India Sri Lanka Relations 2018

In 2018, India and Sri Lanka continued to strengthen their economic and diplomatic ties. The Prime Minister of India visited Sri Lanka to participate in the UN Vesak Day celebrations. Sri Lanka is one of India's largest trading partners in SAARC, with trade growing significantly after the India-Sri Lanka Free Trade Agreement in 2000. Recent developments include Sri Lanka allowing India to jointly develop the Trincomalee port (oil tanks farm) and inviting Petronet LNG to set up a liquid gas import terminal.

Additionally, Sri Lanka signed an agreement with India to build 1,200 houses in Hambantota, and India bid to lease and manage the Mattala airport in Hambantota. Amidst these collaborations, Sri Lanka handed over its southern port of Hambantota to China on a 99-year lease to pay off debt, stipulating that only the Sri Lankan Navy will be responsible for security and the port cannot be used as a base for any foreign navy. The Hambantota port is strategically located on vital energy supply lines in the Indian Ocean and is part of China’s Belt and Road Initiative.

India-Sri Lanka Relations in 2018: A Complex Dance of Diplomacy and Development

The year 2018 witnessed a multifaceted engagement between India and Sri Lanka, characterized by deepening economic cooperation, strategic considerations, and the overarching influence of China's growing presence in the Indian Ocean region. While both nations sought to strengthen their bilateral ties through various collaborative projects and diplomatic exchanges, the backdrop of Sri Lanka's economic vulnerabilities and China's expanding Belt and Road Initiative (BRI) added layers of complexity to the relationship. The leasing of the Hambantota port to China, in particular, cast a long shadow, raising concerns in India about its strategic implications and the delicate balancing act Sri Lanka was undertaking.

Deepening Economic Ties: A Foundation for Cooperation

The economic dimension of the India-Sri Lanka relationship in 2018 was marked by several significant developments. The India-Sri Lanka Free Trade Agreement (ISFTA), signed in 2000, continued to serve as a cornerstone of their economic engagement. This agreement, aimed at reducing tariffs and promoting trade between the two countries, had demonstrably boosted bilateral trade volumes since its inception. Sri Lanka has consistently remained one of India's largest trading partners within the South Asian Association for Regional Cooperation (SAARC) framework, highlighting the importance of this economic partnership.

Beyond the existing trade framework, new avenues for collaboration were explored and initiated in 2018. One notable development was Sri Lanka's decision to allow India to jointly develop the Trincomalee port, specifically the oil tank farm located there. Trincomalee, a deep-water port on the northeastern coast of Sri Lanka, holds significant strategic and economic value. Its natural harbor is one of the finest in the world, and its location makes it a crucial hub for regional trade and maritime activity. The joint development of the oil tank farm was envisioned as a project that would enhance Sri Lanka's energy security while providing India with a strategic foothold in the region. The history of the Trincomalee oil tank farm is complex, dating back to World War II when it was built by the British. Its disuse for many years was a matter of discussion between the two countries. India's involvement in its redevelopment signifies a renewed commitment to strategic partnership.

Another significant development was the invitation extended to Petronet LNG, an Indian company specializing in liquefied natural gas (LNG) import and regasification, to set up a liquid gas import terminal in Sri Lanka. This initiative aimed to help Sri Lanka diversify its energy sources and reduce its reliance on traditional fossil fuels. Petronet LNG's expertise and experience in the LNG sector made it a natural partner for Sri Lanka in this endeavor. The establishment of an LNG terminal would not only enhance Sri Lanka's energy security but also create new economic opportunities and promote cleaner energy alternatives.

Furthermore, India committed to building 1,200 houses in Hambantota, demonstrating its commitment to supporting Sri Lanka's development agenda. This housing project aimed to address the housing needs of the local population and contribute to the overall improvement of living standards in the region. Hambantota, despite being the location of the controversial port project, remained an area of focus for Indian development assistance.

India also expressed interest in leasing and managing the Mattala Rajapaksa International Airport, located near Hambantota. This airport, often dubbed the "world's emptiest airport" due to its low traffic volume, had become a symbol of Sri Lanka's debt burden and its struggles to attract foreign investment. India's bid to manage the airport reflected its desire to enhance its presence in southern Sri Lanka and potentially transform the airport into a viable regional aviation hub. The Mattala airport was built with Chinese loans, and its underperformance contributed to Sri Lanka's debt crisis, making India's interest in managing it a strategically significant move.

