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Sri Lanka walks a tightrope — Chinese ‘credit card’ on one side, Indian friendship on other

‘India is the only game in town’ said one expert alluding to India lending Sri Lanka a helping hand, Colombo's strained ties with Beijing and the prevailing economic crisis.

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Colombo: Wearing hard hats, two Sri Lankan labourers wait for their turn to enter Colombo Port City, once envisioned as a ‘world class’ metropolis. Across the street from them, hundreds of ‘GotaGoGama’ protesters have been camping for over 50 days, calling for the resignation of President Gotabaya Rajapaksa.

“Let’s fight against the corrupt, exploitative economic system,” reads a large sign hung from the Colombo Port City fence. Located on the ocean-facing Galle Face Green, the Colombo Port City is symbolic of the economic storm that has engulfed Sri Lanka.

The USD 1.4 billion project – sanctioned during Mahinda Rajapaksa’s presidency (2005-15) – is being developed by the Chinese on 269-hectares of reclaimed land. China accounts for 10 per cent of the island nation’s debt, ranking third among creditors after Japan and the Asian Development Bank (ADB).

Protest site across the street from Colombo Port City | Sowmiya Ashok | ThePrint
Protest site across the street from Colombo Port City | Sowmiya Ashok | ThePrint

With its 22 million people facing hardships amid a fuel and energy crisis and no foreign reserves to rely on, Colombo is now walking a tightrope with Beijing on the one side and New Delhi on the other. As former Sri Lankan foreign secretary Jayanath Colombage summed it up, “On security, we have an India first policy. But we want economic ties with China, too.”

Between Chinese foreign minister Wang Yi’s visit in January and External Affairs Minister (EAM) S. Jaishankar’s trip to the island nation in March this year, Sri Lanka’s struggle to characterize its relationships with India and China had been visible for some months now.

“Sri Lanka’s crisis is partly a crisis of external relations, and the irony is that for a country that prides itself on Buddhist heritage, it has certainly in the post-war period, been following anything but the Buddhist middle path as it were in external relations,” said Dayan Jayatilleka, Sri Lanka’s former representative to the United Nations (UN) at Geneva.

“We are yet to see whether it would be India or China which will turn out to be Sri Lanka’s lender of last resort. The needle of evidence is now hovering in the direction of India as the external power that will help us stay afloat,” he added.

Jayatilleka said President Gotabaya Rajapaksa is “widely unpopular within Sri Lanka” and “widely discredited internationally”, which is why he cannot raise money or bring in goodwill.

“The global citizenry may not approve of a no-holds-bar approach to assist the country. Sri Lanka itself has a good brand but that brand has been overlaid by the Rajapaksa logo. As long as the logo is not scraped off, it will be difficult for Sri Lanka to punch its weight internationally,” he said.

Also Read: Radio Ceylon — the Sri Lankan channel India turned to when AIR banned film music in 1952

‘China will never let us down’

“Sri Lanka had a credit card in China. And the Chinese were not asking why and what we needed funds for,” said Shihar Aneez, consulting editor of Sri Lankan media outlet Economy Next

The underlying assumption for President Gotabaya Rajapaksa was that China will never let us down, we are too close and too important to the Chinese, and they are too wealthy to let us down,” said Jayatilleka, referring to the Sri Lankan President’s decision to ban fertilisers before he turned to the Chinese asking for organic fertilizers.

Journalist Shihar Aneez, too, agreed that Sri Lanka was “depending on China” for help to sail through the economic crisis. “Sri Lanka ended up antagonizing everybody because of the relationship with China. This was the case from 2019 when President Gotabaya Rajapaksa was elected, to June or July last year,” he told ThePrint.

Aneez added that it was because of the ‘U-turn’ by Colombo that Sri Lanka could no longer avail “easy financial loans” from China. “This is when Sri Lanka started to feel the pinch. This is when they tried to neutralize and establish relationships with India, US and the European Union,” he added.

Among factors that comprised this ‘U-turn’ was the development of renewable energy projects in three islands in Sri Lanka’s Northern province. The projects were initially awarded to a Chinese company but New Delhi managed to persuade Colombo to cancel the contract and instead sign a pact with the Government of India in this regard.

