Sri Lanka: Increasing Footprints of China By Maj Gen AK Chaturvedi, (Retd)

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Introduction

The concept of traditional relations in today’s world of real politics is passe. Relationships are now defined by national interests, and they are dynamic in nature. The same is true in the case of Indo- Sri Lanka Relations, which appear to have lost their sheen in case both countries try to find comfort in the historical relations in the globalized world of today. Therefore,  it is important that the relationship is redefined in the light of the geopolitical and geo-economic realities of today. An attempt will be made in this paper to analyze the current state of the relationship of the two neighbours with a view to recommending tweaking that has become necessary based on security, economic interdependence and geographical contiguity.

Map-1: Sri Lanka Source: https://www.worldatlas.com/maps/sri-lanka

Geography of Sri Lanka

Sri Lanka is an island country located to the south of the Indian Peninsula in the Indian Ocean and has an area of 65,610 sq. km. Sri Lanka is located in the Indian Ocean, to the South West of Bay of Bengal and to the South East of the Arabian Sea. It is separated from the peninsular Indian subcontinent by the Gulf of Mannar and the Palk Strait. Sri Lanka shares its maritime borders with India and Maldives. Off the North Western coast of Sri Lanka a chain of limestone shoals, known as Adam’s Bridge, separates the Gulf of Mannar from the Palk Strait, and runs along the water to the South Eastern coast of India . At one point it was completely passable, but Adam’s Bridge broke apart in the late 15thCentury when a cyclone hit the region. Today, the bridge is 30 km long, and ranges from 1 – 10m deep in some areas.

Strategic Importance of Sri Lanka

TheIndian Ocean due to its peculiar geography  has lent itself to be  a matter of great interest to extra-regional powers in the Indian Ocean Region (IOR) historically, as it helps them to dominate the trade movement from West (particularly oil and gas) to East.  Starting from the Portuguese in 16th century, various powers over a period of time have got access and control of various “chokepoint” in the region and as such, have been able to maintain its dominance in the IOR.In recent times China with her trade interests in keeping the shipping lanes free from interference has started attempting to find ways and means to make inroads into IOR. These attempts are resulting into impacting the existing geopolitical balance in the IOR.  In the midst of this strategic competition among the extra regional powers and a littoral power like India,  an island nation like Sri Lanka is increasingly becoming of crucial importance for all the players in the IOR, as it can play a significant role in the geopolitics of the region because of its location. Sri Lanka occupies a strategic position in the Indo-Pacific Region (IPR). Its southern tip straddles some of the most critical sea lanes in the world over which most of the trade and almost all of the energy transits to nations east of the Malacca Straits viz China, Japan, South Korea, Singapore and many others. It is therefore critical for all these nations to ensure that the safety and security of these sea lanes and the ships transiting through them is not jeopardised. China is heavily dependent on oil from the Arabian Gulf – 80% of its oil imports are sourced from there and transit through the ‘Strait of Malacca’, one of the most strategically important geopolitical chokepoints in the world. Prior to entering the Malacca Strait , this traffic passes through the Traffic Separation Scheme off Dondra Head which is located only about 10 nautical miles south of Hambantota. Control of this port is therefore a strategic asset for China in mitigating the vulnerability of its trade and energy in what is referred to as its ‘Malacca Dilemma’. A strong PLA Navy (PLAN)presence in this region will not only secure its own trade but will also enable it to disrupt, delay or destroy the trade and energy flows to its adversaries.

In addition, Sri Lanka’s geographic location gives her access to regional markets, which adds valueto it for safe guarding the economic interests of these extra regional powers. No wonder the region is a hotbed for power projection of great powers.With the rising importance of Indo-Pacific there are numerous powers like US, China, India, and Japan, who are interested in Sri Lanka. Colombo has become an important epicentre of great power politics in the Indian Ocean Region. Rising influence of China on the Island Nation is becoming a matter of concern, not only for India but for other bigger geopolitical powers like US.

Two countries in India’s backyard, Sri Lanka and Maldives, have relatively greater geostrategic importance in the IOR compared to other neighbours, as a result they have long been on the Chinese strategic RADAR. Sri Lanka, owing to its proximity to India and population size, figures prominently in the minds of policy makers in New Delhi and is kept on the top of India’s RADAR due to China’s increasing interests in the island  nation and the implications for the wider IOR. The strategic location of Sri Lanka is such that it has always attracted the attention of various great powers, previously the United Kingdom (UK) but more recently the United States (USA). Sri Lanka despite being a smaller state in the IOR has developed significant relevance for China, who now too seems determined to act as the island’s main economic and security guarantor.

