C3S Article no: 0051/2017
The Chinese Foreign Ministry on May 12th , 2017 parried questions about reports that Sri Lanka has rejected China’s request for its submarine to dock at Colombo due to concerns from India. It seems that the China continues to pressure the island nation for docking its submarines despite assertion by Sirisena government immediately after the visit of Indian Prime Minister to Sri Lanka from May 12 to 14 2017. The Sri Lankan government’s action reflects the country’s need for independent and developmental policies in a mushrooming world of global and regional powers. We can see the recent action as an extension of Sri Lankan Prime Minister Ranil Wickremesinghe’s statement in Tokyo on February 12th, 2017. He has announced “Sri Lanka hopes to become the regional hub of the Indian Ocean again” and Sri Lankans “want to ensure that they develop all their ports, and all these ports are used for commercial activity, transparent activity, and will not be available to anyone for any military activity”. Nevertheless, in a globalized world of ‘dependency’ it is a debatable question on how a small and developing country like Sri Lanka will be able to make changes in its domestic and foreign policy. This paper examines the ongoing expansion of China’s maritime power in the Indian Ocean region and Sri Lanka’s role in it.
What is the background of China sowing the seeds of influence in Sri Lanka?
What is the actual motive of China behind huge economic support for the island country? And how successful is it?
What will be the future implications of Chinese influence in the IOR and how it will affect the stability of the region?
How can India develop a proactive policy in the region, including Sri Lanka?
Sowing the seeds
History plays a pivotal role in understanding the contemporary issues which exist in Sri Lanka in relation to China. The Sri Lankan “pendulum” has been swinging between India and China since its independence in 1945. Don Stephen Senanayake, the first Sri Lankan prime minister had committed to the non-alignment policy to avoid being part of super power rivalries during the Cold War. Like in every country NAM had its modulations in Sri Lanka as well and this resulted in the creation of a new party called the Sri Lanka Freedom Party (SLFP) in 1951 under the leadership of S. W. R. D. Bandaranaike. Bandaranaike’s tenure marked a new history in relation to China and started formal diplomatic relation. During the peak of LTTE war, China’s military assistance improved the ties between the two nations.
The Sri Lankan victory over Tamil Tigers in 2009 was achieved with difficulty and maintained with even greater difficulty. The main back stage supporter of Sri Lankan civil war in the latter part of the war was China. When the US ended direct military aid in 2007 over Sri Lanka’s deteriorating human rights record, China leapt into the breach, increasing aid to nearly $1billion (£690 million) to become the island’s biggest donor, and it also encouraged Pakistan to sell more arms and to train pilots. Even the Chinese veto prevented the UN Security Council from even debating the issue, let alone sending monitors to investigate. China’s support when all others turned their backs against Sri Lanka helped China to amplify its influence in the island nation.
China’s apparent adoption of “string of pearls” theory and Beijing’s “hexiao gongda” policy in South Asia: “uniting with the small”- Pakistan, Bangladesh, Nepal, Burma, and Sri Lanka—“to counter the big”- India are obvious challenges in the region. China has been successful in maintaining a peaceful coexistence with almost all countries in South Asian region by attractive trade and commercial relations with them. The results are showing that the construction of ports in Gwadar (Pakistan), Hambantota (Sri Lanka), Chittagong (Bangladesh) and Kyaukphyu (Myanmar) could make a considerable impact on India.
Expectations behind investing in the country and the success of the story
The eighteenth Communist Party of China National Congress, which was held in November 2012, proclaimed that China would become a strong maritime power. President Hu Jintao told the National Congress: “We should enhance our capacity for exploiting marine resources, develop the maritime economy, protect the marine ecological environment, resolutely safeguard China’s maritime rights and interests, and build China into a maritime power”. The Chinese urge for becoming a maritime superpower of the twenty first century is clearly showcased in Hu Jintao’s speech. More importantly, it has been meaningful in President Xi Jinping 21st century Maritime Silk Road (MSR) which was announced in 2013. But history tells us that even before the official declaration about the need to become a ‘controller of blue resource’ China started her job by investing in the name of ‘pearls’.
China’s positions of sea defence are closely associated with the security of the Indian Ocean and northwest Pacific Ocean. The growing magnitude of Indian Ocean gives more attention for littoral states in China’s maritime map. Sri Lanka’s strategic position in the Indian Ocean region is rising to its image in Chinese new initiative One Belt One Road (OBOR). The port cities of island countries Colombo and Hambantota are important points of Maritime Silk Road (MSR). Therefore, China’s huge investment in the island country reflects the maritime and economic interest of Beijing. That is why Wickremesinghe, in his speech at the OBOR forum, said: “Sri Lanka could be an economic hub within the OBOR program”.
