Col R Hariharan VSM (Retd.)
[Here are my answers to E-mail questions from a Sri Lanka research
scholar on the big power strategic
competition in the Indo-Pacific theatre with special focus on Sri Lanka.]
Strategic churn up in Indo-Pacific
1 a. How do you assess the
strategic competition between China, India, and the US in the Indo Pacific,
especially around Sri Lanka?
b. Can Sri
Lanka play an active role in the Indo-Pacific by balancing major powers?
While examining the strategic
competition between China, India and the US, with focus on Sri Lanka, in the
Indo-Pacific we need to remember the island state’s unique geostrategic location.
Sri Lanka dominates the sea lanes of communication, mid-way.
Sri Lanka in combination with
the choke points of Bay of Bengal - Malacca Straits and Lombok and Sunda
Straits can bring maritime traffic in Indo-Pacific to a halt. Realising this,
the US, EU and its Western allies as well as China and Japan have invested in
maintaining good relations with Sri Lanka. China has emerged as the most
powerful naval power in the Indo-Pacific region. China had been claiming almost
the whole of South China Sea intruding into the EEZ of neighbouring countries
like Vietnam, Philippines, Indonesia etc. This has been a cause of concern, not
only for China’s neighbours, but also for the major users of Indo-Pacific seas.
The four-nation Quad framework of
Australia, India, Japan and the US represents is part of their efforts to keep the
supply chains of Indo-Pacific open.
Ever since President Xi
Jinping came to power in 2013, Sri Lanka and India’s western neighbour Pakistan,
have become important destinations for China’s Belt and Road Initiative (BRI)
and the 21st Century Maritime Silk Route (MSR). China has tried to cultivate
its relations with Pakistan and Sri Lanka. Sri Lanka’s strategic importance for
Indo-Pacific security of China has increased as US-China relations have become
significantly more confrontational and competitive under President Trump.
The US under Trump saw a
departure from decades of engagement-focused US policy, replaced by a more
assertive and often unilateral approach aimed at pressuring China on trade,
technology, and geopolitical influence. While some high-level talks v have
continued, and areas of potential cooperation are still being explored (as
evidenced by recent US Secretary of State meetings), the underlying dynamic has
shifted towards a deeper, more durable superpower rivalry. This has led to
increased uncertainty and turbulence in the relationship, with implications for
global trade, security, and diplomatic efforts. It is going to be increasingly
difficult for a small country like Sri Lanka to manoeuvre in this turbulent
environment building up in the Indo-Pacific region.
2. How does the India and US
strategic cooperation in regards to Indian ocean affect Sri Lanka, directly or
indirectly? Do you think this cooperation helps create balance in the region,
or does it increase pressure on smaller countries like Sri Lanka?
President Trump has disturbed
the balanced relationship US had tried to achieve in the country’s foreign
policy as a whole. His involvement in support of Israel in its wars in Gaza and
against Iran has sent shock waves in the carefully crafted US relations with
the Arab world. As a result, in South Asia the US-Pakistan relations are being
reset.
We can see the beginnings of
Cold War 2.0 waged by the US under Trump and NATO allies against Russia, China
and North Korea. Trump has weaponised US tariff rates to reassert and
ostensibly strengthen US dollar.
Both POTUS and NATO have sent
clear signals that they would not allow BRICS alliance (with Brazil, Russia,
India, China and South Africa as founders) to gain the leadership of the Global
South.
In this strategic churn up, India
is in the process of readjusting its political and strategic priorities. This
is best illustrated by Operation Sindoor, carried out by India against Pakistan
in May 2025 in response to Pak-inspired terrorist attack on civilian tourists
in Pehalgam in Jammu and Kashmir. India’s military response has demonstrated a
high degree of military precision and coordination across India’s armed forces
striking targets linked to Pakistan based terrorist groups without crossing the
border. India has demonstrated terrorist locations of Lashkar-e-Taiba (LeT) and
Jaish-e-Mohammed (JeM) deep inside Pakistan, if and when necessary. It showed a
shift in India's counter-terrorism doctrine towards more calibrated offensive
action.
Operation Sindoor also
involved diplomatic and strategic messaging to the international community. India
has demonstrated that Pakistan must be accountable for terrorist acts in India
by carrying out temporary suspension of the Indus Waters Treaty, closure of the
Attari-Wagah border, and suspension of bilateral trade with Pakistan.
On the other hand, India was
probably disappointed when US adopted a "neutral stance" rather than
offering unequivocal support for India against terrorism. In a belated action,
the US has proscribed The Resistance Front responsible for the terrorist attack
in Pahalgam. At the same time, Trump and his government are sending signals
that the US was sliding back to treating parity between India and Pakistan.
India’s new found assertive
stance can cause some concern to India’s smaller neighbours like Maldives and
Sri Lanka. We can expect India to take measures to reassure them by infrastructure
and energy links as well as promote joint economic activity.
These developments indicate
that Indo-Pacific region is heading for turbulence as the churn up in the wake
of POTUS tariff war against China, Japan, South Korea and India. Coupled with
this, the US and EU have hyped the sanctions regime against Russia, as a part
of Ukraine war.
These developments are likely
to affect South Asian countries which are dependent on cheaper energy resources
and tourism from Russia. Sri Lanka’s tea export and readymade garment industry
are also likely to be affected. We can
expect China to pressurise Sri Lanka for finalising the Freed Trade agreement
as well make existing Chinese infrastructure projects like Colombo port city,
Matala airport and Hambantota port profitable.
3. How do you see the current
partnership between India and Sri Lanka under the broader Indo-Pacific
strategy?
