Port control is crucial to national security

Infrastructure plays an important role in shaping future trade flows. China’s Belt and Road Initiative was dubbed as being for infrastructure investment. On the other hand, Japan’s infrastructure support programmes such as the Free and Open Indo-Pacific combining “Two Continents” (Asia and Africa) and “Two Oceans” (Pacific Ocean and Indian Ocean), seek to facilitate trade from India and Southeast Asia to efficiently flow west and east, to and from Japan. As part of its efforts through the G7 Partnership for Global Infrastructure, the US also focuses on transportation corridors involving ports. The planned corridor connecting India to Europe through West Asia was hailed as a major achievement at the recent G20 meeting. This will comprise the east corridor connecting India to West Asia and the northern corridor connecting West Asia to Europe.

Foreign ownership of ports by rival nations and having military bases raise obvious security worries, but also concerns about submarine communications cables that are vital to maintaining commerce – the last mile of the cable and its landing station (the most vulnerable parts) are often located near seaports. A recent analysis in the Washington Post highlighted the risk of China controlling ports on both ends of the Panama Canal. A research paper by the Wilson Center, a US-based think tank, highlighted that strategic competition demands America should up its game in maritime commerce. A 2023 strategy paper of the Council on Foreign Relations on tracking China’s control of overseas ports elaborated on these concerns. The Wilson Center paper argued that there was a need for not only to secure domestic critical infrastructure essential to any required mobilisation but also those of allied and partner nations.

To consider these risks, the state department’s bureau of economic and business affairs established a strategic ports initiative to “safeguard seaports from opaque economic activity”. They seek to help “regimes of key partners to protect partners from malign actors”.

One important partner is the US International Development Finance Corporation (DFC). Created in 2018 by the US Congress, DFC is mandated to reduce poverty and also to address “areas that are critical to our national security, and compete with Chinese influence in the developing world”. Earlier that year, China had leveraged Sri Lanka’s inability to repay its loan to gain a 99-year lease on a port that was “a strategic foothold along a critical commercial and military waterway”. Five years later, DFC delivered on its promise to support critical ports, including in Sri Lanka, with financial investments.

Significantly, DFC’s partner in Sri Lanka was not an American company, but India’s Adani Ports. None of the world’s top 10 shippers or top 10 seaport operators are American. Given the strategic nature of such investments, it is important that DFC can partner with companies from allied and partner nations. Last week, the US administration directed the department of homeland security to launch a new Supply Chain Resilience Center with the priority of “addressing supply chain risks resulting from threats and vulnerabilities inside US ports”. Hopefully, its review will also include international ports on which the resilience of supply chains depends.

Multiple efforts are needed to address the risks inherent in the ownership of international ports by rival nations. It is also needed to identify the ports that are strategically important to keep in neutral or friendly hands and take timely action about them.

Dhanendra Kumar is a former executive director at the World Bank for India, Sri Lanka, Bangladesh and Bhutan, and the first chairman, Competition Commission of India. He is currently chairman of Competition Advisory Services LLP. The views expressed are personal