The Shadow of Hambantota: Balancing Act and Strategic Concerns

Despite the deepening economic cooperation between India and Sri Lanka, the leasing of the Hambantota port to China for a period of 99 years cast a long shadow over their relationship. This decision, made by the Sri Lankan government in 2017 to alleviate its debt burden, raised significant concerns in India about its strategic implications.

The Hambantota port, located on Sri Lanka's southern coast, is strategically positioned along vital energy supply lines in the Indian Ocean. Its control by China, even under a 99-year lease, was perceived by some in India as a potential threat to its maritime security and its influence in the region. The Sri Lankan government, however, maintained that the port would be used solely for commercial purposes and that the Sri Lankan Navy would be responsible for its security. They also stipulated that the port could not be used as a base for any foreign navy.

The Hambantota port project is a key component of China's Belt and Road Initiative (BRI), a massive infrastructure development strategy aimed at connecting China with the rest of the world through a network of roads, railways, ports, and other infrastructure projects. While the BRI has the potential to bring economic benefits to participating countries, it has also raised concerns about debt sustainability, transparency, and potential strategic implications.

India has been wary of the BRI, viewing it as a tool for China to expand its influence in the region and potentially encircle India with a network of Chinese-controlled infrastructure. The Hambantota port, in this context, became a symbol of China's growing presence in the Indian Ocean and a source of concern for India's strategic planners.

The Hambantota situation forced Sri Lanka into a delicate balancing act, navigating its relations with both India and China. On the one hand, Sri Lanka needed to maintain strong economic ties with China to address its debt burden and attract foreign investment. On the other hand, it needed to reassure India that its strategic interests would not be compromised by China's presence in the country. This balancing act required skillful diplomacy and a clear understanding of the sensitivities of both sides.

Historical Context: A Complex Tapestry of Relations

The India-Sri Lanka relationship is rooted in a long history of cultural, religious, and economic exchange. Buddhism, which originated in India, has played a significant role in shaping Sri Lankan culture and identity. The two countries have also been connected through trade and migration for centuries.

However, the relationship has also been marked by periods of tension and conflict. The ethnic conflict in Sri Lanka, which pitted the majority Sinhalese population against the minority Tamil population, had a significant impact on India-Sri Lanka relations. India's involvement in the conflict, particularly its support for Tamil militant groups in the 1980s, strained relations between the two countries.

The assassination of former Indian Prime Minister Rajiv Gandhi in 1991 by the Liberation Tigers of Tamil Eelam (LTTE), a Tamil militant group, further complicated the relationship. While India has since distanced itself from Tamil separatism, the legacy of the ethnic conflict continues to shape the dynamics between the two countries.

In recent years, India and Sri Lanka have made efforts to overcome their past differences and build a stronger, more cooperative relationship. The ISFTA, the joint development of the Trincomalee port, and other collaborative projects are testaments to this renewed commitment. However, the shadow of Hambantota and the broader geopolitical context continue to pose challenges to the relationship.

Key Actors and Their Interests

The India-Sri Lanka relationship in 2018 was shaped by the actions and interests of several key actors:

• India: India's primary interest in Sri Lanka is to maintain a stable and friendly neighbor that does not pose a threat to its security. India also seeks to counter China's growing influence in the region and ensure that its own strategic interests are protected. To achieve these goals, India has pursued a policy of economic cooperation, development assistance, and diplomatic engagement with Sri Lanka.

• Sri Lanka: Sri Lanka's primary interest is to achieve economic development and improve the living standards of its people. To achieve this, Sri Lanka needs to attract foreign investment, manage its debt burden, and maintain good relations with both India and China. Sri Lanka's foreign policy is therefore characterized by a balancing act, seeking to maximize its economic benefits while maintaining its sovereignty and avoiding being drawn into geopolitical rivalries.

• China: China's primary interest in Sri Lanka is to expand its economic and strategic influence in the Indian Ocean region. China sees Sri Lanka as a key node in its Belt and Road Initiative and has invested heavily in infrastructure projects in the country. China's presence in Sri Lanka has raised concerns in India, but Sri Lanka has sought to reassure India that its relations with China are purely economic and do not pose a threat to India's security.

• Prime Minister of India: The Prime Minister's visit to Sri Lanka to participate in the UN Vesak Day celebrations in Colombo underscores the cultural and religious ties between the two countries and the importance India places on its relationship with Sri Lanka.

• Petronet LNG: As an Indian oil and gas company, Petronet LNG's potential involvement in setting up a liquid gas import terminal in Sri Lanka highlights India's desire to play a greater role in Sri Lanka's energy sector and promote cleaner energy alternatives.