For China, Sri Lanka is a crucial part of its Belt and Road initiative (BRI) and also it’s Maritime Silk Road Initiative (MSR). USA has imposed sanctions against 24 Chinese firms that are involved in building artificial islands in the South China Sea. It will have an ,adverse impact on all the BRI projects and infrastructure development projects of China including the Hambantota port of Sri Lanka. Hence China sponsored development in Sri Lanka is bound to get deeply influenced by the great power contest. With the current Sino-Indian conflict in the Himalayas, speculations are being made whether the Indian Ocean can become another theatre of the conflict between the two regional powers. Numerous ports built by China in the Indian Ocean under its ‘String of Pearls’ strategy  are a major concern for India, though these countries where China is extending help do not consider it a matter of concern.In fact Sri Lanka like any other South Asian Country uses the ‘China Card’  for drawing concessions from India. The recent statement by Sri Lanka’s Foreign Secretary Jayanath Colombage, where he says that Colombo will follow a neutral foreign policy but with ‘India First’ approach is reassuring. The official line of the Sri Lankan govt is, as reiterated by their foreign minister is,“We will not, we cannot be, we should not be a strategic security concern to India. Period!We have to understand the importance of India in the region and we have to understand that Sri Lanka is very much in the maritime and air security umbrellas of India. We need to benefit from that.”However, same Colombage told a webinar, organised by the Asia Confluence, a Shillong-based think-tank, that India too needed to understand that Sri Lanka will not undermine the nation’s strategic security. Probably experience of Sri Lanka in getting forced to give Hambantota port on 99 years’ lease due to having got trapped in the  debt trap of China has made them little apprehensive.In his recent statement, Sri Lankan Foreign Secretary had termed Hambantota deal as a mistake. One of the casualty of such new thinking has been the East Container Terminal (ECT) at the Colombo port. This project was allocated to a India- Japan collaboration. Because of internal objections it has now been cancelled.

Chinese Advantage– When US and other western powers came down heavily on Sri Lanka for the human rights violation issues and blocked the funding for her developmental projects from the international financial institutions, China came out to fund the projects. However, as her wont, funding was through loans. Here it needs to be appreciated that India does not have the kind of financial muscle which China has. This gives China a clear advantage.   Another aspect which merits consideration is that most of the financial support from China which was pledged to Sri Lanka, was during the tenure of Mahinda Rajapaksa as the President and his successor did nothing to reverse the situation. Now again Rajapaksa brothers are in the power and status quo ante has been restored. The majority of Chinese projects on the island have become white elephants immediately after their completion. The Mattala Rajapaksa International Airport (MRIA) and the Hambantota port are clear cut examples of this. Though the feasibility studies conducted by the government and international agencies completely dismissed the projects in terms of economic viability, however China funded these projects, exploiting the vested interests of the Rajapaksa family in favour of them. The financial liability which these China-funded white elephant projects has created, once again tightened the noose around the neck of Sri Lanka, which has already been struggling with the debt. This huge national debt of the island, which no government in power at Colombo could ignore, will give a lasting grip to Beijing over Sri Lanka. The leanings of the Rajapaksa family towards China is also a reflectionon the Tamil-Sinhalese polarization which exists in the ‘Island Nation’ for decades. India, due to her internal dynamics is considered soft on Tamil aspirations and as such Sinhala majority has certain inherent cynicism about India. Therefore,   accession to power by the Rajapaksa family again in the 2019 presidential elections is a worrisome factor for New Delhi.

Indian Concerns– From an Indian perspective, the growing number of arms acquisition deals and cooperation between China and Sri Lanka is a cause for concern for India. Such concerns became a reality in 2014 when Sri Lanka allowed two Chinese submarines and a warship to dock at its port in Colombo. This rang alarm bells — while China’s counterpiracy contingents have been a regular presence in the IOR for over a decade, sightings of Chinese submarines in the region were until recently a relatively uncommon phenomenon. Although India did not protest aggressively, this was seen as a major breach of trust between India and Colombo.The frequency of Chinese visits along with an unconfirmed report that China could be building aircraft maintenance facility in Trincomalee is certainly a matter of concern for India. This, read in conjunction with China’s attempt to buy two islands off Karachi from Pakistan, activation of Hainan Base in South China Sea and Kyaukpyu base in Rakhine province of Myanmar  have  led to a greater jockeying to strengthen respective positions in the Indian Ocean between India and China.  The prospect of Chinese arms being used against India is yet another factor, that tests India’s relationship not only with Sri Lanka but also with China in the Indian Ocean. A permanent PLAN presence in the Indian Ocean does not auger well for India’s maritime security interests in East Indian Ocean. The emerging threat  has been flagged by successive Chiefs of the Indian Navy. Leasing Hambantota and the Port City project makes it almost certain that the PLAN will soon have a presence in these waters which may include the basing of ships and submarines as well as a staging post for sustaining a longer deployment in the Indian Ocean. A PLAN presence in the Eastern Indian Ocean will certainly inhibit the Indian Navy’s deployment options and will neutralise the geographical advantage it enjoys in these waters. China has been expanding its footprint in the Indian Ocean and has been regularly deploying research vessels (spy ships) to gather intelligence and hydrographic data. Availability of a base would enable a more sustained presence.Perhaps of even greater concern for the Indian Navy is that Hambantota and Colombo are less than 300 miles from the Indian mainland, about 400 miles from Chennai and are less than an hour’s flying time away. So India will have to adapt to the presence of its principal adversary practically in its backyard and shape its preparedness and response accordingly.

