China takes the backseat as India occupies the foreground
Earlier this month, the visiting Indian Foreign Secretary, Vinay Kwatra, proclaimed that India-Sri Lanka ties are poised for a “positive transformation” and that President Ranil Wickremesinghe’s official visit to India from July 20 to 21 will be a “huge success”. Kwatra was not off the mark. Indeed, India-Sri Lanka relations rest on stronger grounds now than ever before.
The pillars of the relationship are both economic and geopolitical.
China, India’s challenger in Sri Lanka, is currently in the backseat having failed to rush to Sri Lanka’s aid when the latter’s economy was down in the dumps with a severe forex shortage leading to a complete inability to repay loans.
India, on the other hand, had promptly extended a credit line of US$ 4.5 billion and rushed food, fuel and medicines to enable the common man to survive the bankruptcy.
While the political and social elite of Sri Lanka looked at the gift horse in the mouth, as they have always done in the case of Indian aid, the man-in-the street did not hesitate to express gratefulness in the true Buddhist spirit. For the first time, India had won over the Lankan hoi polloi, a huge gain in political terms.
India had also taken the initiative to fetch an IMF bailout for Sri Lanka while China was dragging its feet. Beijing was peeved at Colombo’s bid to reach out to the IMF without first seeking Chinese help.
India followed up its initiative by becoming the first bilateral lender to give a financial guarantee as per the IMF’s requirements.
Feeling left out, China came in later to say it will also help. But precious little has come from China thus far.
This, however, does not mean that China is out of the game. Beijing still has a fund of support among the Sri Lankan political and bureaucratic elite because China has a better capacity to fund projects and that on favourable “political” terms compared to India or any other country.
India has some political demands vis-à-vis the Tamil minority, and the US has human rights demands, which Sri Lanka cannot meet easily. But China makes no such demands.
Given these advantages, China is waiting in the wings to enter the Sri Lankan arena at an opportune time, which is when Sri Lanka begins to develop its woefully inadequate infrastructure and Indian and Japanese aid needs to be supplemented.
This casts a heavy responsibility on India, because in the absence of any meaningful economic support from the US, it has to shoulder the burden of funding Sri Lanka’s development. However, India is keen on being the principal benefactor of Sri Lanka as it will give it an advantage over China.
It is in this context that the agreements signed during Wickremesinghe’s visit this week will be of importance.
India is keen on establishing an energy link with Sri Lanka and the development of power generation in the island using renewable energy sources. It is also keen on the development of the Trincomalee port and its hinterland including the further development of the oil tanks there.
India is also keen on improving connectivity with Sri Lanka exploiting its geographical and social proximity. Indians have always been the single largest tourist group in Sri Lanka. Flights connecting the island with India abound and are full.
Unlike in the 1980s, India’s efforts in Sri Lanka now have the full backing of the United States, its new-found strategic partner. Their joint geopolitical aim is to push China to the margins in Sri Lanka.
The US is not a significant player in Sri Lanka’s economy, but its blessings are needed to get the support of the IMF and other international development agencies. Sri Lanka definitely needs Western support to retaining the GSP Plus trade concessions from the European Union. Thanks to the Wickremesinghe government’s good relations with the US and the West, the EU Commission has recommended the continuation of the GSP Plus concessions for another four years. This is a great relief because garment exports, a principal forex earner and employer, heavily depend on the trade concessions.
There is however a pitfall lurking in the path head – the security demands from India and the US.
India has clearly indicated that it will be the “security provider” in the region and has portrayed itself and demonstrated that it is also the “first responder” in any emergency. New Delhi is wary about any moves by Beijing that smacks of military ambitions. India has been suspicious about the visits of Chinese submarines and research vessels that could gather dual use data.
India is also wary about Chinese moves to get a foothold in the Tamil-speaking Northern and Eastern provinces in Sri Lanka, areas that have strategic importance for it.
China’s efforts to set up power plants in the islands off the Northern peninsula were thwarted by India. To secure its hold over the Eastern provinces, where Trincomalee is located, it got the pro-Chinese Governor Anuradha Yahampath replaced by Senthil Thondaman, a pro-India Tamil politician of Indian origin. Thondaman is actively seeking investments from Tamil Nadu.
While Sri Lanka may view the strategic demands from India as unavoidable and legitimate (it is frequently and publicly acknowledged by Sri Lankan leaders) it is wary about US demands.
Sri Lanka fears that if the US’s strategic demands are met, they would amount to showing the red rag to the Chinese bull. Sri Lanka dreads the prospect of becoming a theatre of an US-China armed conflict, like Ukraine.
It is believed that the US is aiming at signing the Status of Forces Agreement (SOFA) with Sri Lanka. SOFA envisages the following concessions to the US by Sri Lanka.
According to Sunday Times, a draft presented in August 2019 contained the following:
American security forces and civilian personnel of the US Department of Defence (DoD), as well as US contractors and their non-Sri Lankan employees “who may be temporarily present in Sri Lanka in connection with ship visits, training, exercises, humanitarian activities, and other activities” will have “privileges, exemptions, and immunities” equivalent to those accorded to administrative and technical staff of a diplomatic mission.
They would be “authorized to wear uniforms while performing official duties and to carry arms while on duty.” US identification would be sufficient for their entry into and exit from Sri Lanka; that is, they would not need a Sri Lankan visa to enter the country.
US vessels, vehicles, and aircraft would be allowed to “exit and move freely within the territory of Sri Lanka” and be “free from boarding and inspection” by Sri Lankan security personnel. The United States also wanted exemption from licenses, customs duties, taxes, and other charges within Sri Lanka.
This proposal was rejected because it was a political hot potato. If the US tries to push it now as part of its Indo-Pacific strategy it will be rejected again for the same reason. Wickremesinghe plans to stand for the Presidency in the elections due next year and may not want to alienate the nationalistic Sinhala majority.
Though India may not oppose the American bid for SOFA openly, it will not pressurize Colombo to accept it being cognizant of its political compulsions. Thus, India will be able to maintain its strategic pre-eminence in Sri Lanka.