Sri Lankan President Mahinda Rajapakse visited China and signed a landmark deal allowing Beijing to develop a harbor, bunkering system, and tank farm in Hambantota district in a "friendship city relationship." The year 2007 is the 50th anniversary of the establishment of diplomatic ties between the two countries, and is designated as "China-Sri Lanka Friendship Year."
Though this deal was one of the eight signed between the two nations, the Hambantota Development Zone Agreement is seen by many as furthering Chinese objectives to expand influence in the Indian Ocean. Several details or objectives of the deal are missing. For example, it is not known if the Hambantota harbor will be developed along the lines of Gwadar deep sea project in Pakistan.
The other agreements include one on economic and technical cooperation, a memorandum of understanding on two-way investment promotion cooperation and a MoU on the film industry. The two sides have also agreed to organize a series of activities to increase friendly exchanges, consolidate traditional friendship, strengthen mutually beneficial cooperation, and promote the China-Sri Lanka All-round Cooperative Partnership. Significantly, the two sides also said that they will "fight tirelessly against the three evil forces of terrorism, separatism and extremism." They have agreed to cooperate and consult on "regional and international counter-terrorism action."
The ongoing civil strife in Sri Lanka has larger implications for India which faces imminent flood of refugees. Also, the Tamil minority in Sri Lanka share ethnicity with the economically and politically crucial South Indian state Tamil Nadu. There is increasing political pressure on the federal government to act and show leadership to stop the humanitarian crisis of this minority and the gross human rights violations by the Sri Lankan Army. India is also handicapped by historical baggage of its dealings with the Liberation Tigers of Tamil Eelam (LTTE) and previous Sri Lankan governments. Therefore, there is a lot of pressure on the federal government to demand better human rights policies and implementation from Rajapakse. Policy makers and senior officials have reportedly expressed their concerns to Lankan officials privately.
It is not clear if Rajapakse is creating leverage for himself with India by allowing overt and expanded Chinese participation in the Indian Ocean. Colombo knows that India is sensitive to Chinese expansion in the Indian Ocean region.