasufumi Saito⍐.

Hezbollah exploding pager trail runs from Taiwan to Hungary

 Hezbollah exploding pager trail runs from Taiwan to Hungary

By Laila Bassam and Maya Gebeily September 18, 2024

• Summary

• 12 killed, 3,000 wounded in unprecedented security breach
• Hezbollah ordered pages months ago; vows retaliation
• Pagers made by Europe firm BAC, Taiwan-based firm says
• Devices modified by Israel at production, Lebanon security sources say
• Israel makes not comment

BEIRUT, Sept 18 (Reuters) - A Taiwanese pager maker denied on Wednesday that it had produced devices that wounded thousands of Hezbollah operatives in Lebanon when they exploded, an audacious attack that raised the prospect of a full-scale war between the Iran-backed group and arch-foe Israel.

Gold Apollo said the devices were made by under licence by a company called BAC, based in Hungary's capital Budapest.

Israel's spy agency Mossad, which has a long history of pulling off sophisticated attacks on foreign soil, planted explosives inside pagers imported by Hezbollah months before Tuesday's detonations, a senior Lebanese security source and another source told Reuters.

The death toll rose to 12, including two children, Lebanese Health Minister Firass Abiad said on Wednesday. The attack wounded nearly 3,000 people, including many of the group's fighters and Iran's envoy to Beirut.

Iran-backed Hezbollah has vowed to retaliate against Israel, whose military declined to comment on the blasts. The two sides have been engaged in cross-border warfare since the Gaza conflict erupted last October, fuelling fears of a wider Middle East conflict that could drag in the United States and Iran.

Jordan's Foreign Minister Ayman Safadi accused Israel of pushing the Middle East to the brink of a regional war by orchestrating a dangerous escalation on many fronts.

"Hezbollah wants to avoid an all-out war. It still wants to avoid one. But given the scale, the impact on families, on civilians, there will be pressure for a stronger response," said Mohanad Hage Ali of the Carnegie Middle East Center.

Hezbollah, Iran's most powerful proxy in the Middle East, said in a statement it would continue to support Hamas in Gaza and Israel should await a response to the pager "massacre" which left fighters and others bloodied, hospitalised or dead.

One Hezbollah official said the detonation was the group's "biggest security breach" in its history.

Footage from hospitals reviewed by Reuters showed men with various injuries, some to the face, some with missing fingers and gaping wounds at the hip where the pagers were likely worn.

The plot appears to have been many months in the making, several sources told Reuters. It followed a series of assassinations of Hezbollah and Hamas commanders and leaders blamed on Israel since the start of the Gaza war.

TRAIL LEADS TO BUDAPEST

The senior Lebanese security source said the group had ordered 5,000 pagers from Gold Apollo, which several sources say were brought into the country earlier this year.

Item 1 of 5 A man's bag explodes in a supermarket in Beirut, Lebanon September 17, 2024 in this screen grab from a video obtained from social media. Social Media/via REUTERS

A man's bag explodes in a supermarket in Beirut, Lebanon September 17, 2024 in this screen grab from a video obtained from social media. Social Media/via REUTERS Purchase Licensing Rights, opens new tab

Gold Apollo founder Hsu Ching-Kuang said the pagers used in the explosion were made by a company in Europe that Gold Apollo named in a statement as BAC.

"The product was not ours. It was only that it had our brand on it," Hsu told reporters at the company's offices in the northern Taiwanese city of New Taipei on Wednesday.

The stated address for BAC Consulting in Hungary's capital Budapest was a peach building on a mostly residential street in an outer suburb. The company name was posted on the glass door on an A4 sheet.

A person at the building who asked not to be named said BAC Consulting was registered there but did not have a physical presence. The CEO of BAC Consulting, Cristiana Barsony-Arcidiacono says on her LinkedIn profile that she has worked as an adviser for various organisations including UNESCO. She did not respond to emails from Reuters.

BAC's registered activities are wide ranging, from computer game publishing to IT consulting to crude oil extraction.

The senior Lebanese security source identified a photograph of the model of the pager, an AR-924. Hezbollah fighters have been using pagers as a low-tech means of communication in an attempt to evade Israeli location-tracking.

The senior Lebanese source said the devices had been modified by Israel's spy service "at the production level." Israeli officials did not immediately respond to Reuters requests for comment.

"The Mossad injected a board inside of the device that has explosive material that receives a code. It's very hard to detect it through any means," the source said.

