In Sri Lanka Perspectives
January 2025, Col Hariharan reflects on AKD's China visit and portends of
balancing with India
South Asia Security Trends, February
2025 | https://www.security-risks.com
In Brief
President Anura Kumar
Dissanayake started the new year with some tight rope walking both externally
and internally. It did not matter that he was following up what was
contemplated earlier by his predecessors. His maiden state visit to China
hogged the media space as a slew of formal agreements were signed during the
visit. These included an agreement with Sinopec to build a $3.7 bn oil refinery
in Hambantota and the Bank of China (BoC) and the Central Bank of Sri Lanka
(CBSL) renewing the currency swap agreement for RMB 10 bn (equal to about $1.7
bn) for three years. These agreements will help China to strengthen its
presence in Sri Lanka, particularly in the energy sector. That can make Sri
Lanka's strategic balancing act with India and the US, a little more difficult.
Sri Lanka’s export earnings
touched a record high figure of $16.1 bn in 2024. This has stoked AKD’s
ambitions to set the export revenue target of $36 bn by 2030. Similarly, the
government has raised the renewable energy target from the current 70 percent
by 2030 to 100 percent.
President Dissanayake repeated
his promise to abolish pensions for parliamentarians. Already a committee
headed by a retired Supreme Court judge has submitted its report on perks and
privileges enjoyed by politicians. It probably includes recommendations on the
high cost of running mansions provided to former presidents. These moves caused
a flutter among opposition politicians. Former president Mahinda Rajapaksa is
already furious with the downgrading of his security detail. And the talk of
huge amounts spent by the State on maintaining former presidents is making him
livid. To add to his agony, the government had booked his two sons on criminal
charges. Yoshitha Rajapaksa was arrested on a money laundering charge hanging
fire from 2019. Namal, the national organiser of Sri Lanka Podujana Peramuna
(SLPP), is facing charges of criminal misappropriation of LKR 70 million
related to the Krrish Tower project. People are keenly awaiting follow up
action on these cases; in the past even after filing charges, the cases never
came up before the courts.
The month ended on a sour note
on relations with India, when a Sri Lanka Navy sailor opened fire injuring two
Indian fishermen poaching off the coast of Valvettithurai in Jaffna peninsula’s
northern coast. It served as a strong reminder to both Sri Lanka and India of
the unresolved issue of Tamil Nadu fishermen continuing to poach in Sri Lankan
waters, regardless of government injunctions on both sides.
Comparing AKD’s visits to
China and India
President Dissanayake visited
China from 14-17 January 2025. The joint statement issued after his meeting
with President Xi Jinping is interesting when compared with the joint statement
issued after President Dissanayake’s visit to New Delhi in December 2024. Prime
Minister Narendra Modi had “affirmed India’s continued commitment to support
Sri Lanka in its economic stabilization efforts for its economic recovery and
economic growth.” PM Modi further assured President Dissanayake that India's
approach would be investment-based and grant-oriented to reduce the debt burden
on Sri Lanka and to assist them in generating economic opportunities that are
long-term and sustainable and will eventually contribute to growing the
absolute size of the Sri Lankan economy. (Emphasis added).
In contrast, the joint
statement issued in Beijing gives a glimpse of how China views its relationship
with smaller countries like Sri Lanka. China focused on "mutual trust,
support, respect, win-win cooperation, and common development" while reiterating
"its commitment to an independent foreign policy of peace." It
expressed its “firm support for Sri Lanka in safeguarding its independence,
sovereignty, and territorial integrity.” Sri Lanka, while reaffirming this,
reiterated "its commitment to an independent, non-aligned foreign
policy." Sri Lanka expressed "its commitment to the one-China
principle, recognizing the People's Republic of China as the sole legal
government representing the whole of China, and Taiwan is an inalienable part
of China's territory" along with strong opposition to "Taiwan
independence." Sri Lanka pledged not to allow anti-China or separatist
activities on its territory.
For the first time, Sri Lanka
“reassured its support to China regarding its policies with Xizang (Tibet) and
Xinjiang.” The explicit emphasis on Tibet and Xinjiang for the first time shows
China’s anxiety in seeking reassurance from a Buddhist country like Sri Lanka.
Some of the other agreements of interest signed during the visit are discussed
below.
Energy security and Hambantota
Oil Refinery
During AKD’s visit an
agreement was signed with Sinopec Group for establishing a state-of-the art oil
refinery at Hambantota. The refinery estimated to cost $ 3.7 billion, will have
a capacity of 200,000 barrels daily, mainly for export. It also reflected the
significance of Hambantota as a strategic economic hub for China. Opting for a
high-cost oil refinery project might appear contrary to Sri Lanka’s goal of
achieving energy self-sufficiency through renewable energy sources by 2030.
However, it gives Sri Lanka the option to diversify its energy sources,
reducing its dependence on imported refined petroleum products. It can also
stimulate economic growth in the region and create jobs. Most importantly, the
large-scale Chinese investment project strengthens Sri Lanka’s strategic
partnership with China with potential for more investments in allied
industries.
