K Raveendran
The emergence of Sri Lanka as a template for the fallout of infrastructure development with Chinese funding will save thousands of diplomatic man-hours for India in checkmating the Chinese ‘String of Pearls’ agenda. New Delhi has tried to counter the Chinese Belt and Road Initiative with its own ‘Look East’ policy, but has not been particularly successful so far. Lanka certainly provides a new window of opportunity.
The dangers inherent in accepting Chinese big money has so far been a hypothetical premise. But the Lankan economic crisis, manifesting in nationwide protests and rioting, has shown how real the threat of Chinese debt trap is on the ground. The policies of President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa, diehard fans of China’s economic clout, have walked the island nation into a trap, for which it has been made to virtually pay through the nose. The mega infrastructure projects funded with Chinese money have turned out to be a millstone around the neck of every Sri Lankan. The Lankan people genuinely believe that the situation has been brought about by the decision by Rajapaksas to ‘sell’ everything to the Chinese. The nation’s total debt to China reportedly stands at $8 billion, almost one-sixth of Sri Lanka’s total external debt of $45 billion, but Beijing has refused to offer any relief.
The Lankan predicament has created discomfort in all similarly-placed states such as Bangladesh, Nepal, Maldives, Bhutan and of course Pakistan, which has never been known for a truly objective assessment of any issue under the sun. Imran Khan’s Pakistan has more than 10 percent of its total debt owed to China although the current turmoil in the country cannot be linked directly to vulnerability towards the Chinese. Irrespective of how these individual crises play out ultimately, there is certainly buzz about the dangers of Chinese debt trap diplomacy throughout the region in pursuit of its own hegemonistic ambitions in the Indian Ocean region.
New Delhi has put its best foot forward in dealing with Sri Lanka in its hour of distress. India rushed a shipload of diesel to provide relief to the fuel famine, which has driven the average Lankans to desperation, forcing them out into the street with slogans asking the president and prime minister to go home, which they tried to besiege as the protest tended to spiral out of control.
Additionally, India extended a credit line of 1 billion dollars to bail out the island nation from the payment crisis. This is in addition to about $2.4 billion transferred to the beleaguered nation through currency swap and deferment of repayments.
The Chinese stranglehold over international finance is overwhelming. According to a report by the Harvard Business Review, the Chinese state and its subsidiaries have lent around 1.5 trillion dollars in direct loans to more than 150 countries, making China the world’s largest official creditor surpassing official lenders such as the World Bank, IMF or all OCED creditor governments combined. In South Asia, it is not even Sri Lanka that owes the maximum to the Chinese, that honour going to Pakistan and Bangladesh. Pakistan reportedly owes $22 billion to the Chinese while Bangladesh has to repay $ 4.7 billion. Maldives similarly has a debt of around $ 3.1 billion, owed to the Chinese, including government to government loans and already all these countries are struggling to make timely repayments.
Obviously, India cannot do anything to woo Pakistan away from the Chinese sphere of influence, and the people of the Islamic republic are destined to suffer whatever be the consequences. But the lessons from the Lankan crisis have great bearing on some of the other neighbours, which haven’t yet moved away from the orbit of Indian influence. The Lankan template, therefore, will come much handy for New Delhi to re-establish its influence in the region, which at some stage of the aggressive Chinese overtures had looked as gone for ever. As an emerging economic superpower, the problems in the domestic economy notwithstanding, the new developments accord India another opportunity to reclaim its due place in the regional geopolitics of Asia. (IPA)
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