India Sri Lanka  cooperation in Military domain– India -Sri Lanka cooperation is also increasing in the military domain. “SLINEX” is a series of naval exercises between the two navies. First conducted in 2005, these exercises help the two navies understand each other’s procedures. Scope of the exercise is increasing every year, with Air Force joining since 2018. “DOSTI” is another exercise, started in 1991 between India and Maldives, which has been expanded to include Sri Lanka since 2012. It is a trilateral Coast Guard exercise.Aim of this exercise is to enhance interoperability. Third Biennial exercise is Ex Milan conducted by Indian Navy at Port Blair in which a number of South Asia and South East Asian countries participate. Exercise is meant to organise professional exercises,  seminars, social events and sporting fixtures between participating nations. The Indian Ocean Naval Symposium (IONS) is a series of biennial meetings between the littoral states  of the IOR. It provides a forum to increase maritime security co-operation, discuss regional maritime issues, and promote friendly relationships among the member states.India has also successfully imparted training to the Sri Lankan military across the three branches of the armed forces for years. Although there has occasionally been opposition to such ties from India’s Tamil Nadu, yet Sri Lanka has asserted that it is committed to training its defence personnel in India and prioritized India over sending officers to other countries. Between 2011 and 2013, almost 1,700 Sri Lankan officers have been trained in India, and around 80 percent of Sri Lankan naval officers have received training in India.In 2012, an agreement between the Indian and Sri Lankan Prime Ministers led to the inauguration of the Annual Defence Dialogue between the two countries. This dialogue is attended by high ranking officials, evaluates a range of defence cooperation initiatives, including maritime security, to further bilateral defence ties.Thus, through these various confidence-building measures, the Indian military currently  has with Sri Lanka. However, India needs to remain cognizant of growing defence ties, particularly due to sales of military equipment between Sri Lanka and China. Further, in case the Sri Lankan Navy’s Southern Command base gets shifted to the Chinese-run Hambantota port, it will add another dimension to their defence cooperation.

With India, Sri Lanka’s relationship during the post-colonial era goes well beyond economic relations. India has been extremely influential in Sri Lanka’s domestic politics. For instance, India played a key role in introducing the 13th Amendment to the constitution of Sri Lanka, which brought power devolution to the country to provide a solution to Sri Lanka’s ethnic conflict.  However, the concerns about power devolution to the Tamil minority remain unaddressed and India has been consistently pushing Sri Lanka for full implementation of the 13th Amendment. Most recently, the same concern was raised by India’s External Affairs Minister Dr S Jaishankar during his visit to Sri Lanka from 05-07 Jan 2021. Before this Indian PM had a virtual meeting last year with the President and the PM of Sri Lanka.Indian NSA also visited Sri Lanka Last year (more about it later in the paper).

Sri Lankan Concerns over Quad- One of the concerns of Sri Lanka as enunciated by their Permanent Secretary in the Ministry of Foreign Affairs, is over the four-nation Quad, involving Australia, Japan, India and the US.  Sri Lanka apprehends that Quad will give rise to a new cold war Their fear is based on the increasing militarisation of IPR. The leadership in Sri Lanka feels that the objectives of the Quad will be in conflict with the objectives  of the BRI of China which will have an implication for Sri Lanka, who was hoping that with the support of both India and China, Sri Lanka will grow into a major naval and maritime hub with attended benefit of a boost to her economy. Sri Lanka considers herself as a ‘Non-Aligned’ country and does not want to get caught in the power game of bigger powers. The reaction of Sri Lanka  flags the need of India to be more sensitive to the aspirations of the smaller neighbours and a need to take them into confidence before taking any such decision.

The Rise of Economic Relations With China 

China’s relationship with Sri Lanka has been vastly different,  in part due to China’s greater distance from the island. While China has been an ally of Sri Lanka in the post-independence period, its involvement in Sri Lanka’s domestic affairs has been minimal. The growth of the China-Sri Lanka relationship is a recent phenomenon and one largely anchored on economic and financial ties. However, in recent years, military and political relations between the two countries have also grown.

Upon upgrading to a middle-income country, Sri Lanka has been heavily exposed to severe and recurrent Balance of Payment (BOP) crises. This compelled successive governments to seek solutions to escape from economic troubles, which resulted in stronger economic ties with China – and an increased reliance on China in Sri Lanka’s development process.