In the last few decades, China’s economy has been growing rapidly and overtaking the traditional economic powers. Now, China is the world’s second largest economy measured in terms of GDP. According to World trade Organization China is the first largest merchandise exporter and the second largest merchandise importer in the world. For China, the ratio of merchandise trade as a percentage of the GDP is nearly 35.8%, whereas in India it is around 31%. Hence, the comparison of ratio of GDP shows that China is much more dependent on trade than any other Asian country. In addition, China’s dependence on ‘water’, i.e., the maritime aspects for its economic growth throws light to the importance of stable and secure Sea Lines of Communications (SLOCs) in Asia-Pacific region. Protection of SLOCs is interconnected to the economic and political stability of the littoral states of the Indian Ocean. One of the main intentions of the building up of China’s People’s Liberation Army Navy (PLAN) is to secure her globally expanding economic interests. So, the query is raised on why China’s interests concentrates on Indian Ocean region and particularly in Sri Lanka.
The vital role of the Indian Ocean region in maritime strategy and trade relations is the main reason for China’s investment in the island country since the end of Tamil Elam war. This can be best explained in Alfred Thayer Mahan words “Whoever controls the Indian Ocean dominates Asia and this Ocean is the key to the seven seas. In the twenty first century the destiny of the world will be decided on its water”. As the global manufacturing hub of the world, China’s strategic position in the Indian Ocean region and huge financial aid for building ports across the region are essential component for the country to keep the economy at its present growth rate and to enlarge its position all across the globe.
The emerging status of Sri Lanka as a geo-strategically significant country and the growing importance of ‘Blue Water Economy’ are the main attractions in the ‘Southern tip of South Asia’. Some scholars predict that Sri Lanka will be the naval strategic point of the coming era. The importance of maritime power is a vital aspect for the island country and China is trying to take advantage of the country at the same time. China’s support for the Sri Lankan government to build new transportation infrastructure are mainly driven by its ambitions to reach the oil rich Middle East and for trade with Europe.
Sri Lanka willingly or unwillingly seems to be a partner of China’s ambition to acquire footprint in the Indian Ocean region. The transformation of the sleepy coastal town of Hambantota as the new harbor city in the region was the so called help of China to the island country to implement its dream. Hambantota port is center stage due to its geographical position of being situated at the southern tip of Sri Lanka which is closer to the busy shipping lanes of the world, which are a few nautical miles away from the port. The center location of Hambantota port between Malacca Strait and oil rich Middle East is another major magnetic aspect of this coastal city.
According to the finance ministry data, Hambantota port project has a total loan of US $1.35 billion. Out of that US $900 million was drawn at a 2% interest rate and the remainder is with an interest rate ranging from 6.3% to 7.65%. . In the Colombo financial city, China invested around $ 1.4 billion. For some experts, the investments in the economically weak countries are a Chinese strategy for military presence in the region. Because of this India and Japan are competing to invest in Tricomalee port.
On the other hand, China’s financial engagement with Sri Lanka is likely to deepen starting this year, with Beijing and Colombo getting ready to sign a Free Trade Agreement (FTA), one which has been negotiated since 2014. The lower tariffs will enable Chinese products to penetrate deeper into Sri Lanka’s consumer market, widening China’s already huge $3.4 billion trade surplus with that country. Colombo had been already indebted to Beijing to the tune of $9.6 billion, given at interest rates of between 2% and 5%, and falling behind repayments. This will lead the country to a huge debt crisis and chaos. Former President Mahinda Rajapakse was criticized by several Sri Lankan opposition parties for his inclination to China and for accumulating loans. The end of Rajapakse ‘dictator rule’ and Sirisena’s rise was the immediate after effect of these policies.
In the recent Chinese 2008 Defence White Paper, Beijing emphasizes that struggles for strategic resources, strategic locations, and strategic dominance have intensified. This implies that the PLA has shifted the focus of ground force operations from regional defence toward trans-regional mobility. China’s maritime ambitions must have taken elevated directions. This infers that the direction of maritime strategy must shift from offshore defence to far sea defence.
This strategy is clearly evident from China’s from its establishment of military base in Djibouti, an island country in the African continent. Its strategic position in the crucial point to the Red Sea, the Gulf of Aden and the Arabian Sea, making it as the battle ground of big powers. China is projecting it as a “support facility” for its navy’s anti-piracy, humanitarian and peacekeeping operations in the Horn of Africa region. Despite these claims, other extra regional players, namely United States, France and Japan who have also established military bases in Djibouti fear that China will use it for more advanced military purposes. We can consider it as a starting point of modern colonialism by China. By investing all across the Indo-Pacific region, communist China’s government poses an unprecedented challenge to regional stability and security of the region.
