{"id":5917,"date":"2023-07-31T10:05:20","date_gmt":"2023-07-31T10:05:20","guid":{"rendered":"https:\/\/markscogan.com\/?p=5917"},"modified":"2023-07-31T10:07:01","modified_gmt":"2023-07-31T10:07:01","slug":"indias-foreign-policy-progress-in-sri-lanka-is-a-strategic-setback-for-china","status":"publish","type":"post","link":"https:\/\/markscogan.com\/index.php\/2023\/07\/31\/indias-foreign-policy-progress-in-sri-lanka-is-a-strategic-setback-for-china\/","title":{"rendered":"India\u2019s Foreign Policy Progress in Sri Lanka is a Strategic Setback for China"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"924\" height=\"616\" src=\"https:\/\/i0.wp.com\/markscogan.com\/wp-content\/uploads\/2023\/07\/thediplomat_2023-07-31-011933.jpg?resize=924%2C616\" alt=\"\" class=\"wp-image-5920\"\/><figcaption class=\"wp-element-caption\">Indian Prime Minister Narendra Modi shakes hand with Sri Lankan President Ranil Wickremesinghe after making press statement respectively, in New Delhi, India, Friday, July 21, 2023. Photo Credit: Manish Swarup \/ AP.<\/figcaption><\/figure>\n\n\n\n<p class=\"has-drop-cap\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\"><strong>I<\/strong><\/mark>t was only a year ago that Sri Lanka dominated international headlines, as its\u00a0<a href=\"https:\/\/www.usip.org\/publications\/2022\/07\/five-things-know-about-sri-lankas-crisis\">worst economic crisis in more than 70 years<\/a> contributed to severe domestic strife, including\u00a0<a href=\"https:\/\/edition.cnn.com\/2022\/04\/01\/asia\/sri-lanka-state-of-emergency-protests-intl-hnk\/index.html\">deadly riots<\/a>, and severe shortages of fuel, food and\u00a0<a href=\"https:\/\/apnews.com\/article\/covid-health-asia-south-5217195484ef4c8d858d86bbfb79d35c\">critical medicine<\/a>. The crisis was created by a confluence of domestic policy blunders under the Rajapaksa clan, on whose watch Sri Lanka\u2019s burden of foreign debt had grown to nearly insurmountable levels, a significant proportion of it owed to Chinese creditors.<\/p>\n\n\n\n<p> Sri Lanka\u2019s economic troubles had been known for some time, but the Rajapaksas were unwilling to seek assistance from the International Monetary Fund (IMF). The source of the trouble came not only the inability to service debt due to limited foreign reserves, but economic mismanagement from legitimacy challenges that compelled the government to implement tax cuts to curry favor with the public. The result is that everything that could go&nbsp;<a href=\"https:\/\/www.atlanticcouncil.org\/blogs\/southasiasource\/the-crisis-in-sri-lanka\/\">wrong with the economy<\/a>&nbsp;has: Sri Lanka faces budget and current account deficits, hyperinflation, a devalued currency and massive sovereign debt.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-full\"><a href=\"https:\/\/thediplomat.com\/2023\/07\/indias-foreign-policy-progress-in-sri-lanka-is-a-strategic-setback-for-china\/?fbclid=IwAR2Mx10t7Ay5VEXXMLc2Ou85ni7Ea7QKUkCxe-KAEBz3cGY_WAlbs1f87EM\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"65\" src=\"https:\/\/i0.wp.com\/markscogan.com\/wp-content\/uploads\/2021\/09\/TheDiplomatlogo-e1630482037575.png?resize=300%2C65\" alt=\"\" class=\"wp-image-4989\"\/><\/a><figcaption class=\"wp-element-caption\">As featured in <strong><a href=\"https:\/\/thediplomat.com\/2023\/07\/indias-foreign-policy-progress-in-sri-lanka-is-a-strategic-setback-for-china\/?fbclid=IwAR2Mx10t7Ay5VEXXMLc2Ou85ni7Ea7QKUkCxe-KAEBz3cGY_WAlbs1f87EM\" target=\"_blank\" rel=\"noreferrer noopener\">The Diplomat<\/a><\/strong>.<\/figcaption><\/figure>\n<\/div>\n\n\n<p>For neighboring India, Sri Lanka\u2019s crisis prompted severe strategic anxiety. Over the past decade, Chinese influence on the island has increased, as after the long civil war drew to a close \u2013&nbsp;<a href=\"https:\/\/economictimes.indiatimes.com\/china-aided-sri-lanka-bloodbath\/articleshow\/4629473.cms\">in part due to China\u2019s weaponry<\/a>&nbsp;\u2013 Mahinda Rajapaksa began borrowing heavily to pay for the war. The relationship between New Delhi strained by an Indian peacekeeping mission in the late 1980s and a number of votes by India at the U.N. Human Rights Council after the war put pressure on Sri Lanka to be held accountable for its actions and to promote reconciliation with the island\u2019s Tamil minority population. China seized the opportunity to undermine India\u2019s sphere of influence over Sri Lanka, partially through satisfying Mahinda Rajapaksa\u2019s penchant for vanity and pet projects.