US Pumps Over Half A Billion Into Adani's Sri Lankan Port Deal Amidst Tensions With China

This story was first published on the Benzinga India portal.

India's Adani Group, spearheaded by Indian tycoon Gautam Adani, is poised to secure a hefty investment from the United States for a strategic port project in Sri Lanka, a move seen as an attempt to counter China's expanding regional dominance.

The Adani Group company announced in an exchange filing on Wednesday, that the US plans to inject $553 million into the West Container Terminal project in Colombo. This financial commitment by the US, in concert with India and Sri Lanka, appears to be a calculated maneuver to offset China's clout in South Asia.

This infusion by the International Development Finance Corp (DFC) marks its heftiest Asian infrastructure investment and one of its most significant globally. The project's goal is to spur Sri Lanka's economic progress and fortify its economic ties, especially with neighboring India.

The involvement of the U.S. also signals a strategic pivot aimed at mitigating China's influence over Sri Lanka, which has been burdened by significant debt from prior Chinese-funded port and highway ventures. India, too, is actively working to recalibrate the regional balance of power.

In 2023 alone, the DFC has ramped up its global investments to a total of $9.3 billion, highlighting the US's resolve to deepen its engagement in Indo-Pacific development initiatives.

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As of last year's end, China stood as Sri Lanka's top foreign direct investor, with approximately $2.2 billion funneled into the country. The US has openly criticized China's involvement, particularly in the sparsely utilized Hambantota port, accusing China of engaging in "debt-trap diplomacy."

The DFC's collaboration will extend to John Keells Holdings and Adani Ports & Special Economic Zone, leveraging their regional insight and adherence to high operational standards.

For the Adani Group, which maintains a controlling interest in the port venture and has been contending with allegations of corporate fraud, the US funding acts as a significant vote of confidence. The conglomerate has staunchly denied these accusations, insisting its investments align with Sri Lanka's interests.

The DFC, established during the Trump administration as a development finance entity, strives to aid emerging economies while advancing US foreign policy aims. Despite initial setbacks from the COVID-19 pandemic, the agency has been intensifying its funding activities, seeking to bridge the gap in development financing that China's Belt and Road Initiative has been filling.

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