Sri Lanka, India and China: An

Uncertain Triangle
by Cecilia Tortajada and Asit K Biswas
March 31, 2015 10:21 pm
For India and Sri Lanka, the presence of China and the fall of Rajapaksa mean that
the relationships have to be recalibrated.
Nowhere in South Asia has democracy been so unpredictable as in Sri Lanka. Six
weeks before the election in January 2015, President Mahinda Rajapaksa appeared
unbeatable, even invincible. Elected as President in 2005, he had ended a bloody
civil war of 26 years with the Tamil Tigers in 2009, and the countrys GDP had grown
by 7.4 percent over the past five years. Having orchestrated a change in the
Constitution so that he could run for an unprecedented third 6-year term, he called an
early election two years before necessary, being supremely confident of victory.

A new President was elected, Maithripala Sirisena. He was the General-Secretary of

the Sri Lanka Freedom Party and Minister of Health under the ex-President, and a
long-term ally. The day after Rajapaksa announced the election, Sirisena defected and
announced his candidacy for the President. He went on the offensive immediately,
accusing Rajapaksa family for taking over the control of the economy, power and the
party, and claimed that the country was heading towards a dictatorship.
With a credible Presidential candidate, many sensed an opportunity to get rid of an
increasingly authoritative regime where at least 50 percent of public spending was
under the control of Rajapaksa family members. Furthermore, independent media was
muzzled, minority was repressed and state power and media were used to promote
himself and his family. Turnover at the election was high, 81.5 percent, and the
electorate elected Sirisena with a 3.7 percent majority.
During the second-term of his Presidency, Rajapaksa increasingly became dependent
on China for many reasons. First, before the build up for the final push to defeat the
Tamil Tigers, Rajapaksa had explored getting arms from India, one of Sri Lankas
major donors. However, the United Progressive Alliance (UPA) Government was
beholden to regional parties like Dravida Munnetra Kazhagam (DMK) of Tamil Nadu
for its survival, and DMK had to have consistently anti-Colombo lines. When India
continued to demur, Rajapaksa approached China. It helped the military buildup for
the Sri Lankan armys final assault on the Tamil Tigers.
Second, during the 2013 Commonwealth Prime Ministers meeting in Colombo, the
Indian Prime Minister deferred to domestic pressures and decided not to attend the
Summit despite fervent requests from Colombo.
Third, major western donors strongly disagreed with Rajapaksas aggressive stand not
to allow any independent and objective enquiry into human rights violations by both
the Government and the Tamil Tigers. The enquiry that was carried out by the
Government was superficial and not credible. An independent enquiry by the UN was
rejected. Western donors were reluctant to provide funds to a regime suspected to

have committed serious war crimes.

With traditional Western donors distancing themselves from Sri Lanka with
Rajapaksas policies and India being boxed in because of its internal domestic politics,
China promptly filled the void. Rajapaksa jumped into Chinas embrace with its noninterventionist stands in national issues, including overlooking of war crimes. China,
with help from Russia and Venezuela, had several times protected Sri Lanka from
possible war crimes investigations by the UN.
China had deep pockets to support Sri Lankan development and infrastructure
projects. It had no qualms on the commercial and economic viabilities of projects,
especially since vast majority of the funds were given as loan which meant Sri Lanka
would have to pay them back. These assertive policies cemented Colombo-Beijing
relationship.
In 2009, China replaced Japan as the primary donor. China provided a total
assistance of $5.056 billion between 1971 and 2012. However,94 percent of these
funds were received from 2005 when Rajapaksa became the President. Only 2
percent of these funds were grants, rest were soft loans. In contrast, nearly 30 percent
of the Indian aid of $1.6 billion was grants.
India has been concerned by several developments of Chinese influence in Sri Lanka.
Partly because of internal politics. First is the port at Hambantota which first elected
Rajapaksa to the Parliament in 1970. It was affected by the Indian Ocean tsunami in
2005 when over 30,000 lives were lost. India was requested to help to develop the
port but the UPA Government demurred. China stepped in to develop the port and is
providing nearly 85 percent of the funds as loans. The first phase cost some $307
million. The second phase will be completed this year, costing some $808 million.
China is also constructing its second international airport at Hambantota. Both the port
and the airport are being constructed by China Harbour Engineering Company, with 85
percent funding from Ex-Im Bank of China. It is the first airport this company has ever
built.