The move prompted Chinese foreign minister Wang Yi to visit Sri Lanka in January this year to meet President Gotabaya Rajapaksa and the then prime minister Mahinda Rajapaksa to seek reassurances. “In January, the Chinese Foreign Minister deemed it necessary to come to Sri Lanka since China feared the relationship wasn’t going well,” founder of Colombo-based think tank Awarelogue Initiative, Dr. George Cooke told The Print

Sri Lankan foreign minister Professor G.L. Peiris, after his meeting with Wang Yi in January, had said “whenever Sri Lanka faced difficulties, support was always forthcoming from China in the fullest measure” — a likely reference to the receipt of Chinese-made Sinopharm Covid-19 vaccines in 2021. Colombo had also thanked China for “affording the facility of a USD 1.5 billion currency swap with the Central Bank of Sri Lanka” to help boost its currency reserves.

“For Sri Lanka, China has been a commercial partner. China is interested in the country for investment purposes, they are here for business, they are interested in the location, and are not bothered about things beyond that,” Dr. Cooke explained.

‘India the only game in town’

Barely two months after Wang Yi’s visit to Colombo, External Affairs Minister S. Jaishankar had met his Sri Lankan counterpart on the sidelines of the BIMSTEC summit in March. The two countries had signed several agreements on the first day of Jaishankar’s visit

A statement issued by the Sri Lankan Ministry of Foreign Affairs at the time had said that the two foreign ministers reviewed the broad spectrum of political, economic, social and cultural ties between Colombo and New Delhi that “inextricably intertwined the two nations from time immemorial”.

“There is now growing appreciation amongst the people of Sri Lanka that they have a real friend in India, someone they can bank on,” an Indian diplomat told The Print, adding, “Support extended by India in multiple forms in this year has played a defining role on this front.”

Delving further into Colombo’s foreign policy, former Sri Lankan diplomat Jayatilleka told ThePrint: “We had the Rajapaksas who widely swung towards China. Though Mahinda Rajapaksa was capable of greater balance between India and China, there was this wild swing and embrace of China by President Gotabaya Rajapaksa in his current term. He deliberately chose to cross the red line which raised eyebrows from Delhi to Washington”.

Jayatilleka added that it is a “little too late in the day” for Colombo to attempt a more measured relationship with external partners.

“That is not working out either because all you have is a begging bowl and you have run down your soft power reserves. It is difficult to maintain any strategically thought-out foreign policy in this situation. So, now India is the only game in town whether you are Prime Minister Ranil Wickremesinghe or President Gotabaya Rajapaksa. India has played its way back, probably more because of the colossal blunders of the Sri Lanka side, as the clearly pre-eminent external player in Sri Lanka’s foreign relations,” Jayatilleka added.

Since the beginning of 2022, India has extended two credit lines to Sri Lanka: a USD 500 million fuel credit line and another USD 1 billion credit line for supply of essential food and medicines.

On 22 May, Indian High Commissioner Gopal Baglay handed over a consignment consisting of 9,000 MT (million tonnes) of rice, 50 MT of milk powder and more than 25 MT of drugs and other medical supplies worth more than LKR 2 billion, to Sri Lanka’s foreign minister.

“Indian leaders must be dreading calls from Sri Lanka because it is like: ‘Can I have more? Can I have more?’ We are going to get to a point where India is going to say we really can’t keep giving, we don’t have more to give,” Dr. Cooke told ThePrint.

Instead, he suggested Sri Lanka should ask India to help in terms of technology transfers, helping the country in specific areas. 

“We are now looking at how we get through this week, this month, we are not looking at next year this time, how are we going to manage, or how will the situation be two years or five years from now.

“We are not looking at the bigger picture. To tide through this now, India is helping. It is a situation of teach a man to fish or give the man a fish,” he said, adding, “India is giving us the fish and we are getting through these days.”

(Edited by Amrtansh Arora)

Also Read: Sri Lanka’s Prime Minister wants IMF assistance by middle of June this year


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