Colombo sends financial SOS to Delhi, but India wants Lanka to first walk the talk on China

 

Sri Lanka seeks urgent help from India as its net foreign exchange reserves plunge to an all-time low of $1.2 billion, barely enough to pay for a month’s imports.

R Hariharan  December 18, 2021 14:48:30 IST

https://www.firstpost.com/india/colombo-sends-financial-sos-to-delhi-but-india-wants-lanka-to-first-walk-the-talk-on-china-10220561.html?fbclid=IwAR1YJNk4u9NI8zPztc6yu8dtkdCdLL5PuATENpf8vPdLOTj9LFuMcjKcl-c 

Even as Sri Lankan Parliament was debating the annual budget presented by Finance Minister Basil Rajapaksa, he flew off to New Delhi, for a two-day visit on 1 December, to seek urgent help from India to ward off an impending economic collapse of the country. This drew a sarcastic comment from former Prime Minister Ranil Wickremesinghe. Speaking in Parliament he said, “We have had past Presidents, who have also served as finance ministers parallelly, but they have always attended the Budget debates. We have never seen finance ministers leaving the country while crucial public finance matters are discussed. Our finance minister went to India and came back. We don’t know if he went to beg from India as well.”

But Basil Rajapaksa had no other option but to seek urgent help from India as Sri Lanka’s net foreign exchange reserves have plunged to an all-time low of $1.2 billion, barely enough to pay for a month’s imports. The unprecedented shortage of essentials from oil to rice to cereals and medicines was making people restive. The Sri Lankan minister probably came with a lot of expectations, because India in the past had met such requests from Sri Lanka to meet not only critical requirements of food grains, medicines and petroleum resources, but also to assist in debt servicing.

In contrast to China, which of late has gone public to express its displeasure on some of the actions of Sri Lanka, India under Prime Minister Narendra Modi has never publicly aired its misgivings, even when the Rajapaksas had disregarded India’s sensitivities on critical issues affecting its interests. Instead, India chose to convey it through diplomatic channels.

The visiting Sri Lankan minister had two rounds of talks with his Indian counterpart, Nirmala Sitharaman, and External Affairs Minister S Jaishankar. He also met with the minister for petroleum and natural gas Hardeep Puri and the NSA Ajit Doval. But curiously, though Sri Lanka media had said he would be meeting Prime Minister Narendra Modi, such a meeting never took place. A charitable view of it could be, the Indian PM’s schedule loaded with international and domestic political engagements could not accommodate the meeting.

According to the SLHC press release on the visit, the two sides discussed “four pillars for short- and medium-term cooperation”. However, in reality the “four pillars of cooperation” are “four streams of resuscitation” for Sri Lanka state. The four pillars are a mix of four packages for India’s financial support and investment. Urgent supply of food and health security ‘package’ on an extended line of credit takes priority perhaps to ward off food riots and the fall out of the COVID-19 pandemic. Energy security package for import of fuel from India on an extended line of credit comes next, as the country's petroleum stocks are drying up. Perhaps, to make it attractive to India, it has been tagged with the dusting up of a long forgotten Indian offer for modernisation of Trincomalee tank far. Facilitating Indian investments in different sectors in Sri Lanka figures the last. 

The SHC statement further added, “It was agreed that modalities to realise these objectives would be finalised early, within a mutually agreed timeline. Minister Rajapaksa and ministers Sitharaman and Jaishankar agreed to open direct lines of communication and to be in direct and regular contact with each other in order to coordinate the above initiative.”

Shorn of such frills, Basil’s ‘Mission New Delhi’ could be described as “work in progress”. In military terms familiar to the veteran President Rajapaksa, the mission status would be described as SNAFU — “situation normal, all fouled up”. This is evident from the finance minister’s humble speech in parliament on his return from India.

In normal circumstances, the Rajapaksa government would have sought China’s help as in the past; it already owes China around $5 billion. But, of late, China has become a no-go area, after Sri Lanka reneged on organic fertiliser import deal worth over $48 million with China, when fertiliser samples were found to be contaminated with harmful pathogens. Now the disputed deal is facing arbitration proceedings in Singapore and Colombo. To add insult to injury, Sri Lanka imported liquid nitrogen fertiliser from India to tide over the shortages. The relations between the two countries appear to have worsened further after Sri Lanka appeared to be having second thoughts over developing hybrid energy systems in three northern islands of Sri Lanka by Sino Solar Hybrid Technology. The Chinese embassy in Colombo has tweeted that the projects have been suspended due to third-party intervention, presumably referring to India. India had expressed its concern at Chinese involvement in this project in locations barely 43 km from its coastline.

