The Indo-Pacific region is becoming the hotbed for geopolitical influence of both China and India. Both countries share adversarial relations and have high trust deficits and, more importantly, try to marginalize the influence of the other in a multi-dimensional manner. Sri Lanka, a very strategically located country in Indian Ocean Region (IOR) is considered a strategic asset by India and China because of its potential to affect the maritime security of the IOR[i].

Two-thirds of world oil passes through various trade routes located around Sri Lanka; in addition, its proximity to regional markets and security of Sea Lines of Communications (SLOCs) enhance its strategic importance to the countries like the US, Russia and China. From a maritime security perspective, according to Robert Kaplan, Sri Lanka is considered as ‘Monsoon Asia’ among other countries such as India, Pakistan, China, and Bangladesh which underscores its importance to the United States.

Therefore, Sri Lanka has the potential to change the contours of the politics of the Indo-Pacific region. By switching to any country between India and China, Sri Lanka can drastically affect the South Asian regional political and security landscape which could, in turn, lead to a shift in international politics and security architecture. To check the growing stature of India in South Asia regional politics and thereby counterbalancing the QUAD countries’ dominance in the Indo-Pacific region, China is relentlessly trying to gain a hold over Sri Lanka as a part of its Maritime Silk Road Initiative (MSRI) by adopting a multi-pronged strategy.  

China’s role in Sri Lankan politics

China has had a very close relationship with Sri Lanka since ancient times. Sri Lanka was among the first non-communist countries to recognize China after the conclusion of the Chinese civil war[iii]. China has nurtured a very cordial and warm relationship with the Rajapaksa family that ruled Sri Lanka for more than a half century[iv]. China supported Sri Lanka with arms when the then defense minister Gotabaya Rajapaksa launched a military campaign against Tamil Tigers in 2000s[v]. Furthermore, China blocked the attempts made by the countries such as Mexico in United Nations to issue a statement against Sri Lanka for employing heavy weapons in war and atrocities against civilians[vi].

When Sri Lanka succeeded in quelling the Tamil Tiger terror group, Sri Lankan President Mahinda Rajapaksa publicly thanked China for assisting Colombo in many ways. 

China has deeply penetrated Sri Lanka by heavily investing in the Rajapaksa family. It offered very expensive projects such as the Mattala Rajapaksa International Airport, which was funded by a Chinese bank with a very high-interest loan.Chinese investment exponentially increased during the Rajapaksa regime. During Mahinda Rajapaksa’s campaign in 2015, approximately $7.6 million went directly from a majority state-owned Chinese corporation to Rajapaksa’s campaign expenditure[vii]. During the elections, the Chinese ambassador openly lobbied for voters for opting Mahinda Rajapaksa[viii]. In 2018, a Chinese-Sri Lankan joint venture specialized in container shipping donated $55,000 to a charity controlled by the sister-in-law of Mahinda Rajapaksa[ix].

‘Elite Capturing’ is a very common practice in Chinese diplomacy. Chinese leaders often seek to develop a very close and friendly relationship with the elites and their families having dominant political clout in any country[x]. Papua New Guinea, and South Asian countries such as India, Nepal, and Pakistan exemplify this trend. Asymmetry in development, size and structure of the economy proffers numerous avenues for to China for employing its multi-pronged strategy to enhance its geopolitical influence in the country to make it fully dependent on its developmental assistance[xi].

Sri Lanka's economic crisis 

Sri Lanka is a war-torn state. It demands huge investments to fulfill its infrastructural necessities. The economic structure of Sri Lanka, economic mismanagement, high budget and current account deficits, hyperinflation, and huge sovereign debt are the factors that are affecting Sri Lankan economy regressively[xii]. More importantly, the populist policies of the Rajapaksa government, taxation policy, and banning chemical fertilizers coupled with the above factors have resulted in a deep economic crisis[xiii].