Organizations and Legal Frameworks

Several organizations and legal frameworks play a role in shaping the India-Sri Lanka relationship:

• SAARC: The South Asian Association for Regional Cooperation (SAARC) is a regional intergovernmental organization that promotes economic and political cooperation among South Asian countries. Sri Lanka's membership in SAARC highlights its importance as a trading partner within the South Asian region. However, SAARC's effectiveness has been limited by political tensions and differing priorities among member states.

• India-Sri Lanka Free Trade Agreement (ISFTA): The ISFTA, signed in 2000, is a key legal framework that governs trade and economic cooperation between India and Sri Lanka. The agreement has significantly increased trade between the two countries by reducing tariffs, promoting investment, and facilitating trade.

Stakeholder Positions and Underlying Interests

A deeper understanding of the India-Sri Lanka dynamic requires analyzing the positions and interests of the key stakeholders:

• India: India officially seeks to strengthen economic and strategic ties with Sri Lanka. Underneath this, India's underlying interests revolve around countering China's growing influence in the region and safeguarding its security interests. India pursues these goals through infrastructure investments and consistent diplomatic engagement.

• Sri Lanka: Sri Lanka's official position is to balance its relations with India and China to maximize economic benefits. However, its underlying interests are focused on attracting foreign investment, managing its debt effectively, and maintaining national sovereignty. Sri Lanka's actions involve engaging with both India and China across various development projects.

• China: China officially promotes infrastructure development and economic cooperation through its Belt and Road Initiative. Its underlying interests aim to expand its economic and strategic influence within the Indian Ocean region. China's actions include substantial investments in infrastructure projects and extending loans to Sri Lanka.

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Broader Implications: A Region in Flux

The India-Sri Lanka relationship in 2018 has broader implications for the region:

• Political: The relationship reflects the increasing competition between India and China for influence in Sri Lanka and the wider Indian Ocean region. This competition has the potential to shape the political landscape of the region and influence the foreign policies of other countries.

• Diplomatic: Sri Lanka's balancing act between India and China highlights the complex diplomatic challenges faced by small states in a multipolar world. Sri Lanka needs to maintain good relations with both powers while safeguarding its own interests and avoiding being drawn into their rivalry.

• Security: China's presence in Hambantota raises potential strategic implications for India, particularly in terms of maritime security. India needs to monitor the situation closely and take steps to protect its interests.

• Economic: Increased investment and economic activity in Sri Lanka, driven by both India and China, have the potential to boost the country's economic growth and improve the living standards of its people. However, Sri Lanka also needs to manage its debt burden carefully and ensure that foreign investment benefits the country as a whole.

Connections to Ongoing Issues and Future Outlook

The events of 2018 are connected to several ongoing issues in the region:

• China's Belt and Road Initiative: The BRI continues to be a major driver of infrastructure development and economic activity in South Asia. However, it also raises concerns about debt sustainability, transparency, and potential strategic implications.

• India's efforts to counter China's influence: India is actively seeking to counter China's growing influence in South Asia through a combination of economic cooperation, development assistance, and security partnerships.

• Sri Lanka's debt management: Sri Lanka continues to face significant debt management challenges, which have been exacerbated by large infrastructure projects funded by Chinese loans.

Looking ahead, the India-Sri Lanka relationship is likely to be shaped by the following factors:

• Continued competition between India and China: The competition between India and China for influence in Sri Lanka is likely to intensify in the coming years.

• Further economic cooperation between India and Sri Lanka: Despite the strategic challenges, India and Sri Lanka are likely to continue to explore opportunities for economic cooperation.

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• Potential for increased strategic tensions: China's presence in Hambantota has the potential to create increased strategic tensions between India and China.

The situation with the Hambantota Port raised concerns for India about its strategic implications, especially regarding maritime security in the Indian Ocean. India's response involves strengthening its own naval capabilities and enhancing maritime cooperation with other regional partners to ensure security.

The ISFTA has helped boost trade between the two countries, but there are still non-tariff barriers and other obstacles that need to be addressed. Future negotiations could focus on expanding the scope of the agreement to include services, investment, and other areas of economic cooperation.

The ethnic conflict in Sri Lanka has had a lasting impact on the country and its relations with India. While the conflict has officially ended, issues of reconciliation, accountability, and power-sharing remain unresolved. India can play a constructive role in promoting reconciliation and ensuring that the rights of all communities are protected.

