A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
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Thiranjala Weerasinghe sj.- One Island Two Nations
?????????????????????????????????????????????????Friday, May 26, 2017
India and China’s Tug of War Over Sri Lanka
India sets out to check China’s efforts to turn the island into a maritime hub on its “Belt and Road.”
By Yigal Chazan-May 23, 2017
Unnerved by growing Chinese influence in Sri Lanka, India is seeking to
strengthen ties with the Colombo government through economic cooperation
as the Indian Ocean island nation assumes increasing importance as a
regional trading hub in one of the world’s busiest sea lanes.
In the past few weeks, India’s Prime Minister Narendra Modi has met his
Sri Lankan counterpart Ranil Wickremesinghe in New Delhi and, more
recently, in Colombo. In India’s capital, they sought to consolidate a
growing economic partnership, signing a memorandum of understanding on
future cooperation, which provides a framework for Indian investment in
infrastructure projects on the island. Modi’s subsequent visit to
Colombo, the second since he became premier in 2014, reflected what New
Delhi officials have described as “qualitative transformation” in
bilateral ties. They hope the upturn in relations will help to loosen
Beijing’s hold on their southern neighbor.
In recent years, Beijing has invested heavily in Sri Lanka’s
infrastructure as part of its “string of pearls” policy aimed at
establishing a naval presence across South Asia by building ports and
other facilities in friendly countries – including Pakistan, Bangladesh,
and Myanmar. The expansion is part of its “One Belt, One Road” (OBOR)
project, a new trade route linking China with the West, underpinned by
billions of dollars of infrastructure investment.
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India has been looking on nervously, concerned that China is encroaching
on its sphere of influence and eroding its commercial and cultural
links with the island, some of whose Tamil minority are descendants of
colonial-era indentured workers from the southern Indian state of Tamil
Nadu. Sri Lanka’s current President Maithripala Sirisena has sought to
rebalance relations with the competing regional powers, reaching out to
New Delhi with Modi keen to reciprocate.
Under Sirisena’s predecessor, Mahinda Rajapaksa, Sri Lanka looked to
China for economic and diplomatic backing at a time when the West was
threatening to sanction Colombo for crimes committed in its conflict
with Tamil separatists. China is the largest investor in Sri Lanka,
having spent hundreds of millions of dollars repairing war-damaged
infrastructure and developing new projects following the end of the
civil war in 2009. With Western investors keeping their distance because
of the country’s poor human rights record, Beijing was only too willing
to further its own economic interests on the island, which has
dovetailed with Colombo’s ambition to become an important regional hub.
Chinese funds have been channeled into roads, airports, and sea ports,
the two highest profile initiatives being the Hambantota Port
Development and the Colombo Port Project. Yet the influx of capital has
not been without controversy. The commercial value of some of the
infrastructure projects has been questioned, while Chinese loans – with
which much of the investment has been financed – have contributed to the
country’s huge national debt of $64 billion, or 76 percent of GDP.
After coming to power, Sirisena suspended projects that he said were
badly priced and financed on onerous terms. But eventually, with the
country’s economic crisis worsening, he allowed them to go ahead.
Sirisena asked China to resume work at the $1.4 billion Colombo Port
Project in October, although a deal to increase the commercial viability
of the loss-making Hambantota facility and also help Sri Lanka generate
much needed funds has been held up. Colombo is offering China an 80
percent stake in the port on a 99-year lease for $1.12 billion.
Negotiations have reportedly been stalled due to a dispute about plans
for an adjoining 15,000-acre Chinese industrial zone, which has been
opposed by locals who fear they will be evicted from their land. In
January protesters clashed with the police at the proposed site in the
country’s first violent display of opposition to Chinese investment.
Trade unions, meanwhile, are unhappy with the size of the Chinese stake
in the port and the length of the lease period. The government is under
pressure to resolve these issues as China, which has so far spent $1.7
billion on the port and a nearby airport, has said it will invest $5
billion to develop the area over next few years and create 100,000 jobs
if “everything goes well.”
Notwithstanding Sri Lankan reservations over Chinese investment, Colombo
is keen to keep China on board. Wickremesinghe attended a major OBOR
summit in Beijing this month and aims to finalize a free trade agreement
(FTA) with China this year. But, as the recent talks with Modi
highlight, Sirisena also wants to bolster relations with India, which
came under significant strain in the Rajapaksa era. This month, Sri
Lanka turned down a request by China to allow one of its submarines to
dock in Colombo, concerned that this might alarm its neighbor.
India’s importance to Sri Lanka is beyond question: it is the island’s
largest trading partner and has provided over $2.5 billion worth of
development assistance. Over 70 percent of the cargo handled in Colombo
port is transhipment cargo to and from India. The two countries are keen
to upgrade their existing FTA by signing a new trade pact called the
Economic and Technology Cooperation Agreement (ETCA), which would
enhance commercial ties between Sri Lanka and India’s fast-growing
southern states.
As with certain Chinese investments, some Sri Lankans are nervous about
India’s economic overtures. There have been protests against the ETCA
over fears that the country would lose out to Indian businesses.
Criticism has also been leveled at India’s flagship planned investment
in the region, the joint development of colonial-era oil storage tanks
in the northern port of Trincomalee. Opponents argue that the government
is selling off state assets to India.
For India, Trincomalee and other planned investments – which include
power plants, railway line upgrades, and the creation of special
economic zones – have a strong strategic value. New Delhi appears to be
determined to check China’s geopolitical ambitions in South Asia.
Developing a bigger economic footprint in Sri Lanka is central to this
aim. Colombo clearly sees benefit from cultivating ties with both
countries as a means of transforming the island into a regional
commercial hub. But the government may find it hard to strike a balance
between the competing interests of China and India, while fending off
domestic concerns over economic colonization.
Yigal Chazan is an Associate at Alaco, a London-based business intelligence consultancy.