The source said about 3,000 of the pagers exploded when a coded message was sent to them, simultaneously activating the explosives.

Another security source told Reuters that up to three grams of explosives were hidden in the new pagers and had gone "undetected" by Hezbollah for months.

In a televised speech on Feb. 13, the group's Secretary General Hassan Nasrallah sternly warned supporters that their phones were more dangerous than Israeli spies, saying they should break, bury or lock them in an iron box.

Instead, Hezbollah opted to distribute pagers to its members across the group's various branches - from fighters to medics working in its relief services.

Israel's Mossad has gained notoriety for its complex operations stretching back to the daring 1960 abduction of high-ranking Nazi Adolf Eichmann. More recently, the spy agency has been blamed for cyber attacks and the assassination of a top Iranian scientist in 2020 with a remote-controlled machinegun.

Nine killed, 2,750 wounded across Lebanon as Hezbollah pagers explode

 

 

Nine killed, 2,750 wounded across Lebanon as Hezbollah pagers explode

Hezbollah official calls it the group’s ‘biggest security breach’ in nearly a year of cross-border fire with Israel.

17 Sep 2024 AJ

At least nine people were killed and about 2,750 were wounded by exploding handheld pagers across Lebanon, the country’s health minister has said.

Firass Abiad said that an eight-year-old girl was among those killed and that more than 200 people are in critical condition after the communication devices exploded on Tuesday, with injuries mostly reported to the face, hands and stomach.

end of list

Lebanon’s Hezbollah blamed Israel for the spree of pager blasts, saying it will get “its fair punishment”, according to a statement released by the Iran-backed group which has been exchanging almost daily cross-border fire with Israel for almost a year.

There was no comment on the blasts from the Israeli military.

Hezbollah said in an earlier statement on Tuesday that two of its fighters and a girl were killed as “pagers belonging to employees of various Hezbollah units and institutions exploded”.

A Hezbollah official, speaking on the condition of anonymity, said the explosion of the pagers was the “biggest security breach” the group has experienced since October 7, when Israel’s war on Gaza began following the Hamas-led attacks on Israel.

Iran’s ambassador to Lebanon, Mojtaba Amani, was among those injured by the pager explosions on Tuesday, Iran’s Mehr news agency reported.

US State Department spokesperson Matthew Miller told a regular news briefing the United States was not involved in the incidents and did not know who was responsible.

“We are gathering information on this incident,” Miller said. “I can tell you that the US was not involved in it. The US was not aware of this incident in advance.”

Al Jazeera’s Zeina Khodr, reporting from Beirut, said it appears the devices were detonated in a coordinated attack, which represented a “major development” in the hostilities between Israel and the Iran-backed Lebanese group.

“This is a major security breach. Hezbollah’s communication devices have been compromised. We have seen pictures from across Lebanon of men lying on the floor wounded, bleeding. We have seen reports of hospitals asking for blood,” she said.

She said “near-simultaneous explosions” were reported in southern Lebanon, in the east of the country and in Beirut’s southern suburbs, where there was widespread panic.

Hezbollah leader Hassan Nasrallah had called on his fighters a few months ago to stop using smartphones because Israel has the technology to infiltrate those devices, Khodr said.

“So now they’ve resorted to this different communications system using pagers, and it seems they have been penetrated,” she said.

Elijah Magnier, an independent military and political analyst, said Hezbollah relies heavily on pagers to prevent Israel from intercepting its communications, and he speculated that the pagers would have had to have been tampered with before being distributed to Hezbollah members.

“This is not a new system. It has been used in the past … so in this case, there has been involvement of a third party … to allow access …to remotely activate the explosions,” he told Al Jazeera.

“These explosions … are powerful enough to [severely] hit the psychology of Hezbollah.”

Earlier on Tuesday, Israel announced the expansion of its official war aims to include enabling Israelis who have fled areas near the Lebanese border to return to their homes, widening its nearly yearlong fight against Hamas in Gaza to focus on Hezbollah.

The exchanges of fire between the Israeli military and Hamas ally Hezbollah in Lebanon have forced tens of thousands of people on both sides of the border to flee their homes.

“The political-security cabinet updated the goals of the war this evening, so that they include the following section: the safe return of the residents of the north to their homes,” Israeli Prime Minister Benjamin Netanyahu’s office said in a statement early on Tuesday.

