Sri Lanka is currently reeling under its worst economic crisis since independence in 1948 and the worst humanitarian crisis since the end of the civil war in 2009. Here, however, I look at how India and China try to extend their influence on the island in entirely different ways.
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Sri Lanka is regarded as Asia’s oldest democracy in terms of universal adult suffrage, dating back to 1931. But, unfortunately, for twelve years in the last two decades, the island has been under the authoritarian grip of the Rajapaksa family who lead the country to the brink of bankruptcy and the people of Sri Lanka are now paying the price for the manner in which they used their democratic right of voting. The island is also referred to as the ‘Pearl of the Indian Ocean’ due to its geostrategic importance.
Being a small island country in the Indian Ocean with a population of only 22 million, Sri Lanka always try to balance its ties with the two large regional rivals – India and China. Even though India is the island state’s only immediate neighbour, the far-away China has been vying for influence in the island for a long time now.
The southernmost point of the island of Rameshwaram in India’s south-eastern coast, a place named Dhanushkodi, lies only about 27 km from the town of Thalaimannar in Sri Lanka’s north-western coast. As per Hindu beliefs, Lord Ram’s Bridge (the ‘Rama Setu’) once stood in between these two points, and now it’s visible from the sky only as a chain of under-water limestone shoals. Scores of Sri Lankan refugees are now taking the same route and are arriving at the shores of the India’s Tamil Nadu state in rented vessels and fishing boats to escape the current economic and humanitarian crisis that the island is currently reeling under.
Buddhism, a faith practiced by over 70 per cent of Sri Lankans, came from India, the land of its origin. The northern and eastern parts of the island have an added history of falling under the rule of India-based Tamil kingdoms in the medieval era and even today have a significant proportion of Tamil population, one of the two major ethnicities in Sri Lanka, along with the majority Sinhalese.
India’s navy continues to be the first-responder and net-security provider throughout the region, including in Sri Lanka, delivering medicines, vaccines and other essentials even via its warships during the pandemic and even during the ongoing crisis. All these facts underline that no country is historically, geographically and culturally close to Sri Lanka as India is, yesterday and today.
The subtle advent of the Chinese challenge
In the last decade or so, India’s traditional ‘sphere of influence’ in its immediate neighbourhood in South Asia and the Indian Ocean is faced with a challenge from an unwelcome actor lying hundreds of miles away, who likes playing a disruptive role in the regional balance of power dynamics. China has been strongly employing its enormous economic resources to eclipse and undermine India’s role in the region, and thereby in Sri Lanka, which is strategically located in the crossroads of sea lanes in the Indian Ocean.
Since the mid-2000s, China has been pumping in money in the form of easy loans and investments, and has been funding infrastructure projects in the backdrop of the Sri Lankan Civil War (1983-2009) between the Sri Lankan government and the separatist Tamil militia group known as the Liberation Tigers of Tamil Eelam (LTTE) that ended after 26 years of fighting. But, the Sri Lankan society still remains divided with the rise of Buddhist majoritarianism and continuing discrimination against the Tamils. In the post-war years, the war-torn country was badly craving for reconstruction and recovery. China astutely cashed in that necessity.
An increased Chinese footprint in the island could also jeopardise India’s naval superiority and interests in the Indian Ocean, where Sri Lanka is strategically located. In 2014, two Chinese submarines and a warship visited Colombo port, raising alarms in New Delhi as it had an immediate consequential bearing on India’s strategic interests.
During the final phase of the Sri Lankan Civil War, India took a stance of delivering only non-lethal weapons, owing to the Tamil question, while China supplied necessary arms, thereby winning the trust of the ruling Rajapaksas, who were instrumental in winning the civil war. This was when China began to win Sri Lankan public trust, but it happened at the cost of India.
The Tamil question and India’s UNHRC dilemma
After the civil war, the Sri Lankan government was charged with allegations of committing war crimes against innocent civilian Tamils. To counter them, Colombo moved a resolution at the United Nations Human Rights Council (UNHRC) in 2009 explaining that it acted only to preserve the unity and territorial integrity of the country. India supported this resolution, despite the Tamil question, keeping China in mind. But, this was faced with huge domestic backlash, especially from the Tamil Nadu state leadership and the diaspora, which forced India to vote against Sri Lanka in the U.S.-drafted resolutions of 2012 and 2013 on the issue.
At the same time, China backed Sri Lanka in rejecting this resolution by stating that it amounted to interfering in the island’s internal affairs and that it could affect the ongoing post-war reconciliation process. This was a favourable turning point in China’s relations with Sri Lanka. In 2014 and 2021, however, India abstained in UNHRC resolutions that held the Sri Lankan government accountable for its malign role in the civil war, thereby taking a diplomatically balanced stand.
The consolidation of the Chinese geostrategic challenge
In the meantime, China had become Sri Lanka’s largest import destination and trading partner by 2016, and today its largest creditor as well. In 2017, the Sri Lankan government leased the port of Hambantota in the island’s southern coastline, overlooking the Indian Ocean, to a Chinese state-owned company for 99 years, causing strategic insecurity for India, as the prospect of the port getting militarized in the future, under Chinese control, loomed large.
This is considered as part of China’s larger ‘String of Pearls’ strategy to subvert Indian interests in the Indian Ocean by taking control of strategic port facilities in certain key littoral states and islands such as Djibouti, Pakistan, Maldives, Bangladesh, and Myanmar. The Hambantota port is poised to be a key transit point in China’s ‘21st Century Maritime Silk Road’, which is part of the broader Belt and Road Initiative (BRI), a massive trillion-dollar, inter-continental infrastructure and connectivity project led by China. The Chinese are also involved in the Colombo Port City mega-project, which is dubbed as the ‘future Dubai’ of South Asia.
