Last Saturday (11), Minister of Foreign Affairs Ali Sabry, during a visit to India, said that China is a friend of Sri Lanka and that the two countries will continue to work arm in arm, but that at no point would Sri Lanka let Indian interests be undermined. He added that Sri Lanka‘s strong relationship is part of its civilisation and will not permit any activity that poses a threat to India’s internal security to take place on its soil.
As far as a diplomatic stance is concerned, it is hard to find fault with this pledge. As one of the founding members of the Non-Aligned Movement in the Cold War era, Sri Lanka has a rich history of maintaining friendly relations with many nations at odds with each other. The fact that the country has been a friend to, and is considered a friend by, both India and Pakistan, through multiple diplomatic and armed conflicts with each other over 75 years is a testament to the success of Sri Lanka’s diplomatic balancing act.
However, the greatest contemporary diplomatic challenge facing Sri Lanka, which is maintaining relations with its giant neighbour, India, as well as the only nation that can challenge the US economically, China, may be its greatest challenge in its post-Independence history. There can be no foreign policy for Sri Lanka without a careful consideration of India and its interests. The reasons for this are myriad and include proximity, shared cultural ties, and India’s emergence in the 21st Century as a genuine global economic power.
Meanwhile, China, as one of Sri Lanka’s largest bilateral creditors, currently has great influence on Sri Lanka’s economic future, as it is the only holdout in the debt restructuring negotiations being undertaken by Sri Lanka. The other main bilateral creditors of Sri Lanka, namely India and the countries in the Paris Club, which includes Japan, have provided financing assurances to support Sri Lanka’s bid to obtain the $ 2.9 billion bailout package from the International Monetary Fund (IMF). However, China has not provided the assurances required by the IMF to provide Board-level approval for the bailout, as noted in its latest statement, where it said: “As soon as adequate assurances are obtained and remaining requirements are met, including by the Sri Lankan authorities, the Extended Fund Facility (EFF) arrangement for Sri Lanka can be presented to the IMF’s Executive Board for approval that would unlock much-needed external financing.”
Looking beyond the IMF programme, the Chinese economy is presently at its weakest point of the past 30 years due to the impact of the Covid-19 pandemic and the trade war launched by the US against it, along with other domestic issues. However, it is far too soon to write China off, as it has defied expectations and forecasts on multiple occasions over the years.
India, meanwhile, has been the major economy least affected by the pandemic and has been a shining light amidst the economic gloom of the past three years. It can be safely assumed that India would continue to grow over the coming years, even if it doesn’t achieve the economic superpower status that some forecasts predict.
Therefore, it is important that Sri Lanka treads carefully with regard to China, finding a way to persuade the Asian giant to provide the necessary assurances, while ensuring India – which virtually bankrolled Sri Lanka during the height of the economic crisis in 2022 – is not made to feel insecure about its neighbourhood. Sabry’s statement made in India over the weekend is a positive first step in this endeavour. However, such a balancing act will be easier said than done. It will be fascinating to watch the Government walk this diplomatic tightrope.