The exchanges of fire between Israeli soldiers and Hezbollah have killed hundreds of people, mostly fighters, in Lebanon and dozens of civilians and soldiers on the Israeli side.

On Monday, Israeli Defence Minister Yoav Gallant said “military action” was the “only way left to ensure the return of Israel’s northern communities”.

Hezbollah claimed a dozen attacks on Israeli positions on Monday and three more on Tuesday.

How did Hezbollah’s pagers explode in Lebanon?

Localised explosions across Lebanon open a new chapter in one of the region’s most established conflicts.

Hundreds of pagers belonging to the Lebanese armed group Hezbollah have simultaneously exploded across Lebanon.

At the time of publishing, at least nine people have been killed and 2,750 wounded, according to security services and the Lebanese health minister.

What’s a pager? Why use them?

Pagers are small communication devices used commonly before mobile phones became widespread.

The devices display a short text message for the user, relayed by telephone through a central operator.

Unlike mobile phones, pagers work on radio waves, the operator sending a message by radio frequency – rather than the internet – unique to the recipient’s device.

It is thought that the basic technology used in pagers as well as their reliance upon physical hardware means they are harder to monitor, making them popular with groups such as Hezbollah where both mobility and security are paramount.

What happened?

The series of explosions began at about 15:30 local time and lasted for around an hour.

Casualty numbers are still being confirmed.

One eight-year-old girl has been confirmed among the dead.

Mohammad Mahdi Ammar, the son of Hezbollah MP Ali Ammar,  has also been reported killed.

Hezbollah confirmed that two of its fighters had been killed.

Lebanese Health Minister Firass Abiad told Al Jazeera: “About 2,750 people were injured, … more than 200 of them critically” with injuries mostly reported to the face, hands and stomach.

Iran’s ambassador to Lebanon, Mojtaba Amani, was also injured in the explosions.

Who carried out the attack?

Many people, including Hezbollah, are pointing to Israel.

Israel and Hezbollah have been engaged in a mostly low-level exchange of fire over the Lebanon-Israel border since October 8, the day after Hamas-led attacks on Israel killed 1,139 people, saw about 240 taken captive and set off Israel’s war on Gaza.

Recently, Israeli politicians and media have increasingly talked of military action against Lebanon to drive Hezbollah back from the border to allow for the return of about 60,000 Israelis evacuated right after the attacks began.

“We hold the Israeli enemy fully responsible for this criminal aggression,” Hezbollah said in a statement, adding that Israel “will certainly receive its just punishment for this sinful aggression”.

Despite a similar condemnation from Lebanese Information Minister Ziad Makary, Israel itself – in keeping with previous situations – remains tight-lipped.

Why didn’t similar blasts occur in Gaza?

According to Hamze Attar, a defence analyst based in Luxemburg, “They cannot use the same method in Gaza because Hamas is very cyber-aware compared to Hezbollah.

“They are very capable when it comes to telecommunications,” he said of Hamas, stressing the efforts the group goes to to encrypt communications.

“They don’t use phones or cellphones. They have their own network and internet and communication and don’t need anything above ground,” he said.

How did the pagers explode?

We still don’t know.

Some speculation has focused on the radio network that pagers rely on, suggesting that it may have been hacked, causing the system to emit a signal that triggered a response within the already doctored pagers.

“What I think happened [is that] every Hezbollah [member] who was at a specific level was attacked,” data analyst Ralph Baydoun told Al Jazeera.

He also suggested that Israel would not need to know the names of whoever received the corrupted signal but it could gather valuable intelligence after the detonations.

“If they had the satellites on, … they would know the names and locations of all operatives who were attacked … immediately when [they asked] for help. They would disclose [their] locations,” he speculated.

Other analysts, such as former British army officer and chemical weapons expert Hamish de Bretton-Gordon, suggested that Hezbollah’s pagers may have been tampered with along the supply chain and “wired to explode on command”.

OK, but how could a pager blow up?

If the pager’s lithium battery was triggered to overheat, this would kick-start a process called thermal runaway.

Essentially,  a chemical chain reaction would occur, leading to an increase in temperature and eventually the battery’s violent explosion.

However, triggering that chain reaction within multiple devices that have never been connected to the internet is far from straightforward.

“You have to have a bug in the pager itself [so that] it will overheat as a result of certain circumstances,” Baydoun said, speculating that those circumstances would most likely be a trigger introduced into the pager through doctored code.

Source: Al Jazeera and news agencies