In addition to Rajapaksa’s inappropriate policy measures, China catalyzed Sri Lankan economic crisis by taking strategic advantage of its proximity with the Rajapaksa family. China used its economic clout to lure the Rajapaksa family to deeply penetrate the Sri Lankan economy. The Rajapaksa family in the island nation is highly influential and became popular after the Rajapaksa government crushed the Tamil Tigers with Chinese assistance that generated huge public sympathy and support. It was cunningly enchased by this family to usurp power and perpetuate corruption, nepotism, and authoritarian fiefdoms[xiv]. Rajapaksa borrowed huge money to pay for a three-decade civil war against Tamil minority separatists and developing roads, airports, stadiums, and power grids[xv]. Hambantota is the stronghold of the Rajapaksa family in which the little-used Mattala Rajapaksa International Airport, Mahinda Rajapaksa Stadium, and a memorial of the Rajapaksa elders were built with Chinese money[xvi]. More importantly, these projects are not paying even low returns and no value addition to Sri Lankan economy.

Several serious corruption allegations have been leveled against the family that includes money laundering, illegal transfer of state-owned weapons worth millions, and mismanagement and corruption at Sri Lanka Airlines[xvii]. By observing asymmetry in economic structure and infrastructural gap, China devised its strategy for entrenching very deeply in Sri Lanka. During 2005-15, when Mahinda Rajapaksa came into power, China became the biggest partner for proffering developmental assistance and FDI[xviii].  

To recover its economy, the Mahinda Rajapaksa government announced mega infrastructure projects and China grabbed this opportunity and invested heavily in these projects by employing its economic clout to become the next Asian superpower[xix]. Furthermore, China offered technical, financial, and economic assistance to these projects. The Sri Lankan government opted for Chinese companies for investment, signed abstract agreements;,promoted opaque companies and investments, accepted loans with higher rates than those offered by ADB or World Bank[xx]. The reason behind this geo-economic strategy was to make Sri Lanka fully dependent on China.

Despite knowing the economic vulnerabilities and structural weakness, China offered unsustainable loans at a very high interest rate. To gain a strong foothold in Sri Lanka, China used the political weakness of the Rajapaksa family to sustain its corrupt and authoritarian regime by funding its electoral campaign in order to gain a strategic advantage in the Indian Ocean Region to marginalize India and other Western countries. especially US influence in the Indo-Pacific region.

Implications for India

The growing presence of China in India's backyard is always a big concern for India. China is strategically encircling India to marginalize its geopolitical influence by undermining India’s stature in international politics and economy. More importantly, there is no place for international norms, values, and rules in Chinese diplomacy. In other words, China wants to acquire a very dominant place in the international system of states by reconfiguring it according to its hegemonic agenda.

It is basically the defining characteristic of ‘Revisionist States’ and India should understand it very carefully. Surprisingly, China is claiming Russian territory Vladivostok as its territory though China and Russia are sharing friendly relations.[xxi]  Similarly, China’s territorial reclamation of maritime territory and islands within territorial waters and Exclusive Economic Zones (EEZs) of other countries in the South China Sea and Japanese islands in the East China Sea[xxii] is enhancing the concerns of the US and its allies including India.

Against this backdrop, India should devise its strategy by paying attention to the Chinese multi-pronged strategy comprising economic diplomacy, technical and financial assistance, and maneuvering of domestic politics of Sri Lanka to gain a strong hold on a very strategically located island nation. By considering Sri Lankan vulnerabilities and necessities, India should offer its multi-dimensional assistance in getting Sri Lanka out of its economic crisis that was the result of debt-trap diplomacy of China and wrong economic policy measures of the Rajapaksa government.

India assisted Sri Lanka with US $3.8 billion in the form of currency swaps, grants, credit lines, humanitarian supplies, and infrastructure development.[xxiii] This action resulted in the cancellation of Chinese projects in the Jaffna peninsula and approval of Indian investment in the energy sector, a Free-Floating Dock Facility, Dornier aircraft, and a Maritime Rescue Co-ordination Center (MRCC). One of its units is located in the Chinese operated at Hambantota airport[xxiv].

