Colombo: Amid the ongoing economic downturn in Sri Lanka, there is a flurry of diplomatic activity these days between Colombo and New Delhi, said a think tank, Policy Research Group (POREG). The think tank also stated that China may now seek a new strategy to control the island nation in order to counter India.
Sri Lanka’s Finance Minister, Basil Rajapaksa, is expected to fly to New Delhi in the coming days, and Prime Minister Narendra Modi is expected to visit Sri Lanka for the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) Summit. India is still to announce PM Modi’s visit to Sri Lanka for the BIMSTEC on March 30, 2022. Meanwhile, Sri Lankan Foreign Minister G. L. Peiris recently stated in New Delhi that his Indian counterpart, S. Jaishankar, is scheduled to visit Colombo from March 18 to 20, said the think tank.
The think tank further said that it’s unclear whether Minister Basil Rajapaksa will meet with PM Modi during his next trip to India. During their visit to New Delhi, neither the Sri Lankan Finance Minister nor the Foreign Minister had met PM Modi.
Despite the fact that Sri Lankan economists argue that such loans and line of credit facilities from foreign countries will not help the country escape its current situation, Colombo believes it is best to work with India to obtain funds for the short-term, and “four pillars of cooperation” between the two governments have been discussed, POREG reported.
According to the think tank, the four pillars of cooperation came into being as Sri Lanka faced its worst financial crisis in over six decades.
The first pillar of cooperation was emergency food and medicine assistance for which Jaishankar announced a USD 1 billion credit line after a recent virtual meeting with the Sri Lankan Finance Minister, POREG reported, adding that the USD 1 billion credit line is still being discussed. Finance Minister Rajapaksa will attend another round of talks to finalize other agreements, including the USD 1 billion credit line.
The second pillar of collaboration is a component of the initiative, which includes a USD 500 million lines of credit for gasoline purchases from the Indian Oil Corporation.
The third event was the signing of a memorandum of understanding between Sri Lanka and India on the Trincomalee tank farm. The discussion is underway on how both countries would collaborate on energy security and storage, POREG reported.
Then there’s India’s help for Sri Lanka’s foreign exchange reserves, which came in two stages: the first was a two-month postponement on dues to the Asian Clearing Union totaling USD 500 million, and the second was a USD 400 million currency swap, the think tank added.
Moreover, the final pillar is an investment in tourism development.
In order to defeat India, China may now seek a new strategy to control Sri Lanka. Sri Lanka will continue to play this game uninterrupted, despite loans and loan-backed projects will not benefit the country, POREG reported.
Sri Lanka, too, must devise its own strategy for sustainable growth based not on borrowed or imposed ideas but on the homegrown solutions with lessons drawn from failures that range from the ill-conceived nation-wide switch to organic farming to controlling exports and the corona pandemic, which has had a debilitating effect on the tourism sector, POREG further reported.