It is vital to investigate the avenues through which bilateral economic relations have developed and the underlying reasons. While much discussion of the growing China-Sri Lanka relationship has focused on the increased reliance on Chinese loans, which is often depicted as Sri Lanka falling into a Chinese debt trap, growing bilateral economic relations go far beyond debt. The blossoming China-Sri Lanka economic relationship,  is taking place through three main avenues: debt, investment, and trade. In terms of public debt, China over the last decade and a half has been the second-largest foreign lender for Sri Lanka. Several large infrastructure development projects, including the Colombo-Katunayake expressway, which connects the main commercial city and the major airport; Hambantota port; and the second international airport of the country, MRIA were all funded by Chinese loans. The CHEC in 1998 had constructed the MRIA and the Hambantota Port. The cost of construction of  MRIA  and the of the cost of $200 million , $180 million was funded by China. China funded the airport on a high-interest rate loan, and the Sri Lankan government suffered a huge loss. Sri Lanka suffered heavy losses which prompted the then Govt of the Sri Lanka  to enter  into a negotiation with India in 2018 to jointly operate the airport. However, after the election of Mahinda Rajapaksa, things changed. Rajapaksa was not in favour of India jointly operating the airport, and ended the negotiation with India. Likewise, for the Hambantota Port, the Exim Bank of China majorly funded its construction. When Sri Lanka failed to meet the loan repayment conditions, which were quite stringent, it entered into a 99-year lease with China Merchants Port Holdings Company Limited to operate the port. The present commercial activities at both these projects are far below expectations, and they may not see a big improvement soon. These two projects indicate two things: the Sri Lankan economy is not robust enough to utilise these mega projects properly by itself. Secondly, with such huge financial involvements, China is now the most important ally of Sri Lanka. This relationship will only strengthen with the Colombo Port City project (More about it later). Thus, as of now, China commercially controls Sri Lanka.

This of course has been a much-discussed phenomenon, used to strengthen claims of debt-trap diplomacy.By the end of 2019, China owned a little over 10 percent of Sri Lanka’s outstanding foreign debt stock. While most of these debts consist of loans obtained for large-scale infrastructure development projects, recently obtained Chinese loans were for budgetary and Balance of Payment (BOP) support. On top of that, in early 2021, the Sri Lankan government obtained a 10 billion renminbi (RMB) currency swap facility from China to tackle the ongoing foreign currency shortage (A lost opportunity for India to earn Sri Lanka’s Goodwill?). These indicate Sri Lanka’s changing relationship to Chinese loans and increasing reliance on loan instruments such as Foreign Currency Term Financing Facilities (FTFF) of $ 2 billion in last three years and swaps to save the country from a severe BOP crisis, or even from defaulting on its debt. Similarly Chinese investments(China has been largest investor during 2010-20. As against 27.4% FDI of China along with Hongkong, India has contributed just 10.4%.) have also played a crucial role in Sri Lanka’s economic development. During the period; 2005-2017, China has invested about $ 15 billion in China.  Incidentally most of the investment are state led and not the private equity. Also almost all investments are with a view to bolster wider national security interests.  Also these are with the strategic interests. These investments include two controversial projects: the Colombo Port City Project and the investment in Hambantota Port. On 19 May 2021, the Sri Lankan Parliament approved the ‘Colombo Port City Economic Commission Bill ‘by a majority vote (148-59). The govt claims that It is going to be a source of investment ($15 Billion) and is likely to generate about 200,000 jobs and as such,  will provide a boost to the country’s economy. The port city project has been questioned by the opposition which considers it to be a threat to Sri Lanka’s sovereignty and they allege that it will become a Chinese colony in Sri Lanka. The govt refuted the Opposition’s allegations that it had compromised the country’s sovereignty. It will be  built at a cost of $1.4 Bn on 269 hectares of reclaimed land off the Port of Colombo, it will include a Special Economic Zone (SEZ) where it will be free to do business in any currency. The SEZ will be administered by a Special Commission which will be exempt from certain legal and constitutional oversight (Thus fears of opposition are not unfounded, as writ of Sri Lankan Govt will not run in this colony. The control will be  to the extent that the authority running would  even regulate the movement of people and since any currency will be allowed to be used, the Yuan will be a certainty).The Colombo City Project so close to India and with rules being such that the authority running it will have full rights on it, is definitely a matter of great concern for India.As far as trade is concerned China in last two years has become top import partner of Sri Lanka replacing India. During the year imports from China reduced by 8% as against Indian Imports, which despite FTA have gone down by 19%.

India’s Economic Role in Sri Lanka

Let us examine Indo- Sri Lankan economic relations on the same three parameters; debt, investment and trade.

Author consolidation based on data from the External Resource Department of Sri Lanka (ERD)

India has never been a major lender to Sri Lanka, nor they lend to Sri Lanka in a capacity similar to China. Unlike China, India runs on a trade deficit above $100 billion and runs into foreign exchange issues from time to time. This means India’s lending capacity is limited and their lending support will largely be based on export credits.

Author consolidation based on data from the External Resource Department of Sri Lanka (ERD).

However, until this year, Sri Lanka had been relying on India to manage its foreign exchange problems by obtaining currency swaps. Early this year, though, India refused to extend the term of its currency swap agreement with Sri Lanka, quoting concerns about Sri Lanka’s economic climate. New Delhi said it was unwilling to extend the swap facility unless Sri Lanka entered into an IMF programme.

