SRI LANKA’S FINANCE Minister Basil Rajapaksa took home a cheque of $1 billion during his March visit to New Delhi, for purchase of essential commodities. This is in addition to aid given a few months earlier to buy fuel, and foreign exchange. India’s total relief package to the island is already at around $2.5 billion. A substantial amount, no doubt.
India’s aid should go a long way in helping Sri Lanka come out of its economic crisis. But India’s is not the only helping hand out there. China, whose investments in the country are deep, also announced a $500 million urgent relief package, and also extended the payment of previous loans.
China’s entry into the Indian Ocean over the last decade, and its active wooing of countries that traditionally relied on India for their security needs, has unsettled waters. Way back in 2005, Sri Lanka had, with consent from all political factions, affirmed that it would turn to India for its security needs. However, where development assistance was concerned, it would go anywhere where there was money. In today’s scenario, Mr Moneybags is China. “Sri Lanka has been pretty consistent on this front. However, our interpretations may have changed because of changing perceptions,” said N. Sathiya Moorthy, head of the Observer Research Foundation’s Chennai chapter. “China may only be a development partner, yet there is no assurance that China won’t misuse this situation to India’s strategic discomfort.”
India’s wariness with China’s involvement in Sri Lanka became deeply set when Beijing began pouring money into the island, taking over Hambantota Port when Colombo did not have funds to repay. The new Colombo Port City, being built with Chinese investment, too, has over 60 per cent Chinese stake. India, upping its development aid, has come at a time when Sri Lanka has also realised the drawbacks of Chinese help—the debt trap. “India’s aid, on the other hand, comes without strings attached, and is always nonreciprocal,” explained former diplomat Anil Trigunayat.
India has also begun working on various aspects of aid, making it encompass a range of areas. While a large focus for India used to be the ethnic Tamil minority, in recent years, the thinking has changed. India keeps alive the Tamil issue in every meet, always urging Sri Lanka to take necessary steps to address the legitimate aspirations of the Tamil community.
It has helped build homes in Tamil-dominated areas for the returning refugees. It is also reaching out to the majority community, the Sinhalese, tapping cultural, religious and ethnic ties—from helping rebuild Buddhist heritage sites and even reaching into pre-Buddhist links, right from the time of Prince Vijaya, who hailed from mainland India and is said to have established Sinhalese rule on the island after banishment from his home.
The pandemic gave India the opportunity to not just extend Vaccine Maitri (though Colombo also used China-made vaccines), but also in training the country in pandemic management. Skill development is a large component of India’s outreach to its neighbours. “Bilateral relations now are more even and balanced,” said Moorthy. “Lots of mutual suspicions are gone or are in the process of being removed.”
Sri Lanka’s disillusionment with China-style aid has been of advantage to India in some ways. For instance, last year, Sri Lanka imported a shipload of supposed organic fertiliser from China. The import was important as the country was planning to turn its entire agriculture organic. However, the consignment turned out to be contaminated and was returned. India is reported to have helped Colombo then.
But while Sri Lanka has become more aware of India’s strategic concerns, China often steals a march because India does not have its ear to the ground. Last year, Colombo cancelled a wind farm project it had allotted to a Chinese firm after India raised security concerns. The project, by the Asia Development Bank, was clinched by the Chinese firm after a global tender was floated. No Indian company submitted its proposal. “Why then blame Colombo? No Sri Lankan government is pro- or anti-India,” said Moorthy. “Every government is pro its own country.” The Rajapaksa government’s decision to cancel the tender shows how keen Sri Lanka is now to eliminate suspicions from its ties with India.
Meanwhile, another Indian Ocean minilateral is quietly developing. The Colombo Security Conclave recently met at Male at the national security adviser level. This grouping, initially between India, the Maldives and Sri Lanka, was formed in 2011, but made little progress, with the two island nations not being too forthcoming. Its revival now is significant, as India consolidates its position as the main security provider in the Indian Ocean. Mauritius is a full member; Bangladesh and the Seychelles are observers. These are among the countries that are on China’s radar for developing its ‘String of Pearls’ in the Indian Ocean. Even the language of the ties has changed; they call themselves each other’s “maritime neighbours”.
India has pumped big money into these nations in recent times. It gave the Maldives $3 billion, after Ibrahim Mohamed Solih came to power, mainly to get rid of the Chinese debt. Bangladesh has received $8 billion in three soft loans, the largest concessional credit given by India to any country, said Finance Minister Piyush Goyal recently. Nepal has got $1.65 billion (infrastructure development), Myanmar around $500 million.
However, we cannot wish away China from our neighbourhood in the foreseeable future, and the development needs of these countries are huge. Will they play these sources of help against each other to leverage their own positions? “These countries have become smarter in using the insecurities of India and China to their advantage,” said Trigunayat. “However, they also realise the difference in the quality of aid, and that is where we have an advantage.”
India finds itself firmly in Sri Lanka’s development story, or at least in getting it out of its economic crisis. Rebuilding the oil tank farm in Trincomalee is one such deal. These storage tanks are of British vintage. The location of Trincomalee is strategically important for India. Also, the Adani group has clinched a deal to develop the west container terminal of Colombo port.
There is a certain stability in India’s relationship with Sri Lanka at present. Ties, however, remain works in progress—not too long ago, Colombo scrapped a deal with Japan and India for developing the east container terminal of Colombo port and gave it to China.