New Delhi: In the changing geopolitical scenario, despite having excellent political ties, Sri Lanka’s relations with China is going downhill especially due to the recent 'commercial' spat between the two countries over a contaminated consignment of organic fertilizer that has resulted in unexpected tensions between the two nations.
The problem arose after a Chinese company named Qingdao Seawin Biotech Co Ltd supplied contaminated organic fertilizers to Lankan farmers. When Colombo rejected to import the tons of fertilizers, China according to sources, blacklisted the Sri Lankan state-run People’s Bank accusing it of a ‘spiteful’ default on the letter of credit payment.
However, to rectify the lost goodwill Chinese Foreign Minister Wang Yi is expected to visit the island nation in the first week of January, which is seen as a move to offer a carrot to the Rajapaksa government and be able to keep its influence on the region intact.
Speaking to ETV Bharat, Professor Harsh V Pant, Director, Research at Observer Research Foundation (ORF) said, “The visit of Chinese FM Wang Yi to Sri Lanka indicates that they are concerned about the recent development in Sri Lanka and they want to bring the relationship back on track. For India it is not simply a relationship that is about economics and trade or defence deals, this is also about people-to-people ties and I don’t think that is something China can emulate.
But China has the power of the purse, a lot of resources that it can bring to the table and no country would like to sideline China. Therefore, much of these recent developments have been to India’s advantage. The long-term trajectory of the relationship between India and China whether it is in Sri Lanka or other parts of South Asia will remain a contestant. India should be prepared for it and India should be willing to play the long game”, he added.
Professor Pant said, “Whenever Colombo would feel that one country or the other is becoming too difficult to handle, it will tilt the other side. For instance, in the case of China sending contaminated fertilizers to Sri Lanka, India was very prompt in its support for Sri Lanka and this has helped in changing a lot of the perception about India’s benevolence in the region and how China often can ride roughshod over local sentiments”.
Meanwhile, as Sri Lanka suffers from a severe economic crisis, a wind of change is witnessed in Sri Lanka’s foreign policy towards India as it is now tilting to New Delhi for help and intensifying the long-delayed India-Sri Lanka plan for joint development of the Trincomalee oil tank farm.
The political analyst told ETV Bharat that India and Sri Lanka ties will continue to evolve in this manner because clearly Sri Lanka would like to use both India and China to its advantage. “As China becomes more dominant in South Asia, India-China will rub off each other and smaller states in the region will try to leverage both countries to their advantage.
But also what is happening is that as China becomes more involved, it will also get exposed in ways it has not been yet. So far China could claim that it is a win-win situation for everyone, it doesn’t ask any questions and gives money, build infrastructure something that India doesn’t do but now as China becomes more involved in local politics, local decision making, some of its darker sides are coming to light. Countries will become more cautious in engaging with China and India because of its more transparent attitude will benefit,” explained Professor Pant, while adding that the contestation between India and China will continue whether it is in Sri Lanka or other parts of the region because this is going to be a major theatre for China and it will not give in that easily.
Sri Lanka is currently under a lot of debt. According to reports, Sri Lanka’s foreign exchange reserves sank to $1.6 billion at the end of November. The shortage has led to a drop in food imports, pushing up prices of essentials in the country.
But Colombo has requested India for help. It may be recalled that Sri Lankan Finance minister Basil Rajapaksa, who visited Delhi in November this year, briefed the Indian side of the economic situation in Sri Lanka and his Government’s approach to addressing post-covid challenges.
The Indian Ministers expressed India’s solidarity with Sri Lanka at this juncture. They reiterated that India has always stood by Sri Lanka and in the current situation would be guided by its Neighbourhood First policy.
During his visit, Basil Rajapaksa was offered a four-pronged package- Food and health security package on an urgent basis that would envisage an extension of a line of credit to cover the import of food, medicines, and other essential items from India to Sri Lanka; Energy security package that would include a line of credit to cover the import of fuel from India, and an early modernization of Trincomalee Tank Farm; Offer of a Currency Swap to help Sri Lanka address the current balance of payment issues; Facilitating Indian investments in different sectors in Sri Lanka that would contribute to the growth and expand employment. This will build on recent trends in that respect.
It was agreed that modalities to realise these objectives would finalize early, within a mutually agreed timeline. Minister Rajapaksa and Ministers Sitharaman and Jaishankar agreed to open direct lines of communication and to be in direct and regular contact with each other to coordinate the above initiative.
Moreover, in a recent development, last week Sri Lankan Energy minister Udaya Gammanpila has announced that in a month, Colombo is slated to sign the long-dragging deal with India to jointly develop the strategically important Trincomalee oil tank farms. He said that India-Sri Lanka has been negotiating this for 16 months and that the country is very close to finalizing the terms of the Trinco oil farm project with India.
India’s interest in the Trinco oil farm project
Trincomalee Oil Tank Farms was built by the British during the Second World War, to serve as a refuelling station. It was built adjacent to the Trincomalee port, which is a desirable natural harbour.
However, the century-old oil tanks need to be refurbished to be fit for use again, at the cost of millions of dollars. The proposal to renovate the oil farm was envisaged 35 years ago, in the 1987 Indo-Lanka accord. This accord states that ‘work of restoring and operating the Trincomalee oil tank farm will be undertaken by India and Sri Lanka, as a joint venture’.