India's soft power, including its cultural influence, educational opportunities, and development assistance, can help strengthen its relations with Sri Lanka. Promoting people-to-people exchanges, offering scholarships to Sri Lankan students, and providing assistance in areas such as healthcare and education can help build goodwill and foster closer ties.

The rise of non-traditional security threats, such as climate change, natural disasters, and transnational crime, requires closer cooperation between India and Sri Lanka. Sharing information, coordinating disaster relief efforts, and working together to combat terrorism and drug trafficking can help enhance the security of both countries.

India's "Neighborhood First" policy prioritizes its relations with its neighbors, including Sri Lanka. This policy emphasizes economic cooperation, connectivity, and people-to-people exchanges. By implementing this policy effectively, India can strengthen its relations with Sri Lanka and promote stability and prosperity in the region.

India's approach to Sri Lanka is also influenced by its broader strategic goals in the Indo-Pacific region. India is seeking to play a greater role in maintaining peace and stability in the region and countering China's growing influence. Sri Lanka, as a strategically located island nation, is an important partner in this endeavor.

The Indian Ocean is becoming an increasingly important arena for geopolitical competition. India and Sri Lanka, as littoral states of the Indian Ocean, have a shared interest in maintaining its security and stability. Working together to promote maritime security, combat piracy, and protect the marine environment can help safeguard their interests and ensure the free flow of trade.

The relationship between India and Sri Lanka is not without its challenges, but it also offers significant opportunities for cooperation. By addressing the challenges and seizing the opportunities, India and Sri Lanka can build a stronger, more prosperous, and more secure future for themselves and the region.

Regional Cooperation within SAARC

Despite its limitations, SAARC provides a platform for regional cooperation on issues of common concern, such as trade, connectivity, and disaster management. India and Sri Lanka can work together to strengthen SAARC and make it a more effective organization. Revitalizing SAARC requires addressing the political obstacles that have hampered its progress and focusing on practical areas of cooperation that can benefit all member states.

India's development assistance to Sri Lanka has focused on areas such as infrastructure, housing, and education. This assistance can be made more effective by aligning it with Sri Lanka's development priorities, ensuring that projects are implemented efficiently, and involving local communities in the planning and implementation process. Capacity building and technology transfer can also help Sri Lanka become more self-reliant.

The India-Sri Lanka relationship is also influenced by domestic political considerations in both countries. In India, the interests of Tamil Nadu, a state with close cultural and linguistic ties to Sri Lanka, can play a role in shaping India's policy towards Sri Lanka. In Sri Lanka, the views of different ethnic and religious groups can influence the government's approach to relations with India. Understanding these domestic political dynamics is essential for managing the relationship effectively.

The Importance of People-to-People Connections

Strengthening people-to-people connections is crucial for building a strong and lasting relationship between India and Sri Lanka. Promoting tourism, cultural exchanges, educational opportunities, and media interactions can help foster greater understanding and goodwill between the two countries. Visa facilitation and simplified travel procedures can also encourage more people to visit and experience each other's cultures.

The digital economy is creating new opportunities for economic cooperation between India and Sri Lanka. Promoting e-commerce, digital payments, and IT services can help boost trade and investment and create new jobs. India can share its expertise in the digital sector with Sri Lanka and help it develop its own digital economy.

The blue economy, which focuses on the sustainable use of ocean resources, offers another area for cooperation between India and Sri Lanka. Working together to promote sustainable fishing practices, protect marine biodiversity, and develop offshore renewable energy resources can help ensure the long-term health of the Indian Ocean.

The COVID-19 pandemic has highlighted the importance of cooperation in the health sector. India and Sri Lanka can work together to strengthen their healthcare systems, share information and best practices, and collaborate on research and development of new vaccines and treatments. Providing medical assistance and training to healthcare professionals can also help Sri Lanka improve its healthcare capacity.

Looking Towards the Future

The India-Sri Lanka relationship is a complex and multifaceted one, shaped by history, geography, economics, and geopolitics. While there are challenges to be addressed, there are also significant opportunities for cooperation. By working together in a spirit of mutual respect and understanding, India and Sri Lanka can build a stronger, more prosperous, and more secure future for themselves and the region. The key lies in maintaining open channels of communication, addressing each other's concerns, and focusing on areas of common interest that can benefit both countries. As the geopolitical landscape continues to evolve, the ability of India and Sri Lanka to navigate these complexities and forge a strong and resilient partnership will be crucial for their own well-being and the stability of the Indian Ocean region.