Colombo Awaits Top-Level Visits From India And China – Analysis

Much is expected from the visits of Indian Foreign Minister Jaishankar and Chinese Vice Minister Chen Zhou. 

The Indian External Affairs Minister Dr. S Jaishankar will be in Colombo on a two-day visit from January 19, All India Radio said on Friday. Meanwhile, the Sri Lankan media reported that a Chinese Communist party delegation headed by the Vice Minister of International Department, Chen Zhou, will be in Colombo from January 14 to 18.

The two visits will be taking place at a very critical time in Sri Lanka. Both India and China have a critical role to play in Sri Lanka as development partners and financiers. 

Colombo is trying hard to get its international creditors to take a haircut so that it gets the IMF’s bailout package amounting to US$ 2.9 billion which it sorely needs to meet its basic obligations to the public. 

But there are China-India and China-West geopolitical issues complicating the restructuring of debt. In addition, there is the challenge of tackling private creditors who account for 40% of the loans. 

Sri Lanka defaulted in April 2022 and rushed to the IMF for help. But the bailout is being delayed. The IMF’s hands are tied by the complexity of the problem. The Governor of the Central Bank of Sri Lanka, Dr.Nandalal Weerasinghe, said on Thursday, that Sri Lanka would not get the IMF’s assistance of US$ 2.9 billion, until India and China, being the largest bilateral creditors, agree on a haircut. But neither India nor China has taken a decision on this issue. Perhaps India feels that it has already extended US$ 4.5 billion in emergency lending to tide over the most critical part of the economic crisis last year and China has done very little, the ball is in China’s court. 

On its part, China has offered an additional loan and a buyer’s credit to Sri Lanka. But it is yet to part with any cash. China has also been insisting that a Free Trade Agreement be signed, but Sri Lanka views this with trepidation. In fact, it views all FTAs with trepidation. 

However, Beijing has promised Sri Lanka that it would intercede on its behalf at the IMF where it is an influential member. Whether Vice Minister Chen Zhou will come up with a worthwhile proposal remains to be seen. 

Geopolitical Dimension

Both New Delhi and Beijing have very crucial geopolitical issues to be taken up with Colombo. India is worried about China’s military intrusions into the Indian Ocean as well as Beijing’s bid to get a foothold in the Northern Province of Sri Lanka which is closest to Tamil Nadu. Beijing, on the other hand, is determined to challenge India’s claim that the Northern Province is under its sphere of influence and that it has the right to dictate terms on the use of the Indian Ocean. 

This conflict has put Sri Lanka in a cleft stick. It cannot realistically offend any of the two warring powers because both New Delhi and Beijing play a major role in its economic and geopolitical domain.

The Chinese maneuvering in the Indian Ocean, with its submarines and research cum surveillance vessels on the prowl, has been agitating India. On the basis of an understanding with Colombo on maritime security, New Delhi had complained to Colombo about the docking of a Chinese dual-use vessel and the refueling of a similar vessel last year. Suspecting that Colombo is disregarding its concerns vis-à-vis China, the head of India’s Research and Analysis Wing (RAW) Samanth Goel visited Colombo in November 2021 for talks at the highest level.

Indian Projects

India has also been concerned about several Indian project proposals gathering dust in Colombo. A comprehensive array of projects for which MoUs were signed in 2017 remain unimplemented, despite Prime Minister Modi indicating displeasure. There is a feeling in India that Sri Lankan governments accept Indian project proposals, but in fact hand out projects to the Chinese. 

It was to discuss projects that a Joint Secretary from the Indian External Affairs Ministry, Puneet Agarwal, visited Colombo in December last year.

Given the context, the outcomes of the visits of Jaishankar and Chen Zhou will be eagerly awaited.