To many, cancellation of East Container Terminal (ECT) of Colombo port to the Indian business conglomerate Adani group appears to be a retaliation by Sri Lanka. This is a be a concern for India for threemore reasons. First; 85 percent of the Colombo International Container Terminal (CICT), which is the largest terminal of Colombo port, is controlled by the China Merchant Port Company (which by equity holding is essentially a Chinese Govt’s company) , which operates as a joint venture with Sri Lanka Port Authority (SLPA). This deal was also inked under the previous Rajapaksa government, a few years back. Second, Hambantota port was leased to China for 99 years and the deal went ahead despite the controversies surrounding it. Against such a backdrop, India inevitably feels that they are being undermined or ignored in the light of the growing presence of China.Third reason is that the location of  ECT is very close to  Colombo Port City, which is being managed by a Chinese company and as such, probably China may have influenced the decision.However, to ally Indian apprehensions Sri Lanka’s Cabinet cleared the West Container Terminal (WCT) of the Colombo port to be developed  as a 35 year joint venture with India’s Adani Group and its local partner, John Keells Holdings PLC, as well as with an investment from Japan.

As explained, earlier, Indian investments are quite low as compared to Chinese investments. As against Chinese strategic investments, only major strategic investment India has made is the Lanka Indian Oil Company, a subsidiary of state-owned Indian Oil Company, which controls approximately 15 percent of the auto fuel supply in Sri Lanka. This investment was facilitated in 2003. Since then there have been very little strategic FDI coming into Sri Lanka from India.

Trade has been the strongest part of the economic relationship between India and Sri Lanka. Historically, India has been Sri Lanka’s largest source of imports,  but China has gone ahead of India. Incidentally India has Free Trade Agreement (FTA) with Sri Lanka since 1998. However, to further expand it into an Economic and Technology Cooperation Agreement have not been successful because of the opposition from the nationalist groups and professionals, as well as a regime which was leaning towards China from 2005-2015 and now again from 2019 onwards. While there are issues regarding the Indo-Sri Lanka FTA, including concerns on non-tariff barriers imposed by India, more than 70 percent of Sri Lanka’s export to India are routed through the FTA, utilizing the tariff-free access. India on the other hand takes little advantage of the FTA benefits. As per existing data, only 10-20 percent of Indian exports are routed through the FTA to Sri Lanka. What is interesting to note is that China has overtaken India as the largest exporter to Sri Lanka without having an FTA with Sri Lanka, and thus without any tariff-free access.

 

Data from Sri Lanka Customs

China becoming the largest importer to Sri Lanka, including the major supplier of raw material to Sri Lanka’s textile industry.  The recent decision of credit swap by China (without going into its merit, ethics and her future design) probably convinced Sri Lanka that China is her all weather friend. However, it is noteworthy that Sri Lanka’s exports to China in 2020 was only 2.3 % of total export as against export to India which was 6.1% of the total export. This can be interpreted that Sri Lanka uses FTA with India to improve her export but does not reciprocate to India under the same FTA.

Risks versus rewards: Rising Debt and influence

China’s influence however comes at a cost for Sri Lanka. The increased Chinese footprints started becoming clearer since 2007 when China started military and diplomatic support to Sri Lanka in her Civil war. A decade later,  Sri Lanka’s debt was standing at 77.6% of the country’s GDP and budget deficit at 5.5 percent of the country’s GDP. Debt crisis led to more loans from China and by 2020 the debt liability rose to $ 4.8 billion.  In 2017, when Sri Lanka could no longer afford the debt repayments Beijing simply took over Hambantota on a 99 year’s lease and writing off a debt of $ 1 billion. China often terms BRI Projects as modern day Marshall Plan. However there is a difference. While Marshall Plan used grants, China lent loans. Thus while US earned loyalties of supported nations, China coerces affected nations to behave the way she wants them to behave.

A Reality Check

The country is struggling to meet its foreign debt repayments schedule due to insufficient foreign currency inflows. The reason for the poor inflow is the current COVID-19 Pandemic which has impacted the tourism which is the main source of foreign currency inflow. On the other hand foreign debt liability not only does not reduce but is getting bigger due to increase in the interest component. Taken together Sri Lanka is unlikely to be able address itsproblems of shortage of foreign currency and other vulnerabilities on account of external factors. As such, she will need support from an external partner and who that partner will be China, India, US or any other western power. On the face of it China appears to be having best chances because Western powers voted against Sri Lanka In UN Human Rights Council Vote on 23 Mar. Although India abstained after a telephonic conversation between President Gotabaya Rajapaksa and PM Narendra Modi, but since China voted in favour of Sri Lanka, Sri Lanka is likely to go for China.It may help him to get from some immediate relief but will it be a  relief in true sense will remain a million dollar question!

Security Dynamics

China’s PLA Navy’s increasing movements be it in the name of anti-piracy operations or goodwill visits  in the IOR have added a new dimension to the security dynamic of the region. After acquiring adequate economic muscle it is natural for China to venture into the IOR with objectives which can be summed up as; firstly;  conduct of non-combat activities focused on protecting Chinese investments, trade and enhancing China’s soft power influence; secondly; undertake counterterrorism/ counter piracy  activities, unilaterally or with partners, against organizations that may threaten China; thirdly; collect intelligence in support of operational requirements, and against key adversaries (including India); fourthly;  support efforts aimed at coercive diplomacy toward small countries in the region (incidentally Sri Lanka and Maldives fall in this category) and finally; enable effective operations in a conflict environment, namely the ability to deter, mitigate, or terminate a state-sponsored interdiction of trade bound for China, and to meaningfully tackle militarily; U.S. or Indian assets in the event of a wider conflict.

