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  • Recently, External Affairs Minister S Jaishankar’s virtual meeting with Sri Lanka’s Finance minister Basil Rajapaksa with an assurance that India will support Sri Lanka in all possible ways for overcoming the economic and other challenges posed by COVID 19 pandemic was significant and timely.


Sri Lanka’s Economic Condition

  • Sri Lanka’s external reserves dropped to $1.6 billion in November 2021 from $7.5 bn in 2019, triggering alarm in different quarters.
  • Sri Lanka has to make a decision on whether to service debts to bonds with an instalment of $500 million due on January 18 or to default for the first time ever.


The China Factor:

Recently, the Chinese Foreign Minister (CFM) visited Sri Lanka.

  • At a meeting, Chinese Foreign Minister proposed a forum for Indian Ocean island nations and also asserted that no “third party” should interfere in China-Sri Lanka ties.
  • While the name of the third party was not revealed, it was a clear reference to India.
  • CFM asserted that the two sides should make good use of “the two engines”, referring to the Colombo Port City in Colombo and the Hambantota Port (also in Sri Lanka).
  • He urged Sri Lanka to consider the prospects of the Regional Comprehensive Economic Partnership (RCEP) and restart talks on a free-trade agreement.


India’s Concerns:
  • Opposition to SAGAR Initiative: The proposed Indian Ocean island countries forum sounded in opposition to Prime Minister of India’s SAGAR (Security and Growth for All in the Region) initiative.
  • SAGAR is India’s strategic vision for the Indian Ocean Region (IOR).
  • Issues Emanating from Two Engines of Growth: China has formal control over Sri Lanka’s Hambantota port as a part of a 99-year lease.
  • Sri Lanka has decided to establish a Special Economic Zone around the Colombo port city and a new economic commission, to be funded by China.
  • The Colombo port handles 60% of India’s trans-shipment cargo.
  • Leasing of Hambantota and the Colombo Port City project makes it almost certain for the Chinese navy to have a permanent presence in the Indian Ocean which will be worrisome for India’s national security.

Source: THE HINDU.