Re-enter the dragon

There may have been greater rapprochement with the West and India in recent years but, contends Neville de Silva,despite some earlier loosening of ties, old ally China still wields economic and diplomatic influence in Sri Lanka.


When the ten-year rule of President Mahinda Rajapaksa was ended on January 8 last year by his cabinet colleague Maithripala Sirisena, who had earlier defected in the stealth of the night after a dinner with Rajapaksa, there was jubilation in many parts of Sri Lanka.

Sirisena had faithfully promised the people that he would not only dump his former leader but also rid the country of authoritarianism, corruption, nepotism and a host of other sins the long-ruling regime had been accused of committing.

Sirisena did not, of course, win the presidential election on his own steam. He was the common candidate of a rather loose conglomeration of political and civil society groups increasingly fed up of the Rajapaksa clan’s stranglehold on power, and yearning for change.

The most important ally in this strange and disparate group with diverse ideologies was the United National Party (UNP), one of the oldest political parties in the country now led by Ranil Wickremesinghe, a veteran politician who had been prime minister before and at election timewas leader of the opposition.

He was made prime minister after Sirisena’s victory, in keeping with a promise held out in a deal struck between them. Traditionally the UNP hasbeen a Western-oriented party though it has from time to time paid lip service to non-alignment.

This ‘Third World’ approach to international relations had formed the bedrock of the country’s foreign policy from the inception, when it was formally launched in Belgrade at the first Non-Aligned Nations summit in September 1961.The movement had only 25 membersat that time, including Ceylon, as Sri Lanka wasthen known.

Sirisena’s party,the Sri Lanka Freedom Party (SLFP), had been led by Sirima Bandaranaike, the world’s first woman prime minister who was an ardent advocate of non-alignment. She was one of the few Asian leaders to attend the first summit in Belgrade and hosted the 1976 summit in Colombo.

The two major components of the new government had divergent views both on economic and foreign policies.

But they seemed to be agreed on one thing—that the Rajapaksa policies, especially in his second term that he won on the back of a military victory over the secessionist minority ‘Tamil Tigers’, had driven the then government into increasing international isolation, leaving it virtually dependent on China for financial assistance for many infrastructure projects, including mega projects.

Rajapaksa’s critics argued that some of these projects—such as the new international airport in southern Hambantota district, a Rajapaksa stronghold—and the new sea port in the same area served only to perpetuate the Rajapaksa name and are largely ‘white elephants’ built at enormous costbut bringing little or no return.

The Mattala Airport, as it is called, was built at an estimated cost of US$120 million with financial assistance from the Chinese government. Construction of the first phase of the project began in 2007 at the height of the military conflict with the Tamil Tigers and formally opened in 2011. In 2009 Exim Bank of China committed US$891 million for the next two phases under the Preferential Buyers Credit Scheme.

The Hambantota port was built at a cost of US$1,308million, with loans from the Exim Bank in two installments. The first phase of construction was estimated at US$306million, which was borrowed at a high interest rate of 6.3 per cent. The second phase, costing $800million, was also borrowed at 6.3 per cent interest.

To Mahinda Rajapaksa’s credit, it must be stated that he first offered the port and a power project in the country’s northeast to India, which dilly-dallied and left decision-making too late,by which time China had made its play.

The Western powers had refused military weaponry to Sri Lanka to fight the Tamil Tigers, one of the most ruthless insurgent organisations in the world, citing human rights and other reasons—though human rights considerations did not seem to deter the West from invading sovereign states or instigating and then involving themselves in regime change.

Moreover, those same Western powers turned their backs on the Rajapaksa government, which was eager to engage in post-war reconstruction and development.

Rajapaksa—and indeed the Sri Lankan populace—saw these as double standards pursued by the West, which was viewed as preaching lessons it did not practiseitself. The continuous haranguing of Rajapaksa by Western leaders and human rights organisations largely funded by the West drove him to rely on China for military, financial and diplomatic support.

Given India’s procrastination and the West’s ‘pulpitology’, and little help in condemning Tamil Tiger terrorism against civilians and civilian targets, Rajapaksa had little alternative but to seek the all-round assistance of China, which had been a faithful ally and friend to Sri Lanka even before the two countries established diplomatic relations in 1957.

