Sri Lanka: India: Friends in Need!

The ocean that bears India's name is also its near maritime neighbourhood. The emerald island of Sri Lanka sits like a sentinel atop this ocean's vastness. Sri Lanka has the twin advantages of proximity to India and as a gateway to the Indian Ocean. More importantly, it dominates the maritime space that encompasses the heavily travelled sea lanes of communication between the oil wells of West Asia and the Indo-Pacific, which is critical for the economies of SE Asia and China.

As all good neighbours, India and Sri Lanka have their differences, big and small. However, in the ultimate analysis, a groundswell of mutual goodwill exists between the two. Historically there has been no serious challenge to Indian influence in Sri Lanka. But this has now changed. While India may not have its version of the 'Monroe Doctrine’, it cannot ignore what is happening in its backyard.

With this background, the recent visit of Sri Lankan President Ranil Wickremesinghe to New Delhi assumes significance. Notably, this is his first visit to India after coming to power as the troubleshooter in the economically devasted landscape of his nation, an endeavour in which India plays a prominent role.

Since last year, relations between India and Sri Lanka have surged. India was spontaneous in stepping forward with a lifesaving loan of over $ 4 billion (a nearly double amount what Pakistan has been appealing to IMF for the last one year) apart from humanitarian assistance in terms of food, medicine and fuel. It also led by example by being the first creditor to extend a letter of support for Sri Lanka's debt restructuring, which was crucial for the following $ 3 billion IMF bailout package.

Background

Ties between India and Sri Lanka are on multiple levels. These ties also carry their historical baggage. However, they are much less compared to India’s other neighbours.

Sri Lanka’s economy is much smaller compared to India’s. As a result, it has always depended on its northern neighbour more than the other way around. Despite differences, India has never backtracked on Sri Lanka. Even when relations were at a nadir due to Colombo cosying up to China) or when India spoke for Tamilian rights during the worst of the Sri Lankan civil war, New Delhi kept its channels of communication open.

On the other hand, Sri Lankan attitude towards India has been at times ambivalent, if not downright antagonistic. There is a hard-right nationalist political grouping within this country. This group does not look at India as a friend. Instead, it perceives India as a regional hegemon seeking power. This political faction was recently in power in the island nation. They were looking to balance out Indian influence in the country by actively inviting larger Chinese penetration in all spheres of activities-defence, economy, trade, culture etc. this is a dangerous game of walking the geopolitical tightrope, and a misstep can be catastrophic.

Analysis

Now Sri Lanka is genuinely attempting to make amends, and India recognises this fact.

There was a hope that Sri Lanka’s tourism-based economy would start to recover after the pandemic. But this did not happen. The second was the Russian invasion of Ukraine. Here the pain was felt more directly by the Sri Lankan people. Food and energy prices rose to unprecedented levels. The government was unable to provide any answers. The national currency rapidly lost its value to become virtually worthless, and foreign remittances dried up as overseas Sri Lankans feared the value of their hard-earned foreign currency being rapidly denuded.

While all this was taking place, international assistance was the only hope. Here again, Sri Lanka's hopes were belied. Everyone waited for the island economy to collapse before taking any steps. Geo-politics overcame any common humanitarian concerns. Under the Rajapaksa administration, India was not seen as a potential donor. Thus, a major opportunity was lost.

China has followed a very familiar playbook in its penetration of Sri Lanka. This is the foreign policy strategy of chequebook diplomacy. China's embrace has brought nothing good to Sri Lanka. The foreign policy of the last government of completely placing Sri Lanka in the Chinese camp has come to nought. The new government of Ranil Wickremesinghe has made a course correction. This President already has extensive ties with India through his previous stints in power. So, he is well suited to re-engaging Sri Lanka with India.

His recent official visit to India has been a game-changer in more ways than one. This is in terms of both optics and the actual substance of this visit. He has clearly stated that “Sri Lanka would not be allowed to be used as a base for any threats against India”. Sri Lanka does not want to become a global or regional geopolitical player. Rather the government's main aim right now is the revival of the economy. This cannot be done without India.

 Several deals have been agreed upon during this visit. This includes India supplying oil to Sri Lanka from its south and increasing its overall financial assistance. Cash-starved Sri Lanka needs both monetary help and an energy supply for its citizens. It has also been decided that Indo-Sri Lankan trade will be carried out in rupees instead of dollars.

Source: https://www.globaltimes.cn/page/202204/1258752.shtml

The above graph clearly shows that up until 2021, Sri Lanka's outstanding debt to India was one of the lowest out of all its external lenders. On the other hand, Sri Lanka's outstanding debt to China stood at a high of 10% alongside Japan.

Other than this, joint projects will also be carried out between the two countries in many other areas. New Delhi has not placed any conditions on its assistance. It has always tried to win the friendship of the Sri Lankan government as well as the people.