<\/p>\n\n\n\n<p>A prime example of the Rajapaksa-era obsession with infrastructure projects was the 99-year lease of the&nbsp;<a href=\"https:\/\/www.hindustantimes.com\/business-news\/sri-lanka-wants-to-undo-deal-to-lease-port-to-china-for-99-years\/story-iH9W5T4vaGf6PSajTLUUyK.html\">strategically-located Hambantota Port<\/a>&nbsp;in 2017 to the Chinese state-owned China Merchants Port Holding Company for $1.1 billion. Sri Lanka secured loans from Chinese banks to develop the port in hopes of relieving some of the shipping burden on the country\u2019s main port in Colombo. Only the new port failed to generate the much-needed revenue. The Rajapaksa government eventually collapsed under the weight of its debt burden to both Beijing and another $25 billion in debt to private bondholders.<\/p>\n\n\n\n<p>With the country descending into economic turmoil, Indian policymakers feared that Colombo would find itself at the mercy of aggressive Chinese creditors. These fears were only underlined by the docking in August of a&nbsp;<a href=\"https:\/\/www.npr.org\/2022\/08\/19\/1118113095\/sri-lanka-china-ship-hambantota-port\">Chinese surveillance vessel<\/a>&nbsp;at the port Sri Lanka had added to China\u2019s \u201cstring of pearls\u201d a few years earlier. Beijing, it seemed, had successfully penetrated India\u2019s natural sphere of influence in Sri Lanka. But one year on, what looked like a strategic victory for Xi Jinping and his attempt to expand Chinese influence in the Indian Ocean ended up being a win for New Delhi.<\/p>\n\n\n\n<p>Timing was everything. Instead of worrying about problems it could not control on its own during a period of confusion and policy chaos, India chose to focus on what it could \u2013 the level of investment in Sri Lanka \u2013 and to demonstrate to a beleaguered government that it had always been a \u201cfriend\u201d and a&nbsp;<a href=\"https:\/\/www.ndtv.com\/india-news\/sri-lanka-economic-crisis-india-dependable-friend-reliable-partner-of-sri-lanka-s-jaishankar-3224802\">reliable development partner<\/a>, despite strains in the relationship while Mahinda Rajapaksa ruled the island. India has taken advantage of the view among the Sri Lankan public that China has been maneuvering for strategic advantage, evidenced by Beijing\u2019s unresponsiveness to&nbsp;<a href=\"https:\/\/asia.nikkei.com\/Spotlight\/Sri-Lanka-crisis\/Sri-Lanka-hopes-for-4bn-in-China-aid-soon-as-envoy-defends-ties\">Sri Lankan requests for support <\/a>during the crisis. Some have accused China of taking advantage of Sri Lanka\u2019s economic troubles by waiting for the right time to&nbsp;<a href=\"https:\/\/www.voanews.com\/a\/china-s-global-image-under-strain-as-sri-lanka-faces-debt-trap-\/6544106.html\">enter into more debt-to-equity swaps<\/a>, thereby controlling even more prime real estate.<\/p>\n\n\n\n<p>As further evidence of New Delhi\u2019s impeccable timing, in July 2022, just two weeks before Gotabaya Rajapaksa was forced to flee Sri Lanka, Foreign Secretary Vinay Kwatra&nbsp;<a href=\"https:\/\/www.tribuneindia.com\/news\/nation\/foreign-secretary-vinay-kwatra-makes-surprise-visit-to-sri-lanka-406346\">made a surprise visit to Colombo<\/a>&nbsp;for a series of meetings with government officials. While China\u2019s strategic position was a point of contention, India focused its energy on Sri Lanka\u2019s economy, which threatened to cause not just an economic catastrophe but&nbsp;<a href=\"https:\/\/www.ifrc.org\/press-release\/sri-lanka-brink-humanitarian-crisis\">a humanitarian crisis<\/a>. India backed up its visit with additional financial assistance, including discussions of expanding its&nbsp;<a href=\"https:\/\/www.reuters.com\/world\/asia-pacific\/sri-lanka-extends-credit-line-with-india-by-200mln-fuel-power-minister-2022-05-02\/\">credit facility<\/a>&nbsp;to procure essential food, fuel, and medicine.<\/p>\n\n\n\n<p>India\u2019s humanitarian and foreign policy decisions over the past year have transformed bilateral ties. India was quick early on to make a flurry of economic investments and pledges of rapid assistance. Between January and July of 2022, it disbursed $4 billion in aid, and deployed a&nbsp;<a href=\"https:\/\/www.ndtv.com\/india-news\/indian-naval-ship-gharial-delivers-760-kg-of-lifesaving-medicines-to-sri-lanka-amid-ongoing-economic-crisis-2932428\">warship that carried medicine<\/a>&nbsp;to support Sri Lanka\u2019s 20 million people.<\/p>\n\n\n\n<p>Economic support to Colombo this year has also been fast and furious. In March, India explored the possibility of&nbsp;<a href=\"https:\/\/economictimes.indiatimes.com\/news\/economy\/policy\/india-sri-lanka-mulling-over-using-indian-rupee-for-economic-transactions\/articleshow\/98427288.cms\">using the Indian rupee for economic transactions<\/a> that would help build a stronger trade relationship, and the countries\u2019 central banks have backed up the idea, suggesting that settlements in rupees would lower exchange rates and transaction costs, and make the provision of trade credits much easier. In May, India&nbsp;<a href=\"https:\/\/www.businesstoday.in\/latest\/world\/story\/sri-lanka-economic-crisis-indias-usd-1-billion-credit-line-extended-by-a-year-380599-2023-05-09\">extended its $1 billion credit line<\/a>&nbsp;for another year, which allows Sri Lanka the flexibility to pay for essential imports while its cash flow and currency reserves are limited. Through an official creditor committee that is co-chaired by India, composed of countries that have provided aid, including France and Japan, requests for debt treatment are being discussed and processed.