Sri Lanka is separated by
peninsular India by about 40 kms of sea only. This makes Sri Lanka the vanguard
of India’s maritime security in Indian Ocean Region (IOR). As a corollary, Sri
Lanka’s security is physically linked to India’s security. This makes it imperative
both countries to maintain good relations. There are both positives and
negatives in their shared history, ethnicity, culture and languages impacting
their relations. Both the countries have been conscious of this; India under
Prime Minister Narendra Modi has taken measures to scale down “Big brother”
attitude towards Sri Lanka, which had affected the relations in the past.
India’s unconditional economic help when Sri Lanka went bankrupt in 2022 is a
good example of the state of win-win relations existing at present.
The Marxist Janata Vimukthi
Peramuna had in the past demonstrated anti-Indian and pro-Chinese attitudes. However,
the JVP-led National Peoples Power (NPP) alliance government now in power now
under President Anura Kumara Dissanayake (AKD), has shown pragmatism in its
approach in handling foreign policy and economic recovery. Don Lal Kantha,
minister for agriculture, speaking in parliament during the
budget session explained it as part of NPP economic philosophy. He called
it ‘aarthika prajaathathrawadaya’ (Economic Democracy).”
4. a. Why
does India view China’s growing influence in Sri Lanka as a threat?
b.
In your view, how can Sri Lanka manage its relationship with China without
creating tension with India?
As stated earlier, Sri Lanka
first priority is to survive the onset of strategic turbulence likely to hit
the Indo-Pacific region, between an assertive India and aggressive China.
During 2024-2025, President Dissanayake has successfully done
some tight rope walking to manage the rival pulls and pressures of India and
China.
Comparing AKD’s visits to
China and India
President Dissanayake visited
China from 14-17 January 2025. The joint statement issued after his meeting
with President Xi Jinping is interesting when compared with the joint statement
issued after President Dissanayake’s visit to New Delhi in December 2024. Prime
Minister Narendra Modi had “affirmed India’s continued commitment to support
Sri Lanka in its economic stabilization efforts for its economic recovery and
economic growth.” PM Modi further assured President Dissanayake that India's
approach would be investment-based and grant-oriented to reduce the debt burden
on Sri Lanka and to assist them in generating economic opportunities that are
long-term and sustainable and will eventually contribute to growing the
absolute size of the Sri Lankan economy. (Emphasis added).
In contrast, the joint
statement issued in Beijing gives a glimpse of how China views its relationship
with smaller countries like Sri Lanka. China focused on "mutual trust,
support, respect, win-win cooperation, and common development" while
reiterating "its commitment to an independent foreign policy of
peace." It expressed its “firm support for Sri Lanka in safeguarding its
independence, sovereignty, and territorial integrity.” Sri Lanka, while
reaffirming this, reiterated "its commitment to an independent,
non-aligned foreign policy." Sri Lanka expressed "its commitment to
the one-China principle, recognizing the People's Republic of China as the sole
legal government representing the whole of China, and Taiwan is an inalienable
part of China's territory" along with strong opposition to "Taiwan
independence." Sri Lanka pledged not to allow anti-China or separatist
activities on its territory.
For the first time, Sri Lanka
“reassured its support to China regarding its policies with Xizang (Tibet) and
Xinjiang.” The explicit emphasis on Tibet and Xinjiang for the first time shows
China’s anxiety in seeking reassurance from a Buddhist country like Sri Lanka.
Some of the other agreements of interest signed during the visit are discussed
below.
Energy security and Hambantota
Oil Refinery
During AKD’s visit to Beijing
an agreement was signed with Sinopec Group for establishing a state-of-the art
oil refinery at Hambantota. The refinery estimated to cost $ 3.7 billion, will
have a capacity of 200,000 barrels daily, mainly for export. It also reflected
the significance of Hambantota as a strategic economic hub for China.
Sri Lanka’s opted for a high-cost oil
refinery project might appear contrary to its goal of achieving energy
self-sufficiency through renewable energy sources by 2030. However, it gives
Sri Lanka the option to diversify its energy sources, reducing its dependence
on imported refined petroleum products. It can also stimulate economic growth
in the region and create jobs. Most importantly, the large-scale Chinese
investment project strengthens Sri Lanka’s strategic partnership with China
with potential for more investments in allied industries.
As against this, India’s
approach towards Sri Lanka’s energy security is more holistic. The emphasis is
on the need for reliable, affordable and timely energy resources to meet the
basic needs of the people. The Indian and Sri Lankan leaders had agreed to take
steps towards the implementation of the solar power project in Sampur, continue
discussion on supply of LNG from India to Sri Lanka, establishing a
high-capacity power grid connecting India and Sri Lanka.
Both countries also agreed to
cooperate with the UAE to implement a multi-product pipeline from India to Sri
Lanka to supply affordable energy. They had also agreed to jointly develop
offshore wind power potential in Palk Straits, paying attention to environmental
protection. Both the leaders had agreed to continue with the development of
Trincomalee tank farms and develop Trincomalee as a regional energy and
industrial hub.
Financial and Technical
Assistance
China granted Sri Lanka RMB
500 million for Economic and Technical Cooperation. They also agreed to create
an Investment and Economic Cooperation Working Group to enhance bilateral trade
and encourage investments. The CBSL and the PBoC renewed their Bilateral
Currency Swap Agreement in December 2024. This agreement, originally signed in
2021, allows for a currency swap facility of RMB10 billion (approximately USD
1.4 billion). The renewed agreement extends the facility for another three
years. