India will have to think out of the box to take on China’s ‘war by other means’ in Sri Lanka

 India will have to keep up the momentum in dealing with Sri Lanka as already there are signs of China cleaning up its act.

R Hariharan January 22, 2021 14:07:49 IST

https://www.firstpost.com/world/india-will-have-to-think-out-of-the-box-to-take-on-chinas-war-by-other-means-in-sri-lanka-10310061.html

China’s foreign minister Wang Yi made a brief visit to Sri Lanka on 9 January, in the last leg of his trip to the Maldives and three other East African countries — Eritrea, Kenya, and Comoros. Obviously, the FM’s trip had not only a regional context but also an Indo-Pacific one. As members of the Belt and Road Initiative (BRI), these countries are groaning under debt servicing problems, particularly after the Covid-19 pandemic badly affected their economy.

This would explain the presence of Vice Minister of Commerce Qian Keming, Assistant FM Wu Jianghao and Vice Chairman of the China International Development Cooperation Agency (CIDCA) Zhang Maoyu in the FM’s team.

President Gotabaya Rajapaksa had a clear economic agenda when the Chinese FM met with him. He sought the FM’s assistance in attracting Chinese tourists to Sri Lanka under the bio-bubble concept. He also pointed out that it would be a great relief if attention could be paid to restructuring debt repayments as a solution to the economic crisis the country was facing. He also said that a concessional trade-credit scheme could be initiated for imports from China.

According to a Xinhua report when the FM met with PM Mahinda Rajapaksa, he emphasised that the friendly relationship between China and Sri Lanka benefits the development of both countries and serves the fundamental interest of both peoples. In a veiled reference to India, Wang Yi said: “It does not target any third party and should not be interfered with by any third party. Their talks covered a wide agenda including progressing the Sri Lanka-China free trade agreement (FTA).”

China’s concerns on “third party” security aspects were echoed by the Chinese Ambassador to Sri Lanka Qi Zhenhong, while speaking to a group of journalists after the FM’s visit. He said, “Defence progression and exchanges is a very important part in bilateral relations… I think we (China and Sri Lanka) should and could do more in this field.” He believed that “cooperation in this field, we not only serve the common interests of China and Sri Lanka on sovereignty, security, and stability, but also you will have this region to keep stability and prosperity”.

According to Ambassador Qi, Sri Lanka will receive an 800 million yuan (about $125 million) grant from CIDCA as part of agreements signed following the visit by China’s FM. Under another grant agreement signed, CIDCA is to fund the construction of 2,000 housing units for low-income people in the Colombo district. China has also signed an agreement with the Ministry of Health to provide kidney disease screening units on ambulances. An agreement to refurbish the BMICH conference hall gifted by China has also been signed.

It is interesting to note that Wang’s visit comes after China-Sri Lanka relations took a nosedive after Colombo suspended its contract for import of organic fertiliser from Beijing when samples were found to be substandard quality. China arm-twisted state-owned Peoples Bank to cough up $6.3 million, payment withheld for rejected shipment of fertiliser. China was not amused when Sri Lanka sought India’s urgent assistance to meet its organic fertiliser shortage.

China was also vexed when Sri Lanka suspended the contract offered to a Chinese firm to install hybrid renewable energy systems in three islands in Palk Bay, barely 50 km from the Tamil Nadu coast, in deference to India’s security sensitivity. Sri Lanka’s positive action has probably imbued greater confidence in the Rajapaksa government.

India has been agile in dealing with Sri Lanka to further its relations, particularly in this period. It stepped in real-time to meet Sri Lanka’s organic fertiliser needs after its spat with China over its supply. India has also fast-tracked the follow-up action after FM Basil Rajapaksa flew to New Delhi last month to seek New Delhi’s help to tide over the foreign exchange crisis. India cleared $1.9 billion assistance including a $400 million swap arrangement, $500 million credit line for other purchases, a few days after FM Wang ended his visit to Colombo.

India’s quick response also recognised Sri Lanka’s action to close the Trincomalee Tank Farm (TTF) issue by signing an agreement on the joint development of the facility. However, much would depend upon how earnestly the TTF agreement is implemented by both sides, considering the political rumblings already heard in Sri Lanka in the wake of the agreement.
India will have to keep up the momentum in dealing with Sri Lanka as already there are signs of China cleaning up its act.

Ambassador Qi has already taken the first step to woo the Tamil minority with the first-ever trip to Jaffna and Mannar. National Alliance leader MA Sumanthiran, MP, has come out strongly against Chinese entry into the North, reflecting the general anti-Chinese sentiments of Tamils. They have not forgotten China’s help to Sri Lanka to crushing the Eelam struggle in 2009.

However, the lure of the Chinese lucre is likely to win over some friends in business circles, particularly in the fishing trade. Tamil fishermen have for long been up against poaching by Tamil Nadu trawlers illegally operating in Sri Lankan waters. So far, India and Sri Lanka have failed to amicably resolve this issue for political reasons. This could offer China pressure points to act against India.

