By July last year, it was clear that Sri Lanka was running out of foreign exchange, and fast. From more than $7.5 billion in January 2020, reserves came down by $3 billion 12 months later. The next six months recorded a much more alarming decline of $2 billion. By November 2021, reserves had reduced to a paltry $1.6 billion.
The government responded by saying that it would not go to the IMF and that it would negotiate loans and credit lines from other countries. It first attempted a fuel credit arrangement with Oman. Although this eventually fell apart due to geopolitical reasons, it nevertheless set a precedent for Colombo to explore similar avenues.
Early last December, the government sent a delegation to New Delhi, led by Finance Minister Basil Rajapaksa. While a meeting scheduled with Indian Prime Minister Narendra Modi was cancelled, Rajapaksa later interacted with External Affairs Minister S. Jaishankar, who stated that New Delhi would stand with Colombo. Jaishankar did not specify what support India would extend to Sri Lanka but made assurances that it would not abandon the country.
The Rajapaksas’ gamble has since paid off: A month after the delegation, India has been facilitating loans, currency swaps, and fuel credit lines for the island.
Today, analysts suggest that the economic crisis has diverted Sri Lanka’s foreign policy from what it had been leading up to under Gotabaya Rajapaksa. These analysts assume that Rajapaksa’s government was shifting to China in late 2019 and early 2020. Accordingly, the pandemic has taken the country back into India’s orbit, while forex shortages have more or less transformed its external relations, restoring a balance.
What are we to make of such claims? Well-founded as they may be, they fail to account for the complexities that have defined foreign policy in Sri Lanka since its independence. By viewing external relations through the prism of growing Chinese power, commentators deny Sri Lanka any real agency in the realm of foreign policy formulation. Indeed, the situation on the ground is considerably more complex than such analyses might suggest.
As is typically the case in Sri Lanka, domestic politics swamped foreign policy in the run-up to the 2019 presidential election. Perhaps the most contentious foreign policy issue at play was the Millennium Challenge Corporation (MCC) agreement with the United States. While the then-government indicated that it would go ahead with it, civil society activists, nationalists, and even tuition masters opposed it, citing fears of U.S. military overreach in the island. Then-presidential candidate Gotabaya Rajapaksa stood with these groups.
Of course, the MCC was hardly Rajapaksa’s last say on the topic of external relations. In his election manifesto, titled “Vistas of Prosperity and Splendour,” he emphasized a “friendly and non-aligned foreign policy.” The section on foreign policy contains seven points, of which three stand out: ensuring that strategic assets do not shift to foreign ownership, forging ties with India, and acknowledging the “standing” of powerful countries.
After becoming president, Gotabaya Rajapaksa gave an interview to The Hindu where he reiterated these points. Rajapaksa stated that under him, Colombo’s relationship with New Delhi would be “frank and upfront.” He added that his government would refrain from anything that might imperil relations, promoting closer cooperation with India while drawing a line between maintaining ties and securing national assets. Symbolically, the first state guest the new president chose to invite to Sri Lanka during his tenure was Modi.
Nine months later, Rajapaksa’s party won a two-thirds victory in Sri Lanka’s parliamentary election, giving it space to craft a more coherent foreign policy. Once again it emphasized ties with India, articulating an “India First” policy. In keeping with the president’s manifesto, the government also advocated greater integration with SAARC and BIMSTEC, establishing a Ministry of Regional Cooperation headed by State Minister Tharaka Balasuriya.
Less than a year later, in March 2021, the Foreign Ministry published a 20-point paper titled “2020 and Beyond.” In keeping with previous documents, it also recommended “close cooperation between Sri Lanka and South Asian countries.”
What’s intriguing about these shifts is that the previous government’s actions did nothing to warrant them. The Sirisena regime (2015-2019) maintained close ties with Delhi, with then-Deputy Minister for Foreign Affairs Harsha de Silva going as far as to launch an ambulance service in the country with Indian support. If the previous administration bequeathed a sore point to the new government, it was its strained relations with China, not India.