<\/p>\n\n\n\n<p>Additionally, when Sri Lanka applied for relief from the IMF, India was the first country to send a&nbsp;<a href=\"https:\/\/www.livemint.com\/news\/india\/india-plays-constructive-role-in-supporting-sri-lanka-recovery-from-economic-crisis-11688885262274.html\">letter of support for debt restructuring<\/a>. Finally, Indian Prime Minister Narendra Modi and Sri Lankan President Ranil Wickremesinghe recently&nbsp;<a href=\"https:\/\/www.voanews.com\/a\/india-and-sri-lanka-to-strengthen-economic-partnership\/7190418.html\">signed a series of agreements<\/a>&nbsp;on energy, trade, and connectivity projects, including&nbsp;<a href=\"https:\/\/www.deccanchronicle.com\/nation\/current-affairs\/210723\/land-bridge-planned-between-india-and-sri-lanka.html\">the possibility of a \u201cland bridge\u201d<\/a>&nbsp;that would provide land access to Sri Lanka\u2019s critical Trincomalee and Colombo ports. A potential gas pipeline connecting southern India and northern Sri Lanka was also floated.<\/p>\n\n\n\n<p>India\u2019s economic diplomacy with Sri Lanka has put China on the back foot. While it too has made concessions in terms of debt restructuring and the delaying of interest payments to Chinese banks, some of those adjustments were&nbsp;<a href=\"https:\/\/www.reuters.com\/markets\/asia\/china-offers-sri-lanka-debt-moratorium-promises-deal-debt-treatment-letter-2023-03-08\/\">due to international pressure<\/a>&nbsp;from the United States and Japan. India\u2019s reputation and status in Sri Lanka have increased, while the flurry of economic arrangements has at a minimum, given India a public relations victory over its rival.<\/p>\n\n\n\n<p>As India wins greater confidence from Colombo by improving its standing as a reliable development partner, it will likely be able to secure longer-term strategic investments that further erode China\u2019s influence. As Modi&nbsp;<a href=\"https:\/\/www.aninews.in\/news\/world\/asia\/india-sri-lanka-security-interests-development-are-intertwined-pm-modi20230721132531\/\">noted after his meeting<\/a>&nbsp;with Wickremesinghe following their meeting earlier this month, security interests and development of the two countries are \u201cintertwined.\u201d The enhanced development relationship should later help alleviate India\u2019s lingering security concerns.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It was only a year ago that Sri Lanka dominated international headlines, as its\u00a0worst economic crisis in more than 70 years contributed to severe domestic strife, including\u00a0deadly riots, and severe shortages of fuel, food and\u00a0critical medicine. The crisis was created by a confluence of domestic policy blunders under the Rajapaksa clan, on whose watch Sri Lanka\u2019s burden of foreign debt had grown to nearly insurmountable levels, a significant proportion of it owed to Chinese creditors. Sri Lanka\u2019s economic troubles had been known for some time, but the Rajapaksas were unwilling to seek assistance from the International Monetary Fund (IMF).<\/p>\n","protected":false},"author":1,"featured_media":5920,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[88,69,331,332],"tags":[39,444,49,112,68,445,146],"class_list":["post-5917","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-china","category-india","category-south-asia","category-sri-lanka","tag-china","tag-imf","tag-india","tag-infrastructure","tag-security","tag-sphere-of-influence","tag-sri-lanka"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>India\u2019s Foreign Policy Progress in Sri Lanka is a Strategic Setback for China &#8211; Mark S. 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The crisis was created by a confluence of domestic policy blunders under the Rajapaksa clan, on whose watch Sri Lanka\u2019s burden of foreign debt had grown to nearly insurmountable levels, a significant proportion of it owed to Chinese creditors. Sri Lanka\u2019s economic troubles had been known for some time, but the Rajapaksas were unwilling to seek assistance from the International Monetary Fund (IMF).\" \/>\n<meta property=\"og:url\" content=\"https:\/\/markscogan.com\/index.php\/2023\/07\/31\/indias-foreign-policy-progress-in-sri-lanka-is-a-strategic-setback-for-china\/\" \/>\n<meta property=\"og:site_name\" content=\"Mark S. 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