P. K. Balachandran
India and the West may replace China as the dominant development partner
The Sri Lankan President, Ranil Wickremesinghe, will be in Japan from May 24 to 27 for talks with his Japanese counterpart Fumio Kishida and other Japanese leaders. The visit is expected to signal a key change in Sri Lanka’s foreign policy as it moves away from China and ties up with the Western powers and India to execute its developmental plans.
A statement from the Japanese foreign office says that Kishida and Wickremesinghe are to “exchange views on bilateral relations between Japan and Sri Lanka and regional and international affairs.” The statement also said that Japan expects President Wickremesinghe’s visit to “further deepen the friendly relations between Japan and Sri Lanka.”
This will be the second summit between Kishida and Wickremesinghe in less than a year. The first was held in September 2022 on the sidelines of the funeral of former Prime Minister Shinzo Abe.
The Wickremesinghe-Kishida talks this time round is expected to result in the announcement of some developmental projects including the US$ 2 billion Light Railway Transit (LRT) project for Colombo, which was abandoned by the Sri Lankan government led by Gotabaya Rajapaksa in 2020, a year after Japan had agreed to fund the project with a very soft loan with a long grace period.
Informed political sources said that the LRT project was stopped over the issue of commissions. Japan was hurt not only because of this, but also because the government did not take it into confidence before announcing cancellation.
The Gotabaya Rajapaksa administration led Japan up the garden path in regard to the construction of the East Container Terminal (ECT) in Colombo port in partnership with India. Under pressure from trade unions, that were allegedly in cahoots with a foreign power, the Gotabaya government reneged on the agreement citing its election manifesto. It declared that the ECT will be constructed by Sri Lankan organizations.
Coincidentally, a project to improve the Bandaranaike International Airport in Colombo at a cost of US$ 1 billion was abandoned in July 2021, this time by Japan. The BIA Development Project Phase II Stage 2, was suspended after the Japan International Corporation Agency (JICA) decided not to make further disbursement of funds citing the inability of the Sri Lanka Government to repay the loan. Sri Lanka had defaulted on its international debts in April 2021.
Seeing an opening, the China Harbor Engineering Company (CHEC), which had constructed the Colombo Port City, bid for the airport project on BOT basis and promised to complete it fast.
However, the economic and political situation in Sri Lankan was changing at that time and the CHEC’s had to be put in cold storage. That was an era when Sri Lanka was in the grip of the pandemic. It had defaulted on foreign loans. There were severe economic shortages. Political unrest was the order of the day.
Seeing an opportunity in this, India rushed in with a US$ 4.5 billion aid package with alacrity. And along with the Western powers, it helped Sri Lanka negotiate a bailout of US$ 2.9 billion with the IMF.
At this critical juncture, incredibly, China was found wanting. Piqued by Sri Lanka’s resort to the IMF at the instance of India and the West, China arrogantly advised Sri Lanka to exercise financial prudence and offered only a short term relief on debt repayment. It dragged its feet on coordinating with the Paris Club of lenders which was working on debt restructuring for Sri Lanka.
President Wickremesinghe, who is pro-West with a history of conflict with China on its investments in Sri Lanka, ignored China’s advice and went ahead with negotiations with the IMF with India’s help.
When Wickremesinghe was last in power as Prime Minister, in 2015, he had ordered the suspension of Chinese projects to investigate corruption charges. However, the investigations were abandoned and the projects were resumed after a gap of a year and a half.
Put off with Wickremesinghe for this and his supposed closeness to India, the Chinese supported anti-Wickremesinghe and anti-Indian politicians like Wimal Weerawansa, Vasudeva Nanayakkara, Sarath Weerasekara, and the Janatha Vimukthi Peramuna (JVP). When a controversial Chinese “research” vessel ‘Yuan Wang 6’ docked at Hambantota port in August 2022 against India’s objections, the leaders cite above welcomed the vessel at the port.
The Chinese are believed to be wishing for the exit of Wickremesinghe from power and the return of the Rajapaksas. But this wish is unlikely to be fulfilled in the foreseeable future because the Rajapaksa-led Sri Lanka Podujana Peramuna (SLPP), the single-largest party in the Lankan parliament, supports Wickremesinghe, enabling him to fulfill the IMF’s conditions.
Meanwhile, India’s influence over Wickremesinghe is increasing and China’s is decreasing. A front page report in ‘Daily Mirror’ of May 22 said that a number of Chinese proposals in a variety of fields are in the doldrums now and the reason cited is the demand for commissions by Sri Lankan officials.
But an informed source said that the real reason is that President Wickremesinghe has turned away from China-funded projects. China-funded projects are suspect in the eyes of Wickremesinghe’s overseas supports – India and the West. These not only have security concerns but also maintain that these projects, attractive though they may be, have landed Sri Lanka in deep debt and will continue to do so if the government continues to take loans from China.
Sources close to Wickremesinghe said that his aim is to get commercial investments and loans from the World Bank, ADB and other such reputed institutions which give sustainable solutions and are transparent in their terms and conditions in contrast to the “opaque” Chinese terms.
However, given Sri Lanka’s geostrategic location and China’s ambitions in the Indian Ocean, the Chinese will continue to enlarge and deepen their foothold in the island. They are particularly keen on challenging India’s desire to dominate the Northern and Eastern provinces on the grounds that these have a preponderance of Tamils.
Towards this end, China is cultivating various constituencies in the North and East, like fishermen, universities and schools. In the North, the Chinese have set up sea cucumber and shrimp farms with locals. But their bid to set up wind energy plants in three islands close to India failed as these were called off by the Lankan government following India’s expression of security concerns.
In the Eastern Province, India is concerned that China is eyeing the Trincomalee harbor which New Delhi believes is vital for its security and dominance over the Bay of Bengal. Earlier, India had succeeded in scuttling a Sri Lankan-Chinese project to have an air force aircraft repair facility at Trincomalee.
Recently, a proposal to link Eastern Province with Yunan Province in China, made by Anuradha Yahampath when she was Governor of the Province, was reportedly shot down by Wickremesinghe because it had raised the hackles in New Delhi.
Yahampath was recently replaced by a pro-Indian Tamil politician, Senthil Thondaman, as Governor. Thondaman is expected to vibe better with the Tamil politicians in the East besides cubing Chinese influence. Incidentally, Thondaman is aslo close to Mahinda Rajapaksa, the most important of the Rajapaksas.
While in the view of the Chinese, the Rajapaksas are innately pro-China and that it would be good to have them back in power, the Rajapaksas are shrewed enough to learn lessons from the past and not alienate India and the West whose help is necessary for the progress of Sri Lanka.
However, this is not to say that any of the above mentioned forces wants China to be eliminated in Sri Lanka. As the G7 resolved at its summit in Hiroshima recently, the plan of the West (and India too) is not to eliminate China or “de-couple” from it, but to “de-risk” it so that it is not a threat.
India and the West will be closely watching the activities of China in Sri Lanka and get the Sri Lankan government to take corrective action whenever China crosses security red lines.
Given Sri Lanka’s economic dependence on the West and India in terms of exports and imports as well as concessional trade agreements (GSP plus with the EU and FTA with India), Colombo is likely to fall in line with the expectations of India and the West.
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