Tuesday, Sep 27, 2022

How Aiding Sri Lanka In Crisis Can Help India Balance Power With China

Now is a good time to push back against China’s growing clout in India’s neighbourhood. New Delhi should be generous in providing financial help to Sri Lanka as it will send a clear signal to the rest of South Asia that New Delhi can be a reliable partner.

Sri Lankan students protesting during a curfew in Colombo demanding the government step down.
Sri Lankan students protesting during a curfew in Colombo demanding the government step down. AP

India’s neighbourhood is on a churn, whether it is the constitutional stand-off in Pakistan, the economic crisis in Sri Lanka, or Afghanistan’s continuing problems exacerbated by the Taliban going back on women’s rights and bringing in old Islamic norms. In India’s easter border Myanmar’s military junta has shown no signs of restoring democracy as the crackdown on civilians continue.

As an emerging power with ambitions of sitting on the high table of international diplomacy, New Delhi has the responsibility of managing issues in its periphery. When Hillary Clinton was secretary of state during Barak Obama’s first term in office, she said at a lecture that as a growing power, India had to shoulder more responsibility in South Asia. This could be during natural disasters like the tsunami of 2004,  health emergency like the Covid-19 pandemic or an economic meltdown as is happening at the moment in Sri Lanka.

During the early days of pandemic both India and China were pushing their vaccine diplomacy to gain friends in the region. India was first off the
mark and began shipping out vaccines to neighbours, including Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives. However, thanks to the deadly second
wave  that devastated India, vaccine exports had to be stopped. Countries like Bangladesh that had ordered huge quantities from the Pune-based Indian Serum Institute of India (SII) were stuck as the company was not allowed to ship out vaccines needed to inoculate Indian citizens. Finally, many of  India’s neighbours ended up using China’s  Sinopharm vaccine and later what they could obtain from the UN.

China’s rise to global power status also led to Beijing expanding its economic clout across South Asia. Nepal, Pakistan, Maldives, Afghanistan,
Bangladesh and Sri Lanka, all signed up to China’s Belt and Road Initiative, an ambitious infrastructure plan to connect Asia and Europe via the old silk route to Beijing. India refused but could do little to prevent others. Despite the loud noises from Washington, Brussels and New Delhi warning countries of the debt trap the BRI projects would entail, the lureof Chinese funding for much needed infrastructure project was hard to resist.  

As China became economically  and politically more powerful, it's influences in India’s neighbourhood grew with its stature and challenged New Delhi in its backyard. Besides Pakistan and Myanmar, China also steadily increased its presence in the  Maldives, Sri Lanka and  Nepal often replacing India.
New Delhi has pushed back and sometimes succeeded. The current government’s both in Male in Kathmandu are pro India, replacing pro-China
administrations. Yet there is simmering anti-India feelings in the two countries. An India out movement is continuing in the Maldives led by former president Abdullah Yameen. China and India are jostling for space and influence in the region. 

The economic crisis in Sri Lanka which has now grown into a political movement against President Gotabaya and his brothers, is a perfect
opportunity for India to play a positive role in this strategically located island nation in one of the world’s busiest sea routes. 

China is very much all over Sri Lanka. During Mahinda Rajapaksa’s second term in office, when India and the rest of the international community were up in arms against human rights abuse during the military campaign against the LTTE, President Mahinda Rajapaksa turned to China. Beijing grabbed major infrastructure projects worth billions of dollars like modernizing the Hambantota port, building the Colombo port city, and numerous smaller projects. Concern about Hambantota turning into a military base cannot be ruled out. China’s military submarines docked in Colombo harbour twice in 2014, setting alarm bells ringing in South Block. But much has changed since then. The Rajapaksa family has made up with India, and New Delhi responded with warmth. Today ties have improved significantly. Meanwhile, Sinhala public opinion went against China as the Hambantota port had to be given over on a 99-year-old lease as Colombo could not repay its debt in
time. Colombo has asked  Beijing to extend a loan of over two billion dollars and appealed for debt restructuring which comes up later in the year.

Colombo’s reserves are sorely depleted, thanks to the financial profligacy of successive governments and the pandemic that put an end for over two
years to its flourishing $5 billion dollar tourism industry. Thanks to the temporary halt of the use of chemical fertilisers announced by the government last year, the tea industry, another major revenue earner, could not earn the much-needed dollars. The result is that the island now has just two billion dollars in forex reserves and has to pay back around $7 billion this year. Of this 10 percent is to China, another 10 percent to Japan and two percent to India. Late into the crisis, Lanka has appealed to the IMF for help.   

This is the time for India to be generous to Sri Lanka. India has adequate foreign exchange reserves to do so and should be open handed in bailing out the island nation. New Delhi has stepped in and already given a credit line of one billion dollars earlier this month when Basil Rajapaksa was in Delhi earlier this month. The government has asked for another $1.5 billion from India. A Reuters report said that since January India has transferred roughly $2.4 billion to Colombo through currency swap, deferment of the loan payment, and credit lines. If needed New Delhi can afford to extend more money to Colombo and earn enormous goodwill from the people. This will stand New Delhi well as it attempts to regain lost strategic ground on the island. 

Sajith Premadasa, leader of the opposition in Sri Lanka’s Parliament has urged Indian Prime Minister Narendra Modi "Please try and help Sri Lanka to the maximum possible extent. This is our motherland, we need to save our motherland." Ironically Sajith’s father former President Ranasinghe Premadasa was no friend of New Delhi’s. He had always been against the IPKF deployment in Sri Lanka and joined hands with the LTTE and ordered Indian forces out of the island. All that is so much water under the bridge. Now is the opportunity for New Delhi to live up to its big power status and help a smaller neighbour.