Spy games: Why Sri Lanka succumbed to Chinese pressure despite India’s veto

The Chinese vessel ‘Yuan Wang 5’ docked at Sri Lanka’s Hambantota port on Tuesday for a week-long ‘replenishment’ despite objections by India, which believed the ICBM- and satellite-tracking ship can be used to snoop on its installations. The vessel was supposed to arrive on August 11 but it was postponed after New Delhi lodged strong protests. However, China had the last laugh.

So what has changed between traditional allies India and Sri Lanka? Analysts believe New Delhi’s heft among its southern neighbours has been offset by massive Chinese investments over the last decade. Beijing has been undertaking gargantuan infrastructure projects in Sri Lanka and the Maldives to gain a foothold on the Indian Ocean as part of its plan to encircle India.

The money pumped in is so huge that Sri Lanka now finds itself in the Chinese debt trap. But that isn’t the only way Beijing operates, and therefore, not the sole reason for Sri Lanka waving off India’s objections in the spy ship case.

Sources say China has made strong contacts among Sri Lanka’s political elite. So much so that an influential section is now sympathetic to the Beijing cause. It is a well-known fact that the disgraced Rajapakse family had a strong equation with the Chinese Communist Party leadership. And reports say a lawmaker from Rajapakse’s party openly lobbied in favour of the Chinese vessel docking at Hambantota.

Sarath Weerasekara, former public security minister and once a top Navy official, is said to have questioned the Sri Lankan government’s move to defer the arrival of Yuan Wang 5. He also reportedly tried to downplay India’s concerns in a meeting with Sri Lanka’s PM and President, in which Mahinda Rajapakse was also present.

Another possible reason could be Chinese threats to block an IMF bailout package for Sri Lanka. The island nation has been battling its worst financial crisis since independence, with $12 bn in overseas debt with private creditors. It is now hoping to secure $3 bn from the International Monetary Fund.

The above reasons apart, China is now Sri Lanka’s largest investor and second-largest lender, holding over 10 per cent of its outstanding foreign debt. Beijing has also repeatedly defended it from censure at global human rights forums on the Tamil issue. No wonder then that Sri Lanka would cave into Chinese pressure.

How China surged ahead in Lanka race

Security analysts fear China has been eyeing projects on the northern islets of Sri Lanka to monitor Indian activities. To this end, over the last decade, it has gradually displaced India as the largest importer of Sri Lankan goods. At the same time, India’s imports to Sri Lanka declined by nearly 20 per cent, while that of China’s by only 8 per cent. In 2005, China had only a one per cent share of Sri Lanka’s official development assistance. Today, it has reached 23 per cent, surpassing India and Japan.

Early last year, Sri Lanka cancelled a lease on oil storage tanks in the eastern port district of Trincomalee that was awarded to the Indian Oil Corporation. It had also cancelled a $500 mn trilateral deal with India and Japan to develop the eastern container terminal at Colombo Port. Japan had already started work on the terminal with funds from World Bank and ADB. The project was later handed over to a Chinese firm.

Beijing is also developing the Hambantota port, located strategically on the Indian Ocean, which it took on a 99-year-lease from Sri Lanka in 2017 upon the latter’s failure to repay a $1.2 bn loan. Some 15,000 acres of surrounding land were also handed over. No other major country – India, Japan or the US for instance – now wants to invest in the deep-sea port, leaving Sri Lanka with no choice but to stick with China.

In November 2021, Beijing also bullied Sri Lanka into paying for contaminated fertilisers. Colombo not only had to pay $6.7 mn to Qingdao Seawin Biotech for 20,000 tonnes of contaminated fertilisers, but also agree to buy fresh stocks from them.

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