India can bail out Sri Lanka as in the past with currency swaps and exports of essential goods including petroleum. Even in the midst of the pandemic, India’s forex reserves have gone up from $ 478 billion last year to $577 billion this year, through some smart fiscal management.

So, India has the money, but does it have the inclination to come to the aid of Sri Lanka, particularly after Rajapaksas in power have repeatedly shown to favour China? Does India’s lack of readiness to immediately respond to Sri Lanka’s request show it is tired of being taken for granted by the island neighbour?

These are legitimate questions in the Indian mind, if we look at the past. Prime Minister Ranil Wickremesinghe signed a memorandum of understanding (MoU) with India during his visit to New Delhi in April 2017. Its focus was mainly on promoting time-bound projects in energy, infrastructure connectivity and port development structures with Indian assistance and investment in Colombo and Trincomalee areas as well as road segments mostly in Northern Province. The projects included a liquid natural gas (LNG) fired 500 MW power plant, an LNG terminal/floating storage re-gasification unit in Kerawalpitya, 50 MW solar power plant in Sampur, joint development of upper tank farm in Trincomalee, port, petroleum refinery and other industries in Trincomalee, and development of Mannar-Jaffna, Mannar-Trincomalee and Dambulla-Trincomalee expressways with Indian investment, among others.

India’s offer has been ignored in most of these projects, when they came up for consideration. Projects under this MoU, have now been offered piecemeal to others. Through this MoU, India hoped to team up with Japan to substantially contribute to the development of industries and infrastructure links in the North and East, which would have speeded up the regions to integrate with the rest of Sri Lanka. 

The COVID-19 pandemic has almost killed tourism industry, the country's main foreign exchange earner. Chances of its revival look bleak with the appearance of Omicron mutant in the scene. Remittances from Sri Lankans working overseas have dwindled. When President Gotabaya Rajapaksa assumed office two years back, he inherited an economy already mauled by mismanagement by successive governments. Implementation of his own lofty ideas on food self-sufficiency through organic farming and clean energy, suited for normal times, has crippled agriculture production and tea industry adding to economic woes. Under these circumstances, China's lack of interest in further investing in Sri Lanka is understandable. It has happened in Pakistan also.

PM Mahinda Rajapaksa has decided “Prosperous Motherland that Overcomes Challenges” as the theme for the 74th Independence Day celebrations on 4 February 2022. To make it a reality, India’s helping hand is a must. To gain that Sri Lanka must perhaps show a little more sincerity and walk the extra mile.

The press release on Basil’s visit did not contain any reference to India’s political and national security concerns, which had figured during the visit of almost all Indian dignitaries to the island, from PM Narendra Modi to ministers of external affairs and defence chiefs. These include fulfilling the promises President Mahinda Rajapaksa made during the Eelam war to implement in full 13th Amendment of the constitution, as a part of achieving ethnic amity.

Seventeenth century Dutch philosopher Spinoza’s rather cynical statement “big fish eat small fish with as much right as they have power” comes to mind when Sri Lanka finds itself in the middle of a big power contest in the Indian Ocean, now part of the Indo-Pacific strategic domain. This is more so after India and China are flexing their muscles, after their relations went south in 2020. It would be prudent for Sri Lanka to bear this in mind when dealing with China. Under President Xi Jinping, China is more likely to expand its domain in Sri Lanka in the coming year. India is here, closer geographically, as part of the family of South Asian nations, more accessible in contrast to China. But India is showing signs it cannot be taken for granted, one can only hope Sri Lanka notices it.

The writer is a retired MI specialist on South Asia and terrorism and insurgency. He was the head of intelligence of the Indian Peace Keeping Force in Sri Lanka from 1987 to 1990. The views expressed are personal.

