India makes inroads into Sri Lanka under China’s long shadow

COLOMBO/NEW DELHI: As Sri Lanka plunged into its worst economic crisis in seven decades, leading to deadly riots and alarming shortages of fuel, food and medicine earlier this year, Its giant northern neighbor intervened.
India provided about $4 billion in expedited assistance between January and July, including lines of credit, currency swap agreements and deferred payment of import payments, and dispatched a warship. essential medicine for the island’s 22 million people.
Now, with Sri Lanka finalizing a $2.9 billion loan from the International Monetary Fund (IMF) and its economy stabilizing, India is looking to attract long-term investments. ambitious, with the aim of countering the influence of regional rival China. government minister and three sources said.

“What we are looking at right now is investment from them,” referring to a series of projects worth more than $1 billion currently under construction, Sri Lankan Foreign Minister Ali Sabry said in an interview this month. discussion will help strengthen India’s presence in Sri Lanka. “They’re willing to invest as much as they can.”
“India is probably looking at that strategically… because of their security concerns,” Sabry said.
India’s foreign ministry did not respond to questions from Reuters about its strategic plans and goals in Sri Lanka.
Regional security will always be New Delhi’s focus, a source with knowledge of the matter told Reuters, at a time of persistent friction with China along its Himalayan border.
“There are two ways about security concerns,” the source said, asking not to be named because of the sensitivity of the issue. “In terms of long-term commitment, that’s the investment being focused on.”
Besides seeking Indian investments to set up energy and renewable energy projects in the north of the island, Sri Lanka is also keen to work with New Delhi to expand and develop the port. at Trincomalee in the northeast into a major port, several officials said.
Taking advantage of Sri Lanka’s proximity to the north of Sri Lanka to India, these projects could help New Delhi balance the vast Chinese infrastructure projects south of the island that have been built over the past 15 years.
The Tamil-majority north in Sri Lanka also shares ethnic ties with India’s Tamil Nadu.
Concerned about China
The talks and the scale of India’s aid this year outstrips other donors, underlining New Delhi’s efforts to regain influence on the island located just a few miles from the southern tip along the bustling waterway connecting Asia with Europe.
In late June, two weeks before tens of thousands of angry Sri Lankans took to the streets and forced President Gotabaya Rajapaksa to leave the country, India’s top diplomat flew to the island nation’s main city of Colombo. to meet.

Foreign Minister Vinay Kwatra, who was accompanied by officials from India’s finance ministry, met Rajapaksa and Prime Minister Ranil Wickremesinghe, among others.
In conversations with Sri Lankan leaders, Kwatra and other Indian officials have highlighted China’s position as a key political concern, according to a Sri Lankan government source with knowledge of the matter. discussions directly.
The source, who was not authorized to speak to the press, said China’s huge role in the island’s economy, which had mushroomed under the previous Rajapaksa government, was causing trouble for the island. India more than anything else.
Details of the June meeting were not previously reported.
Kwatra and the Indian and Sri Lankan foreign ministries did not respond to Reuters questions about the June meetings.
In a statement issued shortly after Kwatra’s visit, India’s foreign ministry said the talks were mainly focused on economic issues, including increasing investment. It does not refer to China.
New Delhi has long been concerned about Chinese influence in its vicinity, which includes Nepal, Bangladesh and Sri Lanka. Sensitivity has run high and diplomatic relations have been fractured since Indian and Chinese armies clashed along the remote Himalayan border in 2020, leaving dozens of soldiers dead.
“We understand that their prerogative is to ensure security,” Sabry said, referring to India. “And for Sri Lanka, we don’t want to contribute to any escalation between any country.”
Meanwhile, China has engaged with the Sri Lankan government on the debt restructuring needed for the deal with the IMF to pass, in addition to sending shipments of medicine, fuel and rice.
The World Bank estimates Beijing’s lending at around $7 billion, or 12% of Sri Lanka’s $63 billion in external debt.
“We are willing to cooperate with relevant countries and international financial institutions to continue to play an active role in helping Sri Lanka,” China’s foreign ministry said in response to questions. in writing by Reuters.
The ministry said it had no details on India’s support and investment in Sri Lanka and its own support for Sri Lanka was “not aimed at third parties”.
perfect storm
Sri Lanka was plunged into financial crisis after the Covid-19 pandemic devastated the tourism industry and remittances from citizens working abroad fell. The war in Ukraine has pushed up the prices of imported goods, especially fuel, sharply.
Rajapaksa’s government also refused help from the IMF, meaning foreign exchange reserves dwindled, exacerbating shortages of fuel and medicine.
Violent protests broke out as tens of thousands of people took to the streets and stormed government buildings.
The president left the country in July and resigned. By then, Sri Lanka had finally joined the IMF and the two sides had reached a preliminary loan agreement of $2.9 billion.
But it was India’s help that helped Sri Lanka buy time.
“Without India, Sri Lanka would fall apart like Lebanon did,” said Uditha Devapriya, international relations analyst at Factum, a foreign policy think tank based in Colombo.
“Sri Lanka has clearly benefited from being the closest neighbor to the most powerful country in the region. India also benefits from ensuring stability in its backyard.”
In October, Wickremesinghe – who took office as president in July after Rajapaksa stepped down – unveiled a blueprint for Trincomalee, home to a natural deep-water harbour, including a proposal to partner with India to develop a strategic port there in addition to establishing a new port. industrial park and an energy center, according to details released by his office.
India and Sri Lanka are also in preliminary discussions on an undersea cable to connect both countries’ power grids and a fuel pipeline from mainland southern India to northern Sri Lanka – projects. could cost at least $4 billion, according to officials on both sides. .
In the energy sector, India’s state-run NTPC is building a 100-megawatt solar power plant in Sampur in Trincomalee district after the two countries signed an agreement in March.
In northwestern Sri Lanka, India’s Adani Corporation is awaiting regulatory approval for two $500 million wind power projects in the Mannar region, Sri Lanka’s Energy Minister Kanchana Wijesekera said in August.
Off the northwest coast, ONGC Videsh Limited (OVL), the overseas branch of the state-run Oil and Natural Gas Corporation in Delhi, has set its sights on obtaining an exploration license and already has numerous discussions with Sri Lankan authorities, who are finalizing regulations before inviting bids from global companies, two Sri Lankan energy ministry officials said.
Both asked not to be named because of ongoing discussions.
Adani, NTPC and OVL did not respond to questions from Reuters about their projects in Sri Lanka.
The push for oil and gas exploration was part of discussions in June, the source familiar with the talks said.

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Foreign Minister Sabry said the Sri Lankan government is interested in leveraging India’s growing economic strength, especially through infrastructure projects and renewable energy, while maintaining the relationship. important to other major allies, including China and Japan.
Despite India’s recent goodwill in Sri Lanka, New Delhi remains wary of the Chinese presence.
In July and August, regional rivals became embroiled in a diplomatic row over a Chinese military survey ship, Yuan Wang 5, which stopped at the port of Hambantota in southern Sri Lanka.
At the time, Indian Foreign Ministry spokesman Arindam Bagchi said that although India has provided “unprecedented” support to Sri Lanka during the economic crisis, New Delhi will not back down from the need for security. his security.
Sri Lankan officials say that despite India’s vital help during this year’s financial crisis, Sri Lanka still needs China – one of its biggest creditors – to agree to the plan. debt restructuring, along with India and Japan, to win the IMF loan agreement.
“Chinese investment is important, China’s relationship is also very important,” Sabry said.
“So I don’t think even India or anyone would expect Sri Lanka not to work with China. To be fair, none of them asked us to.”


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