Implications on regional stability
International infrastructure investment and development is no longer merely about profitability; it is becoming a way of obtaining influence in a country. The increasing presence of China in the island country is a threat to the regional powers of India and Japan. The diminishing US and Western influence in the Indian Ocean region makes Chinese power more powerful and it is a major threat to ‘balance of power’ in the region. The looming figure of China is not only a threat to regional powers, but also it’s a threat to Sri Lanka itself. The huge amounts of loans and aids leave them vulnerable to China’s influence.
India always has an eye on the stability and security of the Indian Ocean region. In retired Indian Vice Admiral P. S. Das’ words India is “the largest and most capable Indian Ocean littoral”, so any intervention of Chinese navy would break the stability and security of the region. According to him, this gives India “serious interests in the Western Pacific [as well] through which half of its overseas trade moves.” In addition to this the naval power establishment is a key tool for China’s power projection in the Indian Ocean region- This kind of strategic play by China will have a greater impact on India’s role as a big brother in the region.
Furthermore, China’s export of their own citizens and prisoners creates a huge dilemma in recepient countries. Thousands of Chinese convicts have been pressed into service on projects undertaken by state-run Chinese companies in Sri Lanka. China’s main intention of investing in developing countries is not intended to support the local economy but to amplify Chinese entry to the local economy and to open markets for its ‘no guarantee, no warranty’ products. By employing Chinese workers, China provides less opportunity for local laborers in the country of investment. This may create economic and political instability. Employing Chinese laborers, at the expense of local labor, has been met with conflict and discord by the local population. In Nigeria, for instance, imported textiles had forced local factories in cities to close down. Such a situation is conceivable in Sri Lanka despite the ties between China and Sri Lanka.
‘Engage South Asia policy’ for India
To counter China’s overwhelming influence in the Indian Ocean region, India’s posture launched time-honored strategies in 2015-2016. Prime Minister Narendra Modi’s visits to Seychelles, Mauritius and Sri Lanka in March 2015, saw an intensive focus of India for a stable and affluent Indian Ocean region. The process was given form through the creation of a separate Division in MEA in January 2016 for the Indian Ocean Region, bringing together relationships with key countries in the region such as Sri Lanka, Maldives, Seychelles, Mauritius and the structured Trilateral Maritime Security Dialogue (between India, Sri Lanka and Maldives) to address geo-strategic security, economic and developmental interests in the Indian Ocean Region.
The Indian Ocean Region Association (IORA) – formerly known as Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) – seeks to address India’s concerns on the future security of the region. Although this regional cooperation group was initiated in 1995, it is a weak association that is lacking a solid cooperation framework across countries in the Indian Ocean region. China, one of seven dialogue partners of the IORA, (along with Britain, France, Germany, Japan, the United States and Egypt) has displayed considerable aggression in the South China Sea and refused to accept a tribunal verdict, creating considerable disquiet among IORA and other countries. In contrast to this, as it began to reinvest in Indian Ocean regionalism, the Indian Ocean forum identified some priority areas, including maritime safety and security, trade and investment facilitation, fisheries management, disaster risk management, and promotion of tourism.
Due to drawbacks in regional organizations, India is lacking consolidated friendship and support from her neighbors and China is taking advantage of this situation. India has held back from fully realizing its potential in developing ports in IOR and thereby creates chances for others to surge ahead. India should give more attention to the development of ports in IOR, thereby enhancing the connectivity with other nations in the region. Network of naval bases, rail, and road can make a rapid growth in the economy as well as this network will enhance Delhi’s image in regional and world politics.
Besides infrastructure development, India can share the glory of Indian educational institutions in developing countries by providing grants and aids for students and policy makers. This will create a responsive educated society to India’s needs and will help in policy making. Now India should look for an ‘Engage South Asia policy’ to widen its interactions with neighbors and will be an extension of ‘Act East Policy’.
In specific terms, India’s relations with Sri Lanka are historic. Therefore, India should develop strong and credible diplomatic relations with Sri Lanka. India has to play a vital role to attract Sri Lankan government and civil society to the big neighbor and create a secure feeling here. India has many advantages over China in terms of historical and cultural similarities with Sri Lanka. Culture is an accelerator which can bring unity and prosperity to a nation. Now, the time has come for India to make use of her rich cultural wealth to attract countries in achieving national security and sustainable development. Being intertwined, cultural and diplomacy can and do play an important role in bringing small and developing countries to the Indian axis. Buddhism can be a great source of energy in restructuring relation to Sri Lanka.