Gotabaya’s third-year in office heading for turbulence

Col R Hariharan

Sri Lanka Perspectives November 2021| South Asia Security Trends December 2021 | www.security-risk.com

 

President Gotabaya Rajapaksa completed two years in office on Nov 17. The 72-year old veteran of Sri Lanka army was elected with an overwhelming majority by Sinhala voters, with the hope he would use his “terminator” magic to “achieve new heights as a nation” as brother and former president Mahinda Rajapaksa puts it. His election manifesto - “Vistas of Prosperity and Splendour” (VPS) has been adopted as a national policy framework after he assumed office. It has ten key policies, with an elaborate and detailed action plan, not designed for the nation yet to recover from the unhealed wounds of three decades of continuing ethnic confrontation. In fact, the VPS prioritises only Buddhism of the Sinhala ethnic kind.

Unlike his Chinese counterpart Xi Ping’s Chinese Dream, Vista's vision was over ambitious for a presidential term of five years. Some of its modest goals are probably achievable, if people were inspired to make sacrifices. However, the President’s style, depending upon military-bureaucratic regimentation, rather than leveraging political strength, can hardly inspire people already suffering from trust deficit in politics.

Moreover, he had inherited a degraded government, empty coffers and the national economy groaning under a decade of mounting debt burden. The COVID-19 global pandemic, mutating every day, provided convenient excuses, but aberrations of governance make economic recovery more complex. Under this emerging scenario, President Rajapaksa rule is probably heading for a turbulent third-year in office.  

The takeaways from his actions so far, shorn of political rhetoric surrounding them, expose the soft underbelly of governance. Its features seem to be: firming up the Rajapaksas' grip on the nation, pampering Buddhist clergy and the Sinhala majority and neutralising the influence of political satraps on the government through the use of military men (including veterans) and ViyathaMaga loyalists.

The country’s participatory democracy, never fully allowed to bloom, has been reduced to “partial democracy.” It is in danger of deteriorating into autocracy, supported by the military and Rajapaksa loyalists. So when President Rajapaksa talks of a new constitution (indicated in the VPS framework), political parties of all hues including minority parties fear formalisation of his style of governance.

The President’s talk of being beholden to Sinhala majority support and reverting to unitary form of government under the new constitution stoke minority fears of further marginalisation from the national mainstream. 

The President has constituted a committee of experts, not a committee of elected members of parliament, to prepare the draft constitution. Earlier, the Sirisena government went through the same charade of drafting a new constitution. It was still born because of trust deficit between various ethnicities. Under the present dispensation, even the small gains made by earlier governments to gain the confidence of the Tamil minority through  influential diaspora bodies like the Global Tamil Forum (GTF), have been snuffed out after they have been banned again.  After the LTTE was wiped out, its overseas elements lost control over diaspora Tamil bodies like GTF. The ban has come at the wrong time, when the government needs to use diaspora Tamils to find a working equation with the aggrieved Tamil minority within a united Sri Lanka. The present government’s ban of even moderate diaspora groups, has given a lease of life to LTTE’s overseas elements, still “democratically” fighting for the cause of independent Eelam. Their calls for international action are likely to get more shrill. 

In October, the President appointed the hard-line Buddhist monk Galagoda Aththe Gnasara to head a 13-member task force to prepare a draft law for implementing the “One Country, One Law” as promised during the election. It is to replace the present laws based on different ethnic cultural traditions, that have existed from colonial times. The monk gained notoriety by leading the anti-Muslim hate campaign of Bodhu Bala Sena, Buddhist fringe group in 2013. His legal experience is limited to being found guilty and sentenced to imprisonment for criminally intimidating a witness in court in 2016. Of course, he was conveniently pardoned by President Sirisena just before he laid down office in 2019. His perspective on Sri Lanka is summed up by a statement attributed to him: “This is a government created by Sinhala Buddhists and it must remain Sinhala Buddhist. Democratic and pluralistic values are killing the Sinhala race.” The composition of the Task Force was in keeping with the sentiment. Originally, it had four Muslim members but ther was no representative from Tamil minority.  However, after representations were made by various parties, three Tamil members were added. But the damage to its credibility has been done.

It is in this environment the exercise of drafting a new constitution is being undertaken. As the Colombo daily The Island editorialised “One can only hope that the Constitution which is said to be on the anvil will not be an exercise to compass the political ends of those in power, especially the ruling family, which has a deep batting line up, as it were."