When President Xi Jinping visited Colombo in September 2014, he signed a BOT

agreement for a 35-year lease for four of the seven container berths on behalf of the
Chinese company. While the Indians are worried about the string of pearls strategy
that ostensibly China is following, they must now regret not accepting the initial
request from Colombo to develop the port.
The Chinese are constructing the new $1.4 billion Colombo Port City Project, covering
233 ha of land. Under the agreement, China will receive 88 ha on a 99-year lease and
another 20 ha on a freehold basis. This means 1/3rd area will be under Chinas
control for 99 years. It is Sri Lankas largest foreign investment project ever, and was
inaugurated by President Xi. Since 70 percent of the port activities are related to India,
New Delhi is seriously concerned about the Chinese intentions and potential
implications.
This is in addition to the South Container Terminal at Colombo Port, which is being
managed by a China-led consortium on a 35-year BOT agreement. Both a Chinese
submarine and a naval ship had used this China-controlled terminal, which had
alarmed the Indians. Colombo had also enthusiastically endorsed the 21st Century
Maritime Silk Road, which had further worried New Delhi about the Chinese intentions.
The relationship between India and Sri Lanka had steadily frayed under Rajapaksa
because both the countries made numerous political miscalculations. In his election
manifesto Sirisena noted Sri Lanka would be neither anti-India nor dependent on
India. During his swearing-in ceremony he added his foreign policy will mend ties with
the international community.
By visiting India first after becoming the President, Sirisena made a point that good
relations with Delhi were a priority. The two countries signed four agreements. One
was a landmark treaty on nuclear cooperation, the first that Sri Lanka has signed with
any country. The Rajapaksa regime had considered Kudankulam nuclear plant in Tamil
Nadu a threat because of a potential accident. Sirisena accepted Indias guarantee of
safety in case of an accident. The others included trade, collaboration in different

areas of agricultural and cultural and educational cooperation.

Modi became the first Indian Prime Minister to visit Sri Lanka since July 1987. He
agreed to address the trade imbalance, provide an additional $318 million for Sri
Lankan railways, and increase the swap agreement to stabilise Sri Lankas currency
during any crisis from $400 million to $1.5 billion. Aware of Sri Lankas internal Tamil
situation, he confirmed that he is a firm believer in cooperative federalism, and
assured in his speech to the Sri Lankan Parliament that, for India, unity and integrity
of Sri Lanka are paramount. It is rooted in our interest.
What may be strategically important in the future is the agreement between India and
Sri Lanka to jointly develop petroleum storage facilities in the eastern port city of
Trincomalee. Modi said India will help Trincomalee to become a regional petroleum
hub. This could lead later to strategic access to this port, counterbalancing Chinas
access to Hambantota.
Modi also promised to develop a Buddhist circuit in India and requested Sri Lanka help
to create a Ramayana Trail. The two countries agreed to continue with talks to solve
the Indian concern of fishing rights at Palk Strait.
Thus, with Sirisenas visit to Delhi and Modis visit to Colombo, there has been a reset
in relations between the two countries.
Rajapaksas unexpected departure will provide an opportunity to reset most bilateral
relationships. However, it will not be status quo ante bellum (state existing before war).
China with its deep pockets, will continue to play an important role in the countrys
infrastructure development, directly and through Asian Infrastructure Investment Bank
of which all the three countries are founding members.
When any relationship frays because of a new third party, relationships have to be
recalibrated. For India and Sri Lanka, presence of China and the fall of Rajapaksa,
mean all the relationships have to be recalibrated as well.
Posted by Thavam