New Delhi: Sri Lanka weathered a perfect storm. The 2019 Easter Sunday bombings signalled a collapse of the country’s tourism industry, which accounts for almost 12 per cent of its GDP and was, at one point, the third largest source of its foreign exchange earnings. The bombings were followed by the Covid-19 pandemic in 2020, rendering another blow to the industry.
Then came the economic crisis, which seemed unthinkable for an island nation that had definitively ended its three-decade-long civil war in 2009 and hailed as “a development success story” by the World Bank six years later. Yet in 2022, Sri Lanka’s economy stumbled, its usable foreign exchange reserves hit a low of $50 million, and it defaulted on its sovereign debt for the first time in history. Pictures of long queues for fuel circulated across social media as the country grappled with nearly $50 billion worth of debt. As the government collapsed and protests erupted on streets at an unimaginable scale, then-President Gotabaya Rajapaksa resigned from his post and fled to the Maldives.
It was during this perfect storm – economic distress, a public health emergency, and political upheaval – that Sri Lanka’s Parliament, not the public, elected Ranil Wickremesinghe as the new President to lead the country. Wickremesinghe’s first visit to India occurred on the first anniversary of his presidency on 20-21 July this year. And it was keeping this situation in mind that the Neighbourhood First series discussed ‘Sri Lanka after Rajapaksa: Recovery or Standstill’ at Delhi’s India International Centre on 29 July.
President Wickremesinghe, the sole Member of Parliament from United National Party, previously held the post of prime minister on five occasions. He came to power with the support of Sri Lanka Podujana Peramuna (SLPP), the largest party in the Sri Lankan Parliament, led by former Prime Minister Mahinda Rajapaksa, who faced the ire of the public for almost half a year in 2022 for his government’s mismanagement of the country’s economy.
Trust in the India-Sri Lanka equation
“The discussions are always country-based,” Major General (Retd) Ashok K Mehta, who has been chairing the series for over four years now, told ThePrint. According to Mehta, it looks into a key component of India’s foreign policy – neighbourhood first.
Large portions of the hour-and-a-half-long discussion were spent grappling around the question of ‘trust’ – especially whether the local populace in Sri Lanka trusts India as a partner. S Venkat Narayan, veteran journalist and president of the Foreign Correspondents’ Club of South Asia, explained how, from his experience, the average Sri Lankan appreciates India’s willingness to step in and help the country in time of need.
India and Sri Lanka have had a complicated relationship. Ambassador Yash Sinha, Chief Information Commissioner of India and former High Commissioner of India to Sri Lanka, said that “trust is a two-way street” and that India must attend to certain issues such as Operation Poomalai – an airdrop of relief supplies by the Indian Air Force to the besieged town of Jaffna in 1987, during the first Eelam war.
The Sri Lankan armed forces had blockaded Jaffna in its efforts to defeat the Liberation Tigers of Tamil Eelam (LTTE). While not substantial, the supplies dropped by India indicated its intent to not remain a bystander in Sri Lanka’s civil war.
Barely two months later, the India-Sri Lanka Accord was signed to end the civil war, allowing the Indian Peace Keeping Force (IPKF) to be deployed in Sri Lanka. Besides India’s actions during the Sri Lankan civil war, its seriousness as an economic partner has also been questioned.
“Sri Lanka has complained that India has done nothing over developing the [Trincomalee] oil tank farms,” said Gulbin Sultana, a research fellow at the Manohar Parrikar Institute for Defence Studies and Analyses, setting the tone for the subsequent discussion: Is India to be trusted, and will it prove to be a sincere and reliable economic partner for Sri Lanka?
In 2003, the Indian Oil Corporation took over the Trincomalee oil tank farm through its subsidiary, the Lanka Indian Oil Corporation or Lanka IOC. Trincomalee was once described as the world’s largest oil tank farm, said Vice Admiral (Retd) Anup Singh. Despite the takeover, only 14 of Lanka IOC’s 99 tanks had been operationalised until 2022.
Former Presidents Mahinda and Gotabaya Rajapaksa had indicated that the Sri Lankan government would re-acquire these oil storage tanks from Lanka IOC and scrap the deal with India. Eventually, in 2022, the governments of India and Sri Lanka agreed to a deal to jointly develop the farm.
The oil storage tanks are significant because of their proximity to the Trincomalee harbour, the “fourth largest natural harbour in the world…shielded from four sides,” said Singh. The deep water harbour can berth aircraft carriers and has a strategic value to geo-security.
Also read: Sri Lanka wasn’t India’s backwater. Just look at its violent, religious medieval history
Sri Lanka stuck between India and China
As the discussion progressed, the focus veered toward China’s impact on Sri Lanka’s prospects. Sinha clarified that China is “here to stay” and will be there for the foreseeable future.
Commenting on how China was building more than just economic ties with Sri Lanka, an audience member pointed out that it had been funding Buddhist monasteries and monks to forge a cultural alliance with the island nation – an area India hasn’t been able to tap into so far.
But Sinha quickly disagreed, saying that India has been “an able cultural partner”, funding dance academies in Kandy and housing for monks in Anuradhapura. Nevertheless, the general consensus was that China’s deep pockets and the Belt and Road Initiative (BRI) are foreign policy tools India simply must contend with.
Amid this tug-of-war between India and China, the gaze quickly shifted toward Sri Lanka: whose side would the island nation pick eventually? Singh raised an interesting counter-question: Why force Colombo to play ball?
“Every Sri Lankan leader has always said that they look to India for providing security like a relative, while they look to China for their economy like a friend,” said Mehta, explaining how Sri Lanka views its relationship with India and China.
(Edited by Zoya Bhatti)