Ambassador Qi has also made a strong pitch for resuming the negotiations for an FTA with Sri Lanka, which was stalled after six rounds of talks. “We are open to discuss any concerns and China will be flexible so we can ensure early harvest for Sri Lanka” he said. The FTA will also help Sri Lanka to become a sub-distribution hub for Chinese firms to set up manufacturing operations and serve global markets. He cited the example of Cambodia, a low-income country, which had greatly benefited from its FTA with China.

India will have to reckon with the issue when Sri Lanka signs the FTA with China. Its fallouts will have to be factored in India’s trade with Sri Lanka, as well as on its own FTA with the island nation.

China will soon be sending a shipment of rice to Sri Lanka as a donation on the occasion of the 70th anniversary of the Ceylon-China Rubber-Rice Pact in 1952. This will be welcomed by the people as rice prices are ruling high in import-dependent Sri Lanka. Sri Lanka’s relations with China are founded on the goodwill generated by the Pact, which should not be underestimated.

President Xi Jinping addressing the 13th BRICS summit last year made a pithy remark: “A man of wisdom adapts to change, a man of knowledge acts by circumstances.” This holds the key to China’s gamesmanship in India’s neighbourhood, particularly in Sri Lanka. The year 2022 is going to be crucial when hopefully the Covid pandemic tapers off and the global economy picks up. India will have to think two steps ahead to take on China’s “war by other means” on many fronts in Sri Lanka.

This author is a former MI specialist on South Asia and terrorism, who has served as the head of intelligence with the Indian Peace Keeping Force in Sri Lanka 1987-90. Views expressed are personal.

Sri Lanka: Managing macroeconomic minefield in 2022

 Sri Lanka Perspectives December 2021| South Asia Security Trends January 2022| www.security-risk.com

The mood in Sri Lanka at the end of the year 2021 is not unlike the aftermath of the Boxing Day tsunami that struck the island nation 17 years ago, on December 26. The tsunami attributed to the 9.1 Richter earthquake in the Indian Ocean took a toll of over 35,000 lives including 4000+ missing persons and a million and half people were displaced from their homes.

International community swiftly rallied to provide relief to Sri Lanka. Though India’s own coastal areas had also faced the wrath of the tsunami, causing the death of over 10,000 lives, it was the first country to provide relief to Sri Lanka. According to Washington Post, “an Indian navy medical team arrived in Colombo within hours of the tsunami, and four ships docked at several ports across the country by the end of the following day…. a team of Indian divers, meanwhile arrived in Galle to begin raising sunken vessels that were preventing relief ships from entering the port; with help from the Sri Lankan Navy, the job was completed in eight days.” The report also said, “Over the last three weeks, India has deployed 14 ships, nearly 1000 military personnel and several dozen helicopters and airplanes to its devastated island neighbour…..Indian officials described the relief mission as the largest outside their borders since independence from Britain in 1947.”

At the end of 2021, Sri Lanka is facing devastating effects of another kind, which are no less than the aftermath of the 2004 tsunami. The explosive mix of the global COVID 19 pandemic has taken its toll, not only on Sri Lankan people, but on the national economy. The government coffers are empty and its mounting international debts threaten to prolong its agony during 2022.

However, unlike the aftermath of 2004 tsunami, nations are not rushing to the aid of Sri Lanka to speed up the process of its recovery. Sri Lanka seems to have lost much of the international goodwill it enjoyed in 2004; when the international community was prepared to underwrite the peace process with development aid. Of course, the changed international attitude can be attributed to the changes in the global and regional strategic scene. The entry of China, more powerful than ever, in the Indo-Pacific has resulted in the realignment of   big power footprints in the region. Sri Lanka finds itself in the eye of this dynamic scene after the formation of the Quadrilateral framework of four nations - India, USA, Japan and Australia. China’s increasing domination of the Indian Ocean region and its adverse impact on India-China relations is another issue of concern for South Asia.   

However, Sri Lanka’s internal political scene, has not changed much now; probably it is a little worse than in 2004. A bit of soul searching will probably show that political parties have frittered away a decade plus of peace after the end of the LTTE led Tamil separatist insurgency. It provided an opportunity to build a vision driven muti-ethnic nation. In 2021, we saw the ascent of the Sinhala Buddhist majoritarianism; it is now stridently calling the shots in governance. The rise of Buddhist chauvinism and militarism in tandem could turn the year 2022 turbulent, if course correction is not made by President Rajapaksa. There are rumblings of discontent at his style of governance within the ruling SLPP-SLFP political coalition. This could get worse in the coming months, if action is not taken to curb runaway food prices and shortages of fuel, power and other essentials.

