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China, Sri Lanka agree loans, defence; seek to allay Indian worries | Reuters
Chini Lankan Bhai BhaiChina and Sri Lanka agreed on $1.5 billion in private-sector investment in the northern express highway, which links Kandy in the central part of Sri Lanka, to Jaffna in the north, Peiris said.
Officials from the two sides also agreed on the extension of a railway, the southern highway and the development of the port of Colombo, the country's capital, Peiris said.
Similar port developments from Myanmar to Pakistan have raised Indian fears about Chinese political and military influence, but Rajapaksa has rejected such concerns, saying China's presence in Sri Lanka is strictly business-related.
Sri Lanka's location astride an ancient and lucrative trade route in the Indian Ocean makes it of strategic commercial and military interest to Washington, New Delhi and Beijing.
That, some analysts theorize, makes it a prime part of China's so-called "String of Pearls" strategy to surround India and project its presence by setting up coaling stations under commercial auspices at port after port in the Indian Ocean.
So far, the weapons of influence have been financial: India and China have both funded huge chunks of Rajapaksa's $6 billion post-war overhaul of roads, railways, ports and power plants.
The loans offered by China to Sri Lanka, which were signed on Tuesday along with the other agreements, make up a "preferential bias" credit facility for infrastructure, Peiris said.
China and Sri Lanka have also agreed on cooperation related to defence, "defence-related training, logistics and maritime security, and have agreed in principle to establish a free trade agreement, Peiris said.
China has stood steadfast with Sri Lanka while it has faced international criticism including from Indian poliicians for alleged human rights violations in the final stages of the war with Liberation Tigers of Tamil Eelam in May 2009.