Sri Lanka is very keen to work with New Delhi on expanding and developing the harbor at Trincomalee in the northeast into a major port[xxv]. Talks are going on an undersea cable to connect the power grids of both countries and a fuel pipeline from southern India’s mainland to northern Sri Lankan projects.

Without interfering in the internal politics of Sri Lanka, India’s approach should be people-centric, supportive of democracy, of an all-weather friend who can lend a helping hand in its economic recovery in contrast to the Chinese predatory strategy of exploiting Sri Lanka to fulfill its geopolitical ambitions and becoming the new epicenter of global politics.

(The author is a geopolitical Risk Analyst who worked with Wikistrat Inc. He specializes in India’s national security and its foreign policy. He can be reached at kdeepakk27@gmail.com)

[i] Induja JS, “The Pivotal Role of Sri Lanka between the Elephant and Dragon”, Center for Land and Warfare Studies, September 28, 2021, https://www.claws.in/the-pivotal-role-of-sri-lanka-between-the-elephant-and-dragon/. Accessed on March 8, 2023.

[ii] Ibid.

[iii] Michael Rowand, “China Made a Failed Bet on Sri Lanka’s Rajapaksa Family”, Foreign Affairs, July 13, 2023, https://foreignpolicy.com/2022/07/13/china-sri-lanka-rajapaksa-family-corruption/ Accessed on March 8, 2023.

[iv] Ibid.

[v] Ibid.

[vi] Ibid.

[vii] Ibid.

[viii] Ibid.

[ix] Ibid.

[x] Ibid.

[xi] Ibid.

[xii] Tamanna Salikuddin, “Five Things to Know about Sri Lanka’s Crisis”, United States of Peace Institute, July 15, 2022, https://www.usip.org/publications/2022/07/five-things-know-about-sri-lankas-crisis Accessed on March 8, 2023.

[xiii] Ibid.

[xiv] Seshadri Chai, “Not majority-minority, Sri Lanka crisis a result of corruption, Rajapaksa family’s greed” The Print, July 15, 2022, https://theprint.in/opinion/not-majority-minority-sri-lanka-crisis-a-result-of-corruption-rajapaksa-familys-greed/1039489/ Accessed on March 8, 2023.

[xv] Ibid.

[xvi]  Ruth Pollard, “ In Sri Lanka, even Rajapaksa heartland paved with Chinese money is broken” Business Standard, June6,2022, https://www.business-standard.com/article/international/in-sri-lanka-even-rajapaksa-heartland-paved-with-chinese-money-is-broken-122060600096_1.html, Accessed on March 8, 2023

[xvii] Ibid.

[xviii]  Aditya Gowdara Shivamurthy, “The Sri Lankan Crisis: The curious case of China’s complicity” Observer Research Foundation, May 30, 2022, https://www.orfonline.org/expert-speak/the-curious-case-of-chinas-complicity/ , Accessed on March 8, 2023.

[xix] Ibid.

[xx] Ibid.

[xxi] Akshay Narang, “This is our land’ China now claims Russia’s Vladivostak as part of its territory”, TFI POST, July 4,2020, https://tfipost.com/2020/07/this-is-our-land-china-now-claims-russias-vladivostok-as-part-of-its-territory/ Accessed on March 8, 2023.

[xxii] Ibid.

[xxiii]  Aditya Gowdara Shivamurthy, “ Should India continue its assistance to Sri Lanka as China makes its way to Hambantota?”, Observer Research Foundation, August 23,2022, https://www.orfonline.org/expert-speak/should-india-continue-its-assistance-to-sri-lanka/ Accessed on March 8, 2023.

[xxiv] Ibid.

[xxv]  “India’s Much –Needed Moves to Counter China Influence in Sri Lanka”, NDTV, December 27,2022,https://www.ndtv.com/india-news/india-makes-progress-in-countering-chinas-influence-in-sri-lanka-3641955. Accessed on March 8, 2023.