Given this, then, is it accurate to say that Sri Lanka under Rajapaksa was tilting to China from the start, and that if it wasn’t for the pandemic, it would have swayed there completely? Not really. Colombo’s foreign policy, as it stands at present, has been much more complex than such a reading may suggest. Two points, in particular, need to be noted.
The first point is that the government has been exploring as many options as possible to forge closer commercial and security ties with India, despite the backlash it has received from groups like trade unions and civil society outfits.
The deal over the Trincomalee oil terminal is a case in point. Located strategically in the country’s Eastern Province, the terminal had been a thorn in the side of India-Sri Lanka ties since at least the 1980s, when Colombo’s decision to award a tender to a Singaporean company contributed to a diplomatic fallout that led to India intervening in the country’s civil war. That the deal has been finalized shows that, even under the Rajapaksas, Sri Lanka has not overlooked or ignored India’s stake in the region.
Conversely, while pursuing friendly relations with India, the Rajapaksa regime has run into various spats with China. Two incidents stand out: the Chinese government’s withdrawal from energy projects in the north of the country over Indian pressure, and a months-long imbroglio over a shipment of inorganic fertilizer, which led to a fallout that culminated in the blacklisting of a Sri Lankan bank. Rathindra Kuruwita’s analysis for The Diplomat sheds much light on the latter incident, but the bottom line in both cases is that, for all their pro-China inclinations, even the Rajapaksas have managed to bungle ties with Beijing.
The second point is that any analysis of Sri Lanka’s “inability” to chart a foreign policy independent of Chinese influence needs to factor in the actions, and the rhetoric, of the country’s opposition parties, in particular its main opposition, the SJB.
The SJB remains as ambivalent about relations with India and China as the government. To give one example, in the lead-up to the ECT controversy, a prominent lawmaker alleged that the deal would divert Sri Lanka’s shipping traffic to Mundra Port, without explaining how. In a similar vein, the general secretary of the party warned the government not to barter Sri Lanka’s sovereignty for vaccine shipments from India.
More relevantly, in June 2021 India’s WION-TV interviewed the leader of the party, Sajith Premadasa. Premadasa deflected the newscaster’s interrogative tactics; asked whether the SJB opposed Chinese intervention, he replied that it opposed intervention from any sphere. Much later, Premadasa actively promoted greater engagement with China, and, at an event where the SJB received funds from the Chinese Embassy for its COVID-19 program, noted its ability to win Beijing’s confidence as a “major achievement.”
Other opposition groups have been as ambivalent about China. The People’s Liberation Front, a left-wing outfit known for its opposition to Indian intervention during the 1980s, has alleged that Gotabaya Rajapaksa’s government is turning Sri Lanka into a Chinese province. Yet, intriguingly enough, the party has been sending missives to the Communist Party of China, congratulating it for coordinating “work among Left parties to lead the world towards socialism.” A few years ago, it wrote to Xi Jinping, congratulating him for establishing what it described as a “moderately prosperous society in an all-round way.”
All this shows that foreign policy formulation in Sri Lanka is by no means following a straight line. This has been the case for much of the country’s post-independence history. From initial hostility to India, China, and the USSR, the government eventually sought closer ties with these countries, especially when it faced economic pressures. The Rubber-Rice Pact, inked with China in 1952 despite considerable opposition from within the then-ruling party, the UNP, showed how economic imperatives could dictate the island’s foreign policy.
It must be noted, however, that Colombo never abandoned the need to maintain ties with its regional partners. Partly this was because of the Non-Aligned Movement, in which Sri Lanka played a prominent part, but it was also because of security concerns, which Colombo could not ignore. When it did try to ignore them by allying itself with a pro-Western front in the 1980s, relations soured so badly that India felt compelled to intervene – thereby teaching Sri Lanka a lesson on regional geopolitics that it has heeded since.
Under Gotabaya Rajapaksa, Sri Lanka has attempted to establish common ground with New Delhi. Owing to domestic convulsions these efforts have not always borne fruit, which has reinforced narratives of the country shifting to China. Yet as its closest geographic and geopolitical partner, India has always been a priority for Sri Lanka, regardless of who is in power and who is drafting foreign policy. Paraphrasing Lord Palmerstone, Colombo has long recognized India as a major interest. This is an interest it seeks to follow.