In specific terms, China is making a concerted bid to enhance her military and economic influence across South Asia. As a part her strategy to meet above referred objectives, in recent years, arms supplies and debt funding have become her policy. Sri Lanka is, as such, on her RADAR, with a view to acquire a base for her operations in the Eastern Indian Ocean and also to create a ‘threat in being’ to India.Her ‘foot hold in the door’ is the lease of Hambantota, which will help her to grow geographically. However, whatever be the specifics, the fact remains that Hambantota which is located on the southern coast of Sri Lanka will have substantial Chinese control. In fact, Sri Lanka has even moved out its naval base at Hambantota to Galle. Control of Hambantota port gives China a vantage position in the Eastern Indian Ocean to address its Malacca Dilemma.In addition, Mattala Airport and other BRI projects will help her to consolidate her position in the Island State.

From an Indian perspective, the regime change in 2019 (Rajapaksa brothers assuming the leadership)  is not a good news. India had been very uncomfortable with the previous Rajapaksa regime and its proximity to China.  However, initially the new leadership in Sri Lanka made all the right moves – India was the first country they both visited after assuming office – Gotabaya Rajapaksa as President in November 2019 and Mahinda Rajapaksa as Prime Minister in February 2020 and reiterated the warmth of the bilateral relationship. On another occasion Mahendra Rajapaksa also commented that the extent of Chinese investment was perhaps a mistake. Sri Lanka has taken steps to permit an Indian company to develop Colombo’s West Container Terminal (WCT). The speech by the Prime Minister of Pakistan, Imran Khan, to the Sri Lankan Parliament during his maiden visit to Sri Lanka in February 2021, was also cancelled. These moves allayed India’s apprehensions to some extent. In December 2020, Ajit Doval, the Indian National Security Adviser travelled to Colombo to participate in a NSA level trilateral meeting on maritime security with his Sri Lankan and Maldivian counterparts. It was decided to institutionalise this as a biennial event, and earlier this year a permanent secretariat was established at the Sri Lankan Naval HQ in Colombo to function 24/7 on issues related primarily to maritime security. Sri Lanka has also been a beneficiary of India’s SAGAR (Security and Growth For All in the Region) Doctrine promoting inclusive and cooperative capacity building to secure the larger Indian Ocean region from the traditional, non-traditional, transnational and sub-conventional security challenges that abound in this region. There are plans to integrate Sri Lanka into the Coastal Security Network and the Sri Lankan Navy also operates Indian-built Offshore Patrol Vessels.

However there are also some conflicting signals. The recent events that are significant to demonstrate Sri Lanka’s new approach include following:-

  • Killing of Indian fishermen by the Sri Lankan Navy in January 2021, which is against an understanding since 1994, as per which both countries had agreed to adopt a humanitarian approach on the issue of fishermen, and to refrain from taking kinetic actions against fishermen illegally entering into each other’s territorial waters.
  • Cancellation of the tripartite Memorandum of Understanding (MoU) between Sri Lanka, India & Japan for the development of the East Container Terminal (ECT) at the Colombo Port on 01 February 2021,media reports suggested a covert Chinese hand in instigating the protest against India’s involvement in the project.India was disappointed with the decision as over 70 percent of the trans-shipment business in the terminal is linked to India. Moreover, it is also of geostrategic interest for India, as the terminal is located in proximity to Colombo Port City, being developed by the Chinese.This relationship between Sri Lanka and China will be further strengthen with this  project, which is a $15 billion project, and is presented as something like Dubai or Singapore of future. According to the CHEC website, it will be “South Asia’s premier residential, retail and business destination, offering unmatched plan city living along the warm waters of Indian Ocean”. The city is likely to be completed by 2041. Nevertheless, the success of this project is dependent on the potential end-users, the majority of whom will be from outside Sri Lanka. There will be an International Dispute Resolution Centre within such a zone”. In the Colombo Port City, Chinese firm, CHEC will be operating this city through the Commission. This Chinese company is not a private entity. So the Colombo Port City will be under the direct domination of China. Therefore it can easily be said that the future of the project at best is uncertain. For all practical purposes, the Colombo Port City is a Chinese space; from here, if desired, it can militarily intervene in IPR.
  • Yet another case of conflicting signal was, permitting a Chinese company, The MS/Sinosoar-Etechwin joint venture (JV), to set up a hybrid renewable energy project close to Indiaon Nainativu, Delft, and Analaitivu islands off the Jaffna Peninsulain January. Citing security concerns, India registered a protest over the selection of the Chinese company to execute the project. A group of Sri Lankan Tamil leaders also objected to the project, noting India’s security concerns. Reportedly, India had offered a $12 million grant to execute the same project. Sri Lanka’s Minister of Power, Dullas Alahapperuma was cited as stating in mid-February that the government would consider India’s proposal, as it was a grant rather than a loan. The Sri Lankan Cabinet has, however, not taken any decision to suspend the project with the Chinese JV.
  • There continues to be a deep concern in India about the current Sri Lankan administration’s stance on isues facing Sri Lankan Tamils. The State Minister for the Provincial Council, Sarath Weerasekara, has talked about repealing the 13th amendment, which was an outcome of the India-Sri Lanka Accord of 1987 to address the grievances of the Sri Lankan Tamils.
  • There is also talk of taking back the Trincomalee oil tank farm from India by scrapping the 2017 agreement between India and Sri Lanka.
  • The Rajapaksa administration also seems non-committal about the MoU on Cooperation in Economic Projects, signed between the two countries during Ranil Wickremesinghe’s visit to India in 2017, except on the MoU signed for cooperation in railway sector.

