26.03.2016 Author: Sofia Pale

Sri Lanka: Another Battlefield for India and China


Recently, the continuation of the largest Chinese project on the island of Sri Lanka came to light. It concerns the construction of a huge housing estate, called City Port near Colombo, Sri Lanka’s main port. The new area will be equipped with a variety of shopping, logistics and sports facilities. The idea for construction was put forward personally, by Chinese President Xi Jinping back in 2014, who promised that China would invest $ 1.4 billion in the project. The President of Sri Lanka at the time, Mahinda Rajapaksa, readily approved the project, as Sri Lanka, devastated by the civil war (which lasted from 1983 to 2009) badly needed investment and had received it from China on more than one occasion.

With China’s assistance, the reconstruction of the damaged infrastructure on the island is in full swing. The road network, railway, and a coal-fired power station have all been built. However, the new president of Sri Lanka, Maithripala Sirisena, who came to power in January 2015, suspended the project, citing a possible threat to the ecology of the island, which among other things would have dealt a serious blow to the tourism business, an important component of the Sri Lankan economy. Incidentally, the previous president, M. Rajapaksa lost the election largely because of the loss of people’s trust. In recent years, the Chinese projects had allowed him to earn huge illegal profits, the government ranks were filled with his relatives and the independent media underwent persecution. However, in March 2016, the new president, M. Sirisena reinstated the project without much adjustment, despite the fact that there was still no proof that the construction of the project would not harm the island’s ecology. Thus, the true reasons for more than a year of inactivity remain in doubt.

Moreover, on March 26, 2015, the newly-elected President M. Sirisena and Xi Jinping met in Beijing to discuss the further development of Sri Lanka-China relations. At that time, both men were in favor of strengthening and developing friendship and cooperation. Much was said about the cooperation in such fields as agriculture, science, medicine, education, tourism, etc. At the same time, Xi thought it necessary to recall that the friendship between the peoples of China and Sri Lanka was a source of pride for both nations and testament to the efforts of many past generations, and China has always paid great attention to the island nation in its foreign policy. This reminder was most probably voiced due to the fact that one of the objectives of the visit of the Sri Lankan president to China was the revision of certain transactions entered into by the two countries under the rule of the previous president that were total more than $5 billion. Also, the leadership of Sri Lanka expressed a complaint about the excessive interest rates on loans granted to the country by China for the reconstruction and development of its infrastructure. The Chinese side reacted to this by pointing out that stopping a large-scale project such as the “City port” might avert potential investors from Sri Lanka who may doubt the reliability of its leadership. It was also noted that in order to attract foreign investment, consistency in public policy is crucial, and that at the moment Sri Lanka needs a cash injection from the outside more than ever.

Negotiations were concluded on a friendly note. Xi Jinping expressed his desire for the speedy conclusion of the talks between the two countries on a free trade zone and once again confirmed China’s willingness that Sri Lanka participate in the Maritime Silk Road project that would provide Sri Lanka with access to the reserve fund of the Silk Road project and the Asian Development Bank infrastructure investments.

But what was the reason for the suspension of the project? It is more than likely that India played a significant role in this. The Indian leader is very concerned about the Chinese influence on the island and sees it as an economic and military threat. The island is located on the very shores of India, separated only by a narrow strait, and the Chinese presence there could create a lot of trouble. Particularly alarming for Delhi, was the fact that a Chinese submarine was docked in the port of Colombo in 2014. The Indian leadership regarded this incident with great indignation. Chinese activity in Sri Lanka was declared to be an open threat to Indian security. It is worth noting that M. Sirisena embarked on his first visit as the new president of Sri Lanka to India, and the decision to freeze the “City-port” project may well have been made under pressure from the Indian side. It is also possible that President Sirisena could have used India’s dissatisfaction and the possible worsening of relations as an excuse to get some additional benefits from China. It is unlikely that he would have risked losing the financial support of the PRC and demanded that previous transactions with China be reviewed, if he did not have the chance to turn to Delhi in case of failure to negotiate with Beijing.

Thus, it is likely that we are witnessing another act of the Sino-Indian conflict in which China apparently claimed victory.

Whatever the case may be the Chinese state company «China Communications Construction» has once again received permission to build near the port of Colombo and Sri Lanka has received the largest investment in its history. The construction project is set to become an important point on the Marine Silk Road. Whether China wants to place military installations there is yet unknown, but in the abovementioned meeting in March 2015, the Chinese President announced its intention to expand cooperation with Sri Lanka in the field of defense, and the Sri Lankan President supported this idea.

Obviously, after all these events, it is unlikely that there will be increased peace in the region. The US is concerned with curbing Chinese expansion and has already called for the signing of a military alliance, which would include, in addition to America, Japan, Australia and India, in order to maintain its influence in the Indian Ocean and the South China Sea. China responds with protests, promises to build great numbers of new aircraft carriers and the construction of military bases on artificial islands. It is possible that in these circumstances, India, who has always professed a policy of non-alignment and thus far refused to join any military bloc, might start to reconsider its position. Anyway, in recent years it has actively increased naval cooperation with Chinese competitors, in particular with Vietnam. Therefore, in this case, we will witness a new round of confrontation between the two regional giants, this time on the sea.

Sophia Pale, PhD, Research Fellow of the Center for South-East Asia, Australia and Oceania of the Institute of Oriental Studies of the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.

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