News ID: 233929
Published: 0511 GMT November 08, 2018

Behind Sri Lanka's turmoil, a China-India struggle for investments and influence

Behind Sri Lanka's turmoil, a China-India struggle for investments and influence

Gleaming cranes stretch out on the waterfront in the Sri Lankan capital Colombo as Chinese companies construct a $1.5 billion new commercial district, including hotels, marinas, and a motor racing track. They have already built a giant container terminal nearby and a huge port in the south.

Now India, the traditional power in the region, is muscling into port and other projects, pushing back hard against China, Reuters.com reported.

The big fear for India is that Sri Lanka, just off its southern coast and on one of the world’s busiest shipping routes, could become a Chinese military outpost.

But the battle is creating political turmoil in Sri Lanka. A bust-up between President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe over how far to accommodate Indian interests is a key reason the nation’s unity government has just fallen apart, government officials and foreign diplomats said.

Wickremesinghe, who was fired on Oct. 26 and replaced by veteran pro-China politician Mahinda Rajapaksa, told Reuters about arguments at a cabinet meeting chaired by the president last month over a proposal to grant development of a Colombo port project to a Japan-India joint venture.

“There are arguments in the cabinet, sometimes heated arguments,” he said.

Wickremesinghe did not name the president but said: “There was a paper put forth to not give it to India, Japan.”

He added that he insisted that the ultimate decision should respect a memorandum of understanding signed between India, Japan, and Sri Lanka.

It was the first account of what transpired in the Oct 16 meeting and the government’s pushback against India.

Sirisena told a public meeting on Monday his political rivals were trying to drive a wedge between him and the Indian government by painting him as anti-India.

The Indian foreign ministry said Delhi was committed to giving developmental assistance to Sri Lanka.

 In a statement last week, the Chinese embassy in Colombo rejected allegations China was involved in a conspiracy to change Sri Lanka’s leadership, saying it does not believe in such interference.

Japan did not respond to a request for comment on the sacking of the government. But Wickremesinghe and an official from the Japan International Cooperation Agency said a $1.4 billion soft loan for a light railway project in Colombo was on hold.

India had been pushing Sri Lanka for the award of an estimated $1 billion contract for a second foreign-operated container terminal in Colombo. It has pointed to a memorandum of understanding (MOU) Sri Lanka signed in April 2017.

Reuters has reviewed unpublished documents from that MOU and it lays out a blueprint for projects India would be involved in, including an oil refinery, roads, power stations, and the container terminal. The agreement also includes room for Indian involvement in the development of industrial zones.

  The cabinet meeting was supposed to give clearance for the port project but President Sirisena said the country, already mired in $8 billion of Chinese debt, couldn’t give any more of its assets to foreigners, according to Senaratne.

Sri Lanka is only one of a number of South Asian countries where the China-India rivalry has roiled domestic politics.

China has been constructing ports, power stations and highways in Pakistan, Bangladesh, Sri Lanka, the Maldives and Nepal, much of it now tied to its ambitious Belt and Road Initiative to connect China with countries cross Asia and beyond.

In September, the leader of the Maldives - who had courted Chinese investments - lost an election in a result seen as a setback to Beijing’s ambitions for the islands.

Modi’s government is determined to start to turn back the tide. It is aggressively pitching for projects next to Chinese investments, so China’s military does not get a free pass.

“India can ill afford to ignore the strategic advantage China has gained in Sri Lanka so close to peninsular India,” said Colonel R. Hariharan, a retired Indian army intelligence officer.

 

   
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