New Delhi: USAID administrator Samantha Power Wednesday sought to highlight the “contrasting” roles played by India and China with respect to the economic crisis in Sri Lanka, calling out Beijing’s “opaque loan deals” while hailing New Delhi as an “impactful development leader” and “a friend to the world’s poor”.
US Agency for International Development or USAID is an organisation tasked with leading the US government’s international development and humanitarian efforts. Power, a former US ambassador to the UN under the Barack Obama administration, made the remarks while speaking at IIT Delhi.
She is on a three-day visit to India to advance the US-India strategic partnership and “reinforce India as a critical global development leader in addressing urgent global challenges, including food insecurity”.
In her remarks at IIT, Power praised India’s efforts to help Sri Lanka tide over the current economic crisis with aid and assistance worth nearly $4 billion since January this year.
“India has reacted really swiftly with an absolutely critical set of measures,” said Power. “Contrast this with the People’s Republic of China, which has been an increasingly eager creditor of Sri Lankan governments since the mid-2000s.”
China, she said, “became one of Sri Lanka’s biggest creditors offering often opaque loan deals at higher interest rates than other lenders and financing a raft of headline-grabbing infrastructure projects with often questionable practical use”.
Some of the other reasons Power believes contributed to Sri Lanka’s current economic crisis are economic mismanagement, corruption, unwise agricultural policies, self-inflicted debt burdens and a tourism sector that was “crushed” by Covid, and compounded by the food and fuel crisis.
There is lack of clarity, she added, over whether Beijing will provide more relief or restructure debt owed by the island country.
“Now that economic conditions have soured, Beijing has promised lines of credit and emergency loans. This is critical since Beijing is estimated to hold at least 15 per cent of Sri Lanka’s foreign debt.
But calls to provide more significant relief have so far gone unanswered and the biggest question of all is whether Beijing will restructure debt to the same extent as other bilateral creditors,” said Power.
The USAID administrator also stressed the importance of “trade not aid”, saying creditors should go beyond aid and provide investments to beneficiary countries that will help them reach a position in which they can trade.
She said historically India has always stepped forward and helped poorer countries under South-South cooperation. “But now the stakes are even higher.”
‘India is an impactful development leader’
Power termed India an “impactful development leader” and “a friend to the world’s poor”, saying this role has been made possible due to its democratic values.
“What has positioned India as a future development leader has not been its assets but values. It has been India’s multi-ethnic, multi-party democracy that has allowed it to withstand the challenges it has faced and come out more resilient,” Power said.
She cited India’s support for free expression and tolerance for diversity and dissent as examples of such values.
Asked about the perception that Indian democracy has degraded and that the US has avoided taking a strong stance on it as it views New Delhi as an important counter to China, Power said: “I don’t think that’s a fair characterisation. India is an absolute critical actor not only in the Indo-Pacific but across the world. My remarks were to capture this aspect and how much potential lies in India’s leadership beyond its borders.”
Power Tuesday met Principal Secretary to the Prime Minister, P.K. Mishra, External Affairs Minister S. Jaishankar and Foreign Secretary Vinay Kwatra, among others.
(Edited by Monami Gogoi)