The foreign ministry’s statement – the first reaction since the protests this week – comes at a time when the island nation’s economy is in dire straits and in dire need of a revival.
Speaking about the crisis, Ministry of External Affairs spokesperson Arindam Bagchi said that India has extended “unprecedented support of over $3.8 billion” to improve the dire economic situation in Sri Lanka.
The island nation is grappling with the worst economic crisis since its independence, with fuel running out, foreign reserves falling to dangerously low levels and inflation going through the roof.
a fight for influence
India has been playing the role of a concerned neighbor ever since the Sri Lanka crisis peaked a few weeks ago.
From providing a $500 million line of credit for fuel imports to $1 billion in aid to procure essential commodities, India’s generosity has helped Sri Lanka avert its worst ever crisis.
Notably, India’s massive financial and material aid to Sri Lanka is in stark contrast to the belief that Chinese debt contributed to the crippling disturbances in the island nation.
This has allowed New Delhi to reduce China’s influence on Sri Lanka over the years.
Chinese debt trap?
As part of Chinese President Xi Jinping’s Belt and Road initiative to pump money into infrastructure projects in Asia and Africa, former Sri Lankan President Mahinda Rajapaksa pledged $1.1 billion to build a port in his home region of Hambantota, despite the plan. Including several loans. rejected by an expert panel.
When the deepwater port failed to generate the foreign revenue needed to pay back China, in 2017 Sri Lanka was forced to hand over the facility and thousands of acres of its surrounding land to Beijing for 99 years – directly to China. Providing an important base for territorial contrast, the coastline of rival India.
Not just the port, many other white-handed projects that helped fuel the crisis have come back from billions of dollars in Chinese debt. They are all now gathering dust in the Hambantota district, which is home to the Rajapaksa clan.
Seeing the port, for example, is another Chinese-backed extravaganza: a $15.5 million convention center that has remained largely unused since it opened.
Nearby is Rajapaksa Airport, built with a $200 million loan from China, which is so poorly used that at one time it was unable to cover its electricity bill.
In the capital Colombo, there is the Chinese-funded Port City project – an artificial 665-acre island set up with the aim of becoming a financial hub to rival Dubai.
Rajapaksa has often been criticized for using his political clout to deliver projects to China.
India step
Due to the COVID-19 pandemic and a series of dire economic decisions, Sri Lanka now finds itself deeply in debt.
China, which is Sri Lanka’s third largest creditor after Japan and the Asian Development Bank, accounts for about 10% of this debt.
While Beijing has offered more lending on favorable terms, it has held off on waiving some of Sri Lanka’s loans, possibly on concerns that it may prompt other borrowers in Asia and Africa to demand similar relief. Will do
Prime Minister Ranil WickremesingheThe man who took office after the resignation of Mahinda Rajapaksa recently said that Sri Lanka has not been able to utilize the $1.5 billion in loans given by China, as Beijing contingent money on a country with enough foreign reserves for three months. has made it.
Beijing has also pledged to “play a positive role” in Sri Lanka’s talks with the IMF and is providing about 500 million yuan, about $75 million, in humanitarian aid.
file: A 15,000 metric ton consignment containing rice, milk powder and essential medicines reaches Colombo as part of India’s Humanitarian Assistance (ANI).
Meanwhile, India has stepped in with diesel fuel and gasoline, along with rice, milk powder, medicine and other humanitarian aid worth millions of dollars.
New Delhi has also extended a $4 billion line of credit to Sri Lanka on favorable terms that has been widely credited with helping the country’s crisis worsen.
Wickremesinghe, who has served as prime minister several times in the past, is seen as pro-India, though he has limited leverage in his current role. Gotabaya Rajapakse rest of the president.
While the Rajapaksa family is considered pro-China, and with the common belief that China is partly responsible for the country’s problems, the political winds are shifting in India’s favour, experts believe.
India has recently been successful in snatching away some of Beijing’s important projects in Sri Lanka, which is also a major destination for Indian exports.
In March, Sri Lanka finalized a joint venture with India to develop solar power plants in the island nation. In the same month, Colombo also terminated a contract with a Chinese company to build a $12 million wind farm in the country and offered it to an Indian rival.
“While India is trying to maintain its strategic footprint in Sri Lanka, its main objective is to reduce the Chinese hold in the country,” said KC Singh, former India’s foreign secretary and strategic affairs expert.
With Sri Lanka still staring at an uncertain future, India’s much-needed outreach could help wean China away from its backyard and restore the balance in New Delhi’s favor.
(with inputs from AP)