The project that came in for sharp criticism from multiple sources, including environmentalists, was the highly visible Colombo Port City project in the very heart of the country’s capital. It involved reclaiming land from the sea and building a 233-hectare island off Galle Face Green, the well-known seaside promenade above which British and Japanese aircraft were engaged in dogfights on Easter Sunday 1942, when the Japanese attacked Colombo during World War II.

Under the Colombo Port City development project, which was awarded to the China Communication Construction Co Ltd and cost US$1.5billion, China was to have effective control of 108 hectares, 20 of which was to be on a freehold basis and 88 hectares on a 99-year lease. The Sri Lanka government was to have 62 hectares to develop as it saw fit.

The opposition to this plan was not just by various political and professional groups in Sri Lanka. It had an external dimension. India was concerned that China’s presence virtually on its doorstep posed a threat to its own security.

That concern was exacerbated in Indian eyes when Chinese submarines docked in Colombo, once coinciding with Japanese Prime Minister Shinzo Abe’s visit to Sri Lanka in September 2014. India, Sri Lanka’s closest neighbor, did convey its strong concerns to Sri Lanka as strategic thinkers and officials there believed that China’s stake in the Colombo Port City would allow a frequent Chinese naval presence in what might be called India’s underbelly.

The Rajapaksa government’s increasing reliance on Chinese financial assistance and its commitment to Beijing’s Maritime Silk Route, which would help China expand its commercial and naval presence in the Indian Ocean, was obviously interpreted as a threat to Indian interests and its dominance in the Indian Ocean.

So the defeat of Rajapaksa at the presidential election in January 2015, and subsequently that of his party in the August parliamentary election, were welcomed in India and hailed by the US and UK in particular as a critical blow to China’s growing economic hold and diplomatic clout in Sri Lanka.

There were domestic and external reasons why Rajapaksa’s defeat affected relations with China. It was widely believed that some part of the enormous financial resources that went into the mega projects was creamed off the top by acolytes of Rajapaksa or business interests supporting him while China turned a blind eye to the financial skullduggery.

Moreover, the then government’s support for China’s burgeoning hold on Sri Lanka was seen as antagonising India, whose political and diplomatic help was important in the process of reconciliation with the minority Tamil community and for the social integration the Sirisena-Wickremesinghe administration was hoping to achieve in the post-war years.

CENSURE:The highly visible Colombo Port City project came in for severe criticism from many sources
CENSURE: The highly visible Colombo
Port City project came in for severe criticism
from many sources

Furthermore, Rajapaksa’s perceived dalliance with China was proving to be a thorn in the side of Western nations, especially the US, which was keen to re-engage with Sri Lanka, strategically located in the Indian Ocean close to the major maritime trade routes, as Obama launched his ‘Pivot to Asia’ policy.

Sirisena and Wickremesinghe were both keen to strengthen ties with India which Rajapaksa had allowed to slide, an interest exemplified bythe two leaders making their first official visits to New Delhi afterthey won their respective elections.

Besides, the Westward-looking UNP,following its traditional affiliations with the Washington-London axis, was determined to re-establish its connections with the transatlantic cousins.

Shortly after Maithripala Sirisena became president, Prime Minister Wickremesinghe reiterated that Sri Lanka would look anew at its foreign policy and would be more even-handed in its international relations, implying a reversal of the Rajapaksa government’s China-reliant policy.

A telling example of this was the new government’s decision to suspend the Colombo Port City project until the relevant authorities confirmed that all the necessary procedures had been adhered to, proper environmental reports obtained and financial propriety observed.

Meanwhile hardly had Sirisena sat in his presidential seat when Washington sent its Assistant Secretary of State for South and Central Asian Affairs Nisha Biswal to Colombo, beginning a process that saw Sri Lanka’s Foreign Minister Mangala Samaraweera leaving the starting blocks like a sprinter and heading to Washington a few days later.

During his Washington visit Samaraweera said: ‘I have come with the message that we want to broaden and strengthen these ties and I have discussed with Secretary Kerry about the way forward.’