In short, 2022 is going to be an eventful year for Sri Lanka. Much would depend upon how the government manages its macroeconomic issues. In this respect, the two-day visit of finance minister Basil Rajapaksa to New Delhi early in the month is interesting. He had two rounds of talks with his Indian counterpart Ms Nirmala Sitharaman and External Affairs minister S Jaishankar. He also met with the minister for petroleum Hardeep Puri and NSA Ajit Doval. He sought India’s extended lines of credit for a host of supplies – food, medicines, fuel etc - and Indian investment, which had been lagging.

But apparently, during the talks India had expressed its economic concerns over unresolved Indian investment issues like the Trinco Oil Tank Farm, as well as, security concerns over increasing Chinese footprint in Sri Lanka. Sri Lanka High Commissioner to India Milinda Moragoda, saw the talks as part of Colombo’s dialogue process with New Delhi. Speaking at an Indian virtual seminar, he said “Of course, given the nature of the power play in this region, Chinese presence can be looked at differently. In that context, I think our dialogue with India is what is important – to build trust and to understand each other. And may be, have some red lines which both sides will not cross.” He further added that India has not told us not to accept Chinese investment. “But as long as the investment does not create any strategic issue in India, we should be able to entertain that investment.”

Apparently, the talks nudged the energy ministry to speedily conclude the negotiations with India regarding the development of Trinco Oil Tank Farm. Energy minister Udaya Gammanpilla announcing the successful conclusion of negotiations said a total of 14 oil tanks at the Farm currently operated by the Lanka Indian Oil Company (LIOC) would be leased out them for another 50 years. He said 61 other tanks will be managed by the newly established Trinco Petroleum Terminals, a joint venture of the State-owned Ceylon Petroleum Corporation (CPC) and the LIOC. There is widespread expectation in Sri Lanka now that India would release a $500 million line of credit for import of petroleum products.  We can probably expect other help from India during the month, as Sri Lanka bridges the existing credibility gap with India. Finance Minister Basil Rajapaksa is scheduled to visit the Gujarat investment summit in the first week of January. Some Indian investment announcements can be expected to be timed with his visit.

The Central Bank of Sri Lanka (CBSL) has announced that the country’s official reserves as on December 21 has increased to $3.1 billion and “more inflows” were expected to be realised by January 2022. It expected it to remain at this level till the end of the year. The statement did not reveal the source of inflows. However, media reports quoting forex market sources said reserves had plunged to less than $1.5 billion by mid-December and the latest position given by the Bank was following the drawdown of Yuan 10 billion ($1.5 billion) swap arrangement with the Peoples Bank of China. However, CBSL has said its figure does not include the swap, though opposition MP and economist Dr Harsha de Silva has questioned CBSL reasoning and asked for details.

Amidst Sri Lanka efforts to energise its relations with India, it is interesting to note China taking baby steps to improve its image in Northern Province, where the Tamils generally consider China as pandering to the Sinhala majority. These measures come in the disastrous aftermath of Sri Lanka’s rejection of organic fertiliser of Chinese origin for substandard quality. Chinese ambassador to Colombo Qi Zhenhong made a three-day visit to Northern Province in mid-December. The photo ops of the ambassador's bare-bodied darshan at the Nallur Temple got wide coverage. He visited the Jaffna Public Library, which was rebuilt by India, after it was destroyed during ethnic conflict. Jaffna Mayor Viswalingam Manivannan took him round the library. The envoy donated five laptops and books in different languages to the library.

According to the Chinese embassy statement, he also met with Governor Jeevan Thiagarajah and discussed on how to enhance cooperation between China and Northern Province and improve the livelihoods of the Tamil community. The Governor invited more Chinese investment and assistance in aquaculture, fishing equipment, industries and IT etc in the Northern Province, which received positive response by the Chinese delegation. The Ambassador donated five sets of mobile water purification plants, one for each of the districts. He also visited along with fisheries minister Douglas Devananda the Chinese company running sea cucumber hatchery in Ariyalai. He was “impressed to learn that the Chinese company has created “thousands of jobs for local fishermen, brought millions of US $” and transferred technology to Sri Lanka.

The Farm has also been an important studying and practising base for government officials, local fishermen and students from University of Jaffna etc. The company also raised a request to the Ministry of Fisheries and other relevant Government authorities to expand the farming to attract more FDI. He also took a team of Sri Lankan and Chinese media persons on a tour of the Chinese owned New Silkroad Foodstuff factory in Mannar. The ambassador also donated to local fishermen food parcels, fishing gears and masks worth Rs 20 million.  

We can expect the Chinese to get into more and more active diplomacy mode in IOR in 2022. The Chinese foreign ministry  has announced that foreign minister Wang Yi will be visiting the Maldives and Sri Lanka in early January. It is significant he will be visiting Eritrea, Kenya and Comoros from January 4 to 7, before his visit to India's neighbours. 

[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