All these have contributed to raising the stress and suspicion in India-Sri Lanka bilateral ties.  A discernible leaning,  probably,is as a part of QPQ on the part of Mahinda Rajapaksa, because during Sri Lanka’s fight against LTTE, China stood by them and even now China voted against human rights violation proposal at UN Council in Mar 2021. China’s interest is to keep investing in Sri Lanka so that her own strategic profile in this part of IOR vis-à-vis US and India improves.  As part ofthe BRI, Beijing now owns an 85% stake in Colombo International Container Terminals–currently the only deep-water terminal at the port. For connecting  to Europe, the Middle East, Africa and Asia, the Hambantota port and Colombo International Container Terminal now serve as strategic assets for China. It can be appreciated that Sri Lanka is viewed by China in the context of geopolitical competition with India and other actors in the Indian Ocean and wider Indo-Pacific.

Military Aid by China-During the visit of the then Sri Lankan President Maithripala Sirisena’s visit to Beijing during May 2019, on  Sri Lanka’s request military equipment to assist, in counter insurgency operations worth $14 million for boosting the capability of Sri Lanka’s domestic security forces was provided. China has also agreed to provide Sri Lanka’s police force with over 150 vehicles.Following the Easter Sunday terror attacks which killed over 250 people on April 21 2019, China,reportedly provided an estimated $4.2 million worth of equipment to Sri Lanka, including “500 hand held metal detectors, 25 walk through safety inspection gates, 50 X-ray security inspection systems, 25 hand held vehicle scanners, three explosive detectors and three explosives and narcotics trace detectors.” China also reportedly sent necessary technical teams to Sri Lanka for installation and training of all these equipment.China has gifted a warship, frigate “P625” to Sri Lanka, as a part ofdeepening military cooperation.  The PLANalso hosted professional training for more than 110 members of the Sri Lankan navy and sailors in Shanghai.

Conclusion

The IOR is of significant geopolitical importance to China and its growing influence in Sri Lanka reflects this. China’s objectives are to develop its influence further through major ports of the littoral states in the region, giving Beijing access to secure vital sea lanes of communications for maritime security of its trade.Sri Lanka’s geopolitical location provides the best opportunity for China to achieve this strategy. Furthermore, with tensions rising between India and China over several geopolitical issues, including the border, Sri Lanka offers China a strategic asset with which to diminish India’s influence in the Indian Ocean. Over the last decade China has successfully built some footprints in the IOR which only looks set to further increase amidst the rising financial aid to Sri Lanka, Pakistan, Bangladesh, and Maldives.

If we look at Chinese intervention in other South Asian countries, India is almost surrounded. It is like, what is known in glossary of Military terms ‘Investment’, wherein the ‘string of pearl’ is further being squeezed. After Nepal, Bangladesh and Myanmar it is  Sri Lanka now. China is using a combination of economic, infrastructural as well as military instruments to enhance its control. Not to forget that Pakistan has already become a vessel state of China- probably it calls for an initiative like BRI with grant as the means to provide support rather than through the instrument of loans to checkmate China. India with her present state of economy may not be able to do it but may be with a collective support from other like-minded countries it would be possible. India may examine to join  recently announced US programme, “Build Back Better World (B3W)”, during last G-7 Meet.

It needs to be appreciated by the strategic decision makers in India that keeping smaller nations in the neighbourhood with her,  is the responsibility of India, poaching by extra regional powers is possible only when India does not help them in meeting their aspirations and concerns. Case in point is Hambantota which was initially offered to India and went to China only when it was refused by India.

India, despite its ‘Neighbourhood First’ policy and its SAGAR initiative is unable to anticipate events in its strategic neighbourhood. China has made no secret of its intention to dominate the Indian Ocean through its fast expanding navy and strategic initiatives like the BRI. A permanent PLAN presence in close proximity to India would undermine India’s own position in the Indian Ocean and its ability to shape the geopolitical outcomes in the region.  India therefore needs to  pay far more attention to securing its maritime frontiers and its regional interests with a synergistic  and security policy with due prioritisation and committed funding for development of adequate naval force levels, addressing capability deficits and intensifying its capacity building initiatives in the region.