In May last year Secretary John Kerry himself visited Colombo, the first Secretary of State to do so in over 40 years—a definitive milestone in bilateral relations. Since then high-ranking officials have visited Sri Lanka, including US Permanent Representative to the UN Samantha Powers in November and Under Secretary of State for Political Affairs Thomas Shannon the next month.

The flurry of visits in both directions, with the most recent being Foreign Minister Samaraweera’s call on Washington to sign the first-ever US-Sri Lanka Partnership Dialogue, was viewed by analysts as the Obama administration’s earnestness to integrate Colombo into the ‘Pivot to Asia’ policy.

At the same time Sri Lanka’s moves to ingratiate itself with the US is interpreted by some commentatorsas an attempt to have the superpower that initiated a resolution at the UN Human Rights Council to investigate human rights abuses by Sri Lanka and possible crimes against humanity in the war against the Tamil Tigers soften its stance when a judicial mechanism is set in motion.

But some others are critical of Foreign Minister Samaraweera’s perceived obsequiousness as habitual pandering to American interests that has apparently begun to irritate President Sirisena and provoked Prime Minister Wickremesinghe to raise strong doubts about the usefulness and efficacy of Sri Lanka’s foreign ministry, which in days gone by had earned an international reputation for professionalism rather than for the current ‘cut-throatism’.

While Foreign Minister Samaraweera was travelling the world—one of the six ministers whose regular visits abroad have apparently been noted by President Sirisena—it seems the government and its advisers lost sight of the ball.

Sri Lanka was facing serious balance of payments problems that were fast reaching crisis proportions. It was becoming increasingly clear that the government would not be able to meet its commitments in debt servicing, much of it, of course, spilling over from the Rajapaksa years.

Furthermore the country was burdened with mismanaged and corrupted state-owned institutions, which were finding it difficult to survive without injections of finance by the state.So fiscal indiscipline by a government bent on perpetuating itself and allowing its supporters to exploit money-making opportunities had passed on the burden to its successor.

Words of praise for the Sirisena-Wickremesinghe duo from Western governments for bringing democracy and the rule of law back were welcome. But these honeyed words were not accompanied by financial aid and assistance to rescue the country from the economic morass into which it was fast heading.

The government soon realised that it was one thing to court the West but another for the West to come to the aid of the country it was trying to embrace.

It was a case of taking the horse to water,as the old saying goes.

With dire economic consequences confronting the Sirisena-Wickremesinghe administration, it was forced to swallow its pride and turn to China, an old and trusted ally on which it had tried to turn its back.

Eventually Prime Minister Wickremesinghe, who had paid official visits to India and Japan but ignored China, made a trip to Beijing in April, more than eight months after his election victory.Before he left Sri Lanka, the Cabinet made a decision to revive the Colombo Port City project which it unceremoniously tried to dump immediately after Sirisena became president in January last year.

With more than US$8 billion due to China and Sri Lanka’s balance of payments flashing danger signals, it was no time to play political games with a country that had emerged as Sri Lanka’s biggest financial contributor, ousting Japan which had been so for many years.

Sri Lanka’s International Trade and Strategic Development Minister Malik Samarawickrema had gone to Beijing ahead of Wickremesinghe to smooththe way for his prime minister’s visit.

In Beijing, Wickremesinghe was proposing that the Chinese turn the loans given to Sri Lanka into equity in the airport and seaport built in the south. Moreover he had suggested a special free trade zone for Chinese enterprises to be established, also in the south.

The long Joint Statement issued after the Wickremesinghe visit covers a wide range of subjects and a willingness by Sri Lanka to facilitate Chinese investors by amending certain laws.The statement said that ‘Sri Lanka has welcomed more Chinese investment which it hopes the Chinese government will encourage. Colombo is prepared to cooperate with Chinese companies by creating a favourable investment and business environment’.

Sri Lanka has also agreed to be an active participant in China’s Belt and Road initiative.

One issue which could raise some concerns in neighbouring India and the West is the commitment to maintain ‘close relations’ in the area of defence. The two countries ‘reiterated the need to continue to co-operate and work together on defence and security-related issues’, a clear sign that bilateral relations are back on track.


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