As against this, India’s
approach towards Sri Lanka’s energy security is more holistic. The emphasis is
on the need for reliable, affordable and timely energy resources to meet the
basic needs of the people. The Indian and Sri Lankan leaders had agreed to take
steps towards the implementation of the solar power project in Sampur, continue
discussion on supply of LNG from India to Sri Lanka, establishing a
high-capacity power grid connecting India and Sri Lanka. Both countries also
agreed to cooperate with the UAE to implement a multi-product pipeline from
India to Sri Lanka to supply affordable energy. They had also agreed to jointly
develop offshore wind power potential in Palk Straits, paying attention to
environmental protection. Both the leaders had agreed to continue with the
development of Trincomalee tank farms and develop Trincomalee as a regional
energy and industrial hub.
Financial and Technical
Assistance
China granted Sri Lanka RMB
500 million for Economic and Technical Cooperation. They also agreed to create
an Investment and Economic Cooperation Working Group to enhance bilateral trade
and encourage investments. The CBSL and the PBoC renewed their Bilateral
Currency Swap Agreement in December 2024. This agreement, originally signed in
2021, allows for a currency swap facility of RMB10 billion (approximately USD
1.4 billion). The renewed agreement extends the facility for another three
years. The financial cooperation agreement aims to enhance economic stability
and support trade between the two countries.
As against this, India ‘s
Reserve Bank of India (RBI) and CBSL entered into a bilateral currency swap
agreement on July 24, 2020. This was part of the SAARC Currency Swap Framework
2019-23. Under this agreement CBSL can draw up to $400 million in multiple
tranches to meet short term forex requirements. The CBSL and RBI are also
discussing securing an additional $1 billion under a special swap agreement.
Chinese language and cultural
exchange
Apart from promoting teaching
the Chinese language in Sri Lanka, it is proposed to develop the China-Sri
Lanka Joint Centre for Education and Research “to strengthen scientific and
technological exchanges.” The two sides will also cooperate in areas including
"youth, think tanks, sports, and the media, build upon the bond of
Buddhist exchanges and sister-city exchanges." There is also reference to
jointly promote tourism flows, with China encouraging Sri Lankan cities to
participate in the International Tourism Alliance of Silk Road Cities (ITASRC).
Since 2024, China has been promoting ITASRC to further BRI interests.
BRI and Maritime cooperation
Greater commitment for
integrated development of infrastructure projects – Colombo Port City and
Hambantota Port – which are expected to draw more investments and offer
economic opportunities. China also wants Sri Lanka’s participation in the BRI
Green Development Coalition in view of climate change. They have agreed to
collaborate in disaster prevention, mitigation and emergency management and
rescue. They are to negotiate a MoU on Ocean Cooperation towards a Blue
Partnership for sustainable use of ocean resources. This will mean more Chinese
“research ships” visiting Sri Lanka’s neighbourhood.
Security
China and Sri Lanka in their
joint statement recognised “judicial, law enforcement and security cooperation
as an important component of bilateral cooperation, and stand ready to jointly
crack down on cross-border crimes such as telecom fraud and online gambling.
China is ready to do its best to support capacity building in Sri Lanka's
judicial, law enforcement and security areas and provide assistance with police
supplies.” This is interesting as it may lead to the establishment of Chinese
police stations in Sri Lanka. According to a Brookings report “between 2016 and
2022, four local Chinese public security bureaus established 102 overseas
police service stations in 53 countries across North and South America, Europe,
Africa, and Asia.
India’s security cooperation
with Sri Lanka is on a different level. The New Delhi joint statement says the
two countries “reaffirmed their commitment to work together in countering
traditional and non-traditional threats as well as to ensure a free, open, safe
and secure Indian Ocean Region. India being Sri Lanka’s closest maritime
neighbour, President Disanayaka reiterated Sri Lanka’s stated position of not
permitting its territory to be used in any manner inimical to the security of
India as well as towards regional stability.”
The two countries agreed to
explore the possibility of concluding a framework Agreement on Defence
Cooperation. India had also agreed to extend assistance in providing defence
platforms and assets to augment Sri Lanka’s defence capabilities with tailor made
training programmes.
Enterprise support
China has agreed to continue
supporting Sri Lankan tea, gems, and other enterprises. This programme “would
propel exports of Sri Lankan goods.” The leader’s discussion “included various
ways to push forward digital transformation, green development, and logistics
to offer Sri Lanka an opportunity to introduce modernized activities within
industries. During President AKD’s New Delhi visit, he expressed Sri Lanka’s
interest in exploring the establishment of people-centric digitization as in
India to improve governance, service delivery and social welfare. Accordingly,
India agreed to help in expediting implementation of Sri Lanka's Unique Digital
Identity (SLUDI) project and assist Sri Lanka to roll out Digital Public
Infrastructure (DPI). India had also agreed to promote digital financial
transactions by extending the use of UPI digital payments to benefit both
countries.
Tailpiece: Illegal arms threat
73 T-56 firearms are reported
missing from the armoury of an army camp in Polonnaruwa. Authorities have
recovered 36 of them and the rest are still unaccounted for. According to the
Geneva-based Small Arms Survey estimates, there are around 1.9 million illegal
small arms in Sri Lanka, with the total number of small arms in the country
potentially reaching 2.3 million, significantly higher than official figures of
registered firearms which are much lower. This is one issue in which President
AKD’s urgent attention is required amidst his official preoccupations.
[Col
R Hariharan VSM, 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]
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