Virendra Pandit
New Delhi: A day after Sri Lankan Prime Minister Ranil Wickremesinghe showered fulsome praise for India, saying no other country had helped the island nation in its economic crisis, Beijing rushed in and offered to work with New Delhi to assist a financially struggling Colombo.
Acknowledging Indian financial help worth about USD 3.5 billion this year, besides humanitarian aid like food, fuel, and medicines, Wickremesinghe had recently expressed his country’s gratitude to India.
The Sri Lankan PM’s public praise for India alarmed China, which is playing geopolitical chess both ways, realizing that Colombo needs at least USD 6 billion in the next six months.
Just a day after Wickremesinghe took oath as the new PM on May 25, several pro-Beijing Opposition leaders in Colombo, who turned down an invitation to join the new government, blamed India for influencing Ranil’s choice. Some even claimed the Indian help came with strings attached and that New Delhi could claim some Sri Lankan assets. Former President Maithripala Sirisena also asked India not to agree with the Sri Lankan government on helping Colombo.
India promptly rejected all these charges and claims.
With the civil warlike situation averted, widespread violence and disturbances subsiding, and Sri Lanka coming to terms with its prolonged financial crisis, Wickremesinghe, who became the PM for the sixth time, is viewed as the island country’s messiah. Millions of Sri Lankan share his open praise for India, which, after many years, has found a favorable climate in the island nation.
It alerted China, whose plans to make Sri Lanka a client state like Pakistan through the debt-trapped Hambantota port have collapsed, at least for now.
China is apprehensive of a Sri Lankan mass uprising against the Chinese control of this port, the way the Baluchistan people are protesting against the Gwadar port in Pakistan.
It is in this backdrop that China is trying to humor India and control damage to regain some respect when it has become a global pariah after the pandemic.
While stubbornly resisting the normalization of relations with India on the Eastern Ladakh issue and secretly building structures along the Indian borders, China is trying to hoodwink India on the Sri Lankan matters to gain time.
That is why Chinese Foreign Ministry spokesperson Zhao Lijjan said in Beijing on Wednesday that his country “recognized” India’s “great efforts” in supporting Sri Lanka. He expressed China’s “willingness” to work with India and the international community to help Sri Lanka tide over its crushing economic crisis.
He also said China had sent humanitarian help worth USD 73 million to Colombo and acknowledged Indian help worth USD 3.5 billion this year to Sri Lanka through currency swaps, loan deferments, and credit lines, among others.
China’s efforts to woo Sri Lanka back have another reason. Earlier this year, Sri Lanka had selected India against China to develop a proposed energy project in three islands off the northern Jaffna peninsula.
In March, the Chinese Ambassador to Sri Lanka said that “interrupting a project won through a competitive bidding process, backed by the Asian Development Bank, does not send out a good message for foreign investors looking at Sri Lanka.”
Reminding Colombo of this matter, Zhao said: “We believe Sri Lanka will also work actively to protect the legitimate rights and interests of foreign investors and partners and uphold the stability and credibility of its financing and business environment.”
Along with Japan, China is one of Sri Lanka’s top two bilateral creditors. Chinese loans, however, make up about 10 percent of the island nation’s external debt dominated by market borrowings, which account for nearly half of the total foreign loans.
In April 2022, Sri Lanka pre-emptively defaulted on all its foreign debts of about USD 50 billion to cope with a foreign exchange crunch that left the country with no dollars to pay for essential imports.
Following Colombo’s announcement of its debt default, Chinese institutions “immediately had discussions with the Sri Lankan side to resolve the debts properly,” Zhao said, expressing the hope that “Sri Lanka will work actively with China to discuss the settlement.”
Sri Lanka has also sought help from China and Japan. As part of its help during the pandemic, China had extended USD 2.8 billion to Sri Lanka. But Colombo has raised concern over not being able to access the swap, which is contingent on Colombo showing adequate foreign reserves for three months.
“We have not had foreign exchange reserves for three months since the loan was taken… We have requested the Chinese government to consider removing that condition from the agreement that has been signed with them,” Wickremesinghe told Parliament on Wednesday.