In view of the perceived Chinese interests  and importance of Sri Lanka in India’s Security Matrix, India needs to adopt an strategy which is a win-win for both India  as well as Sri Lanka. Some of the recommended measures are as follows:-

  • A firm, fair and transparent policy to deal with Sri Lanka which inspires confidence in Sri Lanka. It will entail shedding the stand offish approach adopted by India post IPKF withdrawal andformer PM Rajiv Gandhi’s assassination.
  • Leverage; people to people contact; cultural and religious contiguity and other elements of soft power to build bridges with the civil society in Sri Lanka.
  • Make concerted bid to impress upon Sri Lanka that economic engagement with China is getting her sucked into debt trap and whose destination would be becoming a vessel state, which may compromise her sovereignty.

Leverage goodwill between the Armed Forces of the two countries to build bridges between the two countries.

Malacca Dilemma-China’s Malacca Dilemma is its apprehension that India will be able to block the western approaches to the Malacca Strait since they are in close proximity to the Andaman and Nicobar Islands and USA and its allies in the Pacific being able to block the eastern approaches thus crippling the movement of its merchant as well as naval shipping. The Malacca Strait at its narrowest is less than two miles wide and an effective chokepoint.

 

The BRI, is a global infrastructure development strategy adopted by China  in 2013 to invest in nearly 70 countries and international organizations.

The Maritime Silk Road is the sea route part of the BRI of China to increase investment and foster collaboration across the historic Silk Road. It runs from the Chinese coast to the south via Hanoi to Jakarta, Singapore and Kuala Lumpur  through the Strait of Malaccavia Colombo towards the southern tip of India via Male to Mombasa to Djibouti, through Red Sea via the Suez canal to the Mediterranean, there via Haifa, Istanbul and Athens  to Trieste in Italy to Central Europe and North Sea. The CPEC is an extension of the proposed Silk Road.

A career naval officer and a diplomat Admiral Jayanath Colombage is presently the permanent Secretary of the Ministry of Foreign Affairs, Sri Lanka. Earlier he has served as the Commander of Sri Lankan Navy.

Security and Growth for All in the Region (SAGAR)-On 12 March 2015, the PM of Indiahad first taken reference to SAGAR in a speech and elaborated on it in five points. These points are;  to seek a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other`s interests; peaceful resolution of maritime issues; and increase in maritime cooperation”

China Harbour Engineering Company Ltd (CHEC) is an engineering contractor and a subsidiary of China Communications Construction Company (it is a state own company), providing infrastructure construction, such as marine engineering, dredging and reclamation, road and bridge, railways, airports and plant construction.It is the second largest dredging company in the world.

The Liberation Tigers of Tamil Eelam (LTTE) also known as the Tamil Tigerswas a Tamil militant organization that was based in North-Eastern Sri Lanka.Its aim was to secure an independent state of Tamil Eelam in the North and East of the Country.

Author Maj Gen AK Chaturvedi, AVSM, VSM (Retd)  is a retired Indian Army General Officer who has served in Jammu & Kashmir, NE, Andman Nikobar on various appointments at Command and Army HQs. . He is Vice Chairman of Think Tank, “STRIVE”,  after retirement is pursuing his favorite hobby of writing for newspapers, journals, and think tanks.

Disclaimer: The views expressed are those of the author and do not necessarily represent the views of the organisation that he belongs to or of the STRIVE.

 

6 thoughts on “Sri Lanka: Increasing Footprints of China By Maj Gen AK Chaturvedi, (Retd)

  • June 23, 2021 at 9:41 am
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    This article is really informative sir. What China is doing with the help of BRI, G7 is trying to find the alternative by coming out with B3W and India is thinking forward to it as well. But here is a challenge. If global democracies want to
    Provide a better alternative, they will have to craft a set of principles and rules of lending that are more attractive than no-question asked policy. Srilanka is an instructive example of it. They lost the sovereignty of Hambantota which government have signed away to China. And the same instance can be found in Cambodia, Laos and in numerous African countries. The challenge is, how do democracies craft a more efficient, burden-lite lending model for infrastructure? India too on the lines of China’s BRI should spread there wings in to the SAARC nations. India have descent amount in there foreign exchange reserve, enough capacity to rise in Indian ocean and I guess present time is the right opportunity to deep dive into it.

  • June 20, 2021 at 2:46 pm
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    Yes sir. I agree with you that we need to reach out to decision makers to start having a de novo look at our relations with our neighbours. Colonial mindset of past; a British legacy; needs to be shed. Unless our neighbours are with us our national security will always remain under threat

  • June 20, 2021 at 2:21 pm
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    Thanks for finding it relevant but we all should make sure that the decision makers, if we know any one of them, should be impressed upon to start working in the national interests rather than working in personal interests.

  • June 18, 2021 at 10:36 am
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    A perfect overview and detailed analysis of the direct and indirect impacts of China’s support and involvement in Sri Lanka, on India’s maritime corridors with its southern Neighbor hood. A well articulated impressions of Indo Sri Lanka relations, both on the economic fronts and military strengths.

    • June 20, 2021 at 2:39 pm
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      We need to ensure that we need to build maritime strength with a view to build adequate capacity to continue dominating the six degree channel, Duncan’s passage and 10 degree channel

  • June 18, 2021 at 9:05 am
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    An indepth and detailed analysis. I hope the right people read it and change our strategy. The world around us is changing and so should our stance with respect to China. A great read.

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