When the US agreed last week to back a Sri Lankan port terminal being developed by Indian billionaire Gautam Adani, it signaled an open challenge to China’s own Indian Ocean trade infrastructure known as the “string of pearls,” a maritime network that some western analysts worry could have military capabilities.
The International Development Finance Corp.’s $553 million loan package to the Adani-led West Container Terminal in Colombo not only spoke to deepening India-US strategic ties, it also heralded a revival of the embattled tycoon’s efforts to beef up his own international presence after pulling out of Myanmar following the 2021 coup.
However, the funding raised some eyebrows, given that Adani been on the back foot for much of this year. His conglomerate has been battered by multiple fraud allegations leveled by short-seller Hindenberg Research and various media investigations, which the Adani Group has repeatedly denied.
Adani is widely seen to enjoy a close relationship with India’s Prime Minister Narendra Modi and has openly tied the growth of his infrastructure empire to the premier’s economic objectives. He also saw his port investment and energy proposals in Sri Lanka face street protests and political criticism last year, which alleged the projects were opaquely awarded and pushed onto the country by New Delhi, which India and Adani reject.
The US commitment confirmed Adani’s status as “somewhat of a Teflon man,” according to Michael Kugelman, director of the South Asia Institute at the Wilson Center in Washington. “Many investors, recognizing the size and clout of Adani’s businesses, have swallowed the reputation risks associated with doing business with him.”
Whether Adani and India can scale up and contest Beijing’s entrenched presence in the region is another question. Even though Adani Ports and Special Economic Zone is India’s largest operator, with a network of 14 domestic ports, it only has two developments overseas — one in Colombo and another in Israel’s Haifa.
In contrast, China has investments in more than 90 overseas ports, 13 of which it holds majority ownership, according to the US Council on Foreign Relations.
“Given that Beijing is so far out front, it’s hard for Adani or anyone else to hold a candle to China’s infrastructure investments anytime in the foreseeable future,” Kugelman said. “But Adani and his companies are playing a long game. They’re looking to slowly but consistently build out new investments in South Asia and beyond.”