The shuttle diplomacy
Earlier this year, Chinese foreign minister Wang Yi visited Sri Lanka, where he proposed a forum for Indian Ocean island states and asserted that no ‘third party’ should interfere in China-Sri Lanka ties, in a clear reference to India. While the Indian foreign minister Dr S. Jaishankar also visited the island to assure India’s support to the island, took part in a summit meeting of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and called on Sri Lanka’s President Gotabaya Rajapaksa. By the way, Sri Lankan Finance Minister Basil Rajapaksa visited India in March, this year. Such official visits are also seen from and to the Chinese side as well.
Since the beginning of this year, India has offered more than $2.4 billion in lines of credits and currency swaps at different levels to support Sri Lanka, in addition to facilitating arrangements under the aegis of SAARC and the Asian Clearing Union. Despite this, Sri Lanka still relies on Chinese credit to loosen its foreign debt burden. In the past two years, ever since the pandemic began, China has offered about $2.8 billion as ‘financial support’ to Sri Lanka.
Contrasting maritime outlooks
Even after having knowledge about Colombo’s financial constraints and poor repayment capacity, Beijing continued to channel billions of dollars as quick loans, lines of credit and one-sided investments in Sri Lanka without following due procedures, while it was actually intended to gain strategic leverage over India by entangling the island in a ‘debt-trap’, the most abominable form of chequebook diplomacy.
This is the same strategy that Beijing is employing elsewhere in the ‘Global South’ countries, particularly in the African continent. In contrast, India’s engagement in the Indian Ocean region is summed up in the inclusive maritime doctrine of ‘Security and Growth for All in the Region’ (SAGAR), which was unveiled in 2015.
However, it is true that India has found it difficult to catch up with the Chinese in this new ‘great game’ for relative influence as it has a number of structural constraints in terms of expediency in bureaucratic functionality and delivery. However, it needs to be stated that Sri Lanka reached this abysmal point in its economic history not only because of its dependency on Chinese finance, but also due to a combination of domestic factors, such as sheer misgovernance, corruption, and nepotism.
Panning out the current crisis
Today, people in Sri Lanka are facing a shortage of food, fuel and other essential commodities. Power blackouts and inflation became a new normal, and the people are out in the streets protesting for the removal of the current regime from power. Data show that forex reserves dipped 70% in the past two years and foreign debt more than doubled in the ten years from 2010 to 2020, and the situation further exacerbated during the pandemic.
For the first time since independence, last month, Sri Lanka announced that it would default on all of its external sovereign debt, amounting to $51 billion, after running out of forex reserves. The country now badly needs a debt-restructuring plan with hopes of a bailout by the International Monetary Fund (IMF). New Delhi and Beijing have also stepped up their efforts to save Sri Lanka from complete bankruptcy.
This unprecedented crisis began to manifest at least two years back and intensified towards the end of 2021. The government ignored the early indications and, in fact, made it worse. The current majoritarian and populist regime of the Rajapaksas took a series of blunders and policy mis-steps since they came back to power in 2019, which requires another essay’s column space to explain in detail.
The Rajapaksas also happen to be heavily pro-China in their outlook since the concluding phase of the civil war. Even though Sri Lanka’s economic trouble predates the current regime, it was during their first stint, amid the civil war, that the government availed massive loans from China to invest in various projects leading to an increase in the build-up of Chinese clout in the affairs of the island. India still has persisting concerns on the treatment of Sri Lanka’s Tamils, many of whom still awaits justice for the war-time atrocities committed on them by the government and continues to be under constant surveillance.
The way ahead for Indian diplomacy
Turning a blind eye on China’s efforts to make further economic in-roads into Sri Lanka will have serious strategic repercussions for India in the near future. India should continue to collaborate with Japan and other like-minded countries to offer joint projects in Sri Lanka as it is with the case of the Colombo Port’s West Container Terminal development project. India continues to be the most approachable country for Sri Lanka even in these challenging times.
This crisis reminded Sri Lanka of the perils of unchecked loans and brought the genuineness of ‘seemingly liberal’ Chinese loans into question. It is highly likely that the current crisis may further push Colombo to the Chinese side, particularly if India, Japan and the West do not adequately address Sri Lanka’s concerns. Being geographically the closest, India has to take the lead in stepping in and offer sustainable solutions to prevent such an eventuality, and a permanent Chinese naval presence in its backyard is not something it wishes to see. India’s robust private sector can also contribute in this building economic resilience in the island through bona fide investments, particularly in the sectors of Information Technology, heavy industries, urban infrastructure, and consumer goods.
Moreover, regional platforms sans China such as the BIMSTEC and the Indian Ocean Rim Association (IORA) have to be utilised to offer sustainable economic, developmental and technological alternatives to Sri Lanka, and most importantly, the South Asian Association for Regional Cooperation (SAARC) needs to be rejuvenated to ensure prompt and collective response to issues of regional importance and to support each other members in times of crisis. It would also serve as a counterweight to Chinese aspirations and recent moves to form alternative regional mechanisms that could further undermine India’s role in the region.
It is getting clearer day by day that a drastic power transition is underway in South Asia and the Indian Ocean region in the past decade and the relative positions of India and China in those dynamics vis-à-vis smaller countries will have far-reaching consequences for regional peace and stability.