Since India does not have considerable hard power or economic power in the island nation, Prime Minister Narendra Modi’s recent visit to Sri Lanka on 11 May 2017 is a sign of using cultural and historical threads for a “strong relationship” between the two countries. The Sri Lankan government’s invitation to Indian Prime Minister to be the chief guest at the international Vesak day festivities in Colombo can be seen as the new government’s fascination for enhancing Buddhist linkages with ‘big brother’. In addition, engagement with India helps in reducing the dependence of the small island country on China and put a break on Chinese expansion through “debt trap policy”.
The Tamil Nadu influence plays a vital role in both countries in foreign policy making. The recent address by Prime Minister Narendra Modi to the Indian origin Tamil community in Dickoya, Sri Lanka is significant, because this is the first visit of an Indian Prime Minister to this region. The announcement of Modi about direct air India flights from Colombo to Varanasi will create waves in people to people contact. This is especially because 12.6% of Sri Lanka’s population follow Hinduism.
Besides religious ties there are trade and economic linkages. India has become one of the top five countries investing in Sri Lanka, mostly in the services sector like health, education, fuel distribution, hotel industry, tourism, IT training, computer software, and airline industry. However, presently the long standing fishermen issue is the major threat between the neighbors. Along with these issues the lack of Indian understanding about the Sri Lankan view towards regional and extra regional powers and existing powers of the island country is the main communication gap between the nations. Therefore Indian politicians and diplomats have to pay more attention to solve the existing problems and for the establishment of better situations in the island country.
The Ministry of External Affairs (MEA) account of India-Sri Lanka relations had undergone a noteworthy modification during 2015-2016. India’s relationship with Sri Lanka has been progressing in keeping with the “neighborhood first” principle. Since 2005, the Government of India has committed INR 2,300 crore as grant assistance and INR 12,900 crore under Lines of Credit for the rehabilitation of Internally Displaced Persons and reconstruction of infrastructure in the Northern and Eastern Provinces of Sri Lanka. Trade between the two countries has grown rapidly to rise to US$ 7.45 billion in 2014-15. In maritime relations as a continuation to the existing cooperation and progress, Indian Coast Guard to Sri Lankan Coast Guard staff talks were held on 8-10 September 2015 in Colombo. Indian Coast Guard Ship Varaha was gifted to Sri Lanka in August 2015 as a friendly gesture. The recent launch of South Asia Satellite will benefit Sri Lanka. India and Colombo are also actively cooperating in tackling climate change. These measures are commendable. However, there is scope for improvement.
As a sovereign country Sri Lanka should have the freedom to choose what is best for them. The need for an independent policy is crucial for Sri Lanka in present day. As Prime Minister Ranil Wickremesinghe’s hopes, self-reliant policies of a country will contribute to building up a self-sufficient island country.
Building up organizations is necessary in the region. It will be a decisive move to develop coordinated, effective interactions between Indian Ocean littoral countries and interested players in the region. India’s initiative to revive the Indian Ocean regionalism shows Delhi’s belated recognition of the nation’s maritime imperative. Nevertheless, India’s inability to invest at the same level as China in littoral countries and Delhi’s unpreparedness to build real military partnerships in the littoral is affecting India’s dominance in the region. Now Delhi should take necessary steps to overcome all these limitations on the India’s maritime aspirations. Along with this, the leaders should consider strengthening of IORA as well. India as a major regional player in the Indian Ocean region, should take a more active role in bringing all member countries and dialogue partners together in the same podium.
To enhance relation with the island country, the Indian government should increase seats for Sri Lankan citizens in Indian naval and educational institutions. The creation of a diplomatic and military society receptive to India’s needs in the Indian Ocean region will be an indispensable step for the Indian diplomatic community. In conjunction with this, India’s support for building Tricomalee port to counter China’s overwhelming presence in island country will boost relations with Sri Lanka. A proactive Indian initiative for solving the long standing fishermen issue may bring good tides for bilateral relations with Sri Lanka.
Opportunities also exist for India and China to build bilateral trust, even though tensions are still a barrier in diplomatic relations. China has now started accepting the tremendous power of India to an extent in regional level and in international organizations. On its part, India needs to differentiate its mode of diplomacy and interactions with China. India should continue to maintain a cordial relationship with China, simultaneously looking after Delhi’s national interest in the Indian Ocean region including Sri Lanka. The rivalry between India and China for influence in the island country will not benefit either party. Nevertheless, at the same time Sri Lanka is benefiting from the rivalry. Hence, this is the time for both India and China to move from the bitter past towards shared prosperity.
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[Anju Rose James is an intern with the Chennai Centre for China Studies. She completed B. Sc (Physics, Chemistry & Mathematics) at Christ University, Bengaluru. She is now pursuing MA International Studies at Christ University. She has carried out research on identified issues on China under the guidance of the members of C3S. The views expressed in this article however are of the author. She can be reached at firstname.lastname@example.org]