However, President Gotabaya in his third year in office is likely to be confronted with more mundane existential issues, than about gaining brownie points for the VPS agenda. These include finding money to import oil and other essential daily needs like rice, pulses and vegetables, ways to service foreign debt after Sri Lankan rupee has been further discounted and credit rating is sliding dangerously. On national security, house cleaning is urgently required to ensure accountability in the wake of Easter Sunday jihadi bombings, lest rogue elements within the system getaway with it. In the emerging disturbing strategic scenario in the Indo-Pacific, Sri Lanka can expect more overt and covert arm twisting from China, as demonstrated by what followed the Chinese organic fertilizer import fiasco. So it may have to take a relook at its long term relationship building with China. Internally, the President  may be required to seriously look at his political support base as the feud between the Sri Lanka Podujana Peramuna (SLPP) and Sri Lanka Freedom Party (SLFP) seems to be gathering momentum.

[Col R Hariharan, a retired MI specialist on South Asia and terrorism, served as the head of intelligence of the Indian Peace Keeping Force in Sri Lanka 1987-90. He is associated with the Chennai Centre for China Studies. Email: haridirect@gmail.com  Website: https://col.hariharan.info]    

 

 

 

Grim Realities of India-Sri Lanka-China Triangle

 Syed Ali Mujtaba | Clarion India | November 29, 2021

https://clarionindia.net/grim-realities-of-india-sri-lanka-china-triangle/

‘The world is witnessing the cold war 2.0, where China has emerged as a major challenger to the US supremacy,’ observed Col R. Hariharan, and retired Military Intelligence Officer who was with Indian Peace Keeping Force (IPKF) from 1997 – 1990 in Sri Lanka.

Speaking at the Center for Peace and Economic prosperity in South Asia topic; “India- Sri Lanka – China triangle,” Col R. Hariharan said; ‘China wants to revive its old glory when it dominated the world but lost its numero uno position to the West due to the lack of naval capabilities.’

‘Now China is all set to acquire blue water navy status and can freely operate across the oceans and my like to dominate the Indian and Pacific oceans, catapulting to becoming a real superpower.’

The South Asian expert said all the coastal countries in the South Asian region are all under Chinese influence due to its loan policy and deep involvement in infrastructure development projects. This policy has led the coastal countries to become debt-ridden and due to nonpayment of the loan, they are vulnerable to becoming Chinese protectorates.

Talking about the Chinese threat to India emanating from Sri Lanka, Col Hariharan said, ‘Sri Lanka holds a very strategic position in the Indian Ocean region as it is close to the international sea lane that passes into the Indo -Pacific region.’

‘Sri Lanka plays a pivotal role for India to control the strategic choke points in the Indian Ocean region. If Sri Lanka falls into the Chinese sphere of influence, it can have easy access to the Indian and Pacific Ocean region that may have a huge impact on India’s security,’ Col Hariharan, said.

Talking about China’s involvement in Sri Lanka, the soldier scholar said the year 2004 was the beginning of the Beginning’s dalliance with the island nation. This was when India refused to give military aid to both, Sri Lankan government and the rebels, fighting the protected ethnic war. That’s when China supplied arms to the Sri Lankan government that turned the table in its favor and LTTE got defeated in 2009.  After that China started making forays into Sri Lanka and a bohemian relationship developed between the two much to the disadvantage of India.

After that China has become the biggest investor in Sri Lanka. It has built expressways, ports, power projects many of such infrastructural needs that it got on lease for 99 years. This created a debt trap problem for Sri Lanka, which owes USD 1.3 billion to China. The growing debt problem of Sir Lank would certainly impact Indian security because would bring it under the Chinese sphere of influence.

Talking about the development of the Colombo port by China, Col Hariharan said, “The Chinese ambition is to control Colombo port to displace India. Colombo port is one of the busiest ports and 70 percent of India’s container shipment takes place from this port. India is heavily dependent on Colombo port for the transshipment of its international containers to India. China is developing three out of five container terminals of Colombo port and only one is being developed by India’s Adani group. Further, the Chinese development of the Colombo port city has huge security implications for India. This may change the dynamics of the India -Sri Lanka relationship, the IPKF veteran said.

Col Hariharan said China’s growing involvement in Sir Lanka will have its main impact felt on South India, particularly Tamil Nadu. India has to be on guard towards the growing influence of China over Sri Lanka because its Southern region is quite vulnerable at the sea.  India has to strengthen its naval security in South India and augment its Southern ports to become less dependent on the Colombo port.   Some efforts made in this direction include India – Sri Lanka and Maldives navy agreeing for joint patrolling of their SEZ but that’s not enough to protect the sea borders and more needs to be done because there are grim realities in India – Sri Lanka – China triangle.