Discover more from Asia Sentinel
India Bests China in Sri Lanka Power Politics
In massive economic crisis, Delhi emerges as the big winner
By: Salman Rafi Sheikh
With Sri Lanka’s foreign reserves falling below US$1 billion in February-March 2022 and the island nation struggling to muster enough money – US dollars or Sri Lankan rupees – to pay for oil, India sees the crisis as an opportunity to expand its footprint, both by extending credit lines and by securing key investment projects. That is enough to pay for just 1.1 months of imports.
By increasing its economic – and geopolitical – influence, New Delhi seeks to counter the rising influence of China, which has beggared Colombo with massive debt for Belt and Road projects. Colombo, on the other hand, seeks to use New Delhi’s help to both avoid bankruptcy and a political nightmare. Since the end of the Sri Lankan civil war in 2009, the government has largely been a Rajapaksa family affair, with the presidency, premiership, and finance and defense ministries, among others, in their hands.
Numerous other members of the extended family have also been appointed to senior positions and have been accused of running the country into the ground through nepotism, authoritarianism, corruption, and bad governance.
On Friday 18 March, New Delhi agreed to extend a credit line of US$1 billion to help Colombo – which is on the verge of bankruptcy – buy essential commodities, including oil and medicine. New Delhi’s agreement came only after finance minister Basil Rajapaksa (above), younger brother of President Gotabaya Rajapaksa, earlier canceled his visits to India twice due to the Gotabaya regime’s failure to come up with a plan to recover the economy from crisis and repay India.
Sri Lanka still has no recovery plan, although Colombo is in talks with the IMF for a bailout package. Therefore, the crucial question is: what convinced New Delhi to extend the credit line?
As recent developments show, New Delhi extracted highly lucrative investment opportunities from Colombo to deepen its control of Sri Lanka to push back against Chinese influence. Recent reports indicated Sri Lanka is already looking for US$1.5 billion more from New Delhi, which means that India is overseeing a situation in which it can expand its influence on an unprecedented scale.
As evidence of Delhi’s clear “victory,” the cash-strapped Sri Lankan government has decided to allow India to develop three hybrid power projects on three islands off the coast of Jaffna, not far from India’s Tamil Nadu state. Most importantly, the decision involves replacing Chinese investment, cleared last year by the cabinet, for these projects.
In January 2021, the Chinese firm Sinosar-Etechwin was awarded the contract to build these projects. For Delhi, China’s presence was too close to India, Hence, the imperative of forcing China out and moving Indian investment in.
Apart from this, India’s Adani Group has also secured major investment. This agreement, rushed through only a day before Basil Rajapaksa visited India, involves the Trincomalee Power Company Ltd (TPCL) through which National Thermal Power Corporation NTPC) Ltd from India and the Ceylon Electricity Board (CEB) will develop a 100MW solar power plant at Sampur in Trincomalee.
The Adani Group also signed, in the presence of Finance Minister Rajapaksa and Power Minister Pavitra Wanniarachchi, another Memorandum of Understanding to develop a 500MW wind power project in Mannar, in Sri Lanka’s Northern Province.
For many in India, this is a golden opportunity to restrict what some Indian media reports called the ‘long arm of China’ in Sri Lanka. With an eye on cutting this arm short, India’s foreign affairs minister Jaishankar visited Sri Lanka on March 28 to build on India’s growing position and dent China’s. A number of agreements and MOUs were signed.
But it is not in terms of economic investment that India is building its influence. New Delhi is equally keen to push the majoritarian regime of Sri Lanka to change its policies vis-à-vis the Tamil North.
Many Sinhala Buddhists who dominate the ruling Sri Lanka Podujana Peramuna (SLPP) see India as an enemy state that for years helped the Tamil insurgency. Although India was keen to oppose the Liberation Tigers of Tamil Elam’s (LTTE) demand for an independent Tamil state – because it would have also meant India giving up its own state of Tamil Nadu – it was due largely to New Delhi’s soft intervention in 1986-87 that led to Sri Lanka doing the 13th constitutional amendment that created provincial councils.
Although these councils have remained ineffective, as no real powers were invested in them, in terms of addressing Tamil grievances New Delhi continues to push for fully implementing the 13th amendment to design Sri Lanka’s constitutional system – and settle its ethnic problem – in ways that resemble India’s own quasi-federal, and quasi-unitary set-up.
As such, New Delhi is putting pressure on the Gotabaya regime, otherwise known for its hard-line and ideological opposition to any demand or politics of devolution and power-sharing, to change its attitude towards the Tamil people. Accordingly, President Gotabaya met, for the first time since becoming the president in 2019, Tamil members of the Parliament led by the Tamil National Alliance (TNA).
As reports have shown, while there was no potential discussion around devolution for Sri Lanka’s Tamil-dominated north and east, Gotabaya did agree to release Tamil political prisoners and engage with the Tamil diaspora, which continues to mobilize for and fund the politics of a separate Tamil state.
Gotabaya also announced a development fund for the Tamil majority region and a statement from his office said that he had briefed the TNA on several issues including the release of suspects, the launch of a “truth-finding mechanism,” and “resolving of issues related to missing persons.”
According to a member of the opposition United National Party who wished to remain anonymous, this meeting has “New Delhi written all over it,” adding that Gotabaya Rajapaksa, who is himself accused of war crimes, will never “agree to develop such a commission.”
Thus, facing an acute economic crisis, the Rajapaksa regime appears to be conceding too much to New Delhi.
As it stands, Colombo is facing a serious dilemma. China is reluctant to offer any major leeway to Colombo. Colombo’s request for restructuring Sri Lanka’s debt is yet to be answered even after months have passed since the request was made to Beijing during Wang Yi’s last visit to Sri Lanka in early January.
While the IMF may ultimately offer a bailout package, it is only New Delhi, for now, that seems interested in helping – a help that nonetheless is underpinned by India’s long-term strategic interests. If Colombo doesn’t concede or agrees to accommodate New Delhi’s interests, bankruptcy will be certain, which would potentially spell the end of the Rajapaksa regime for now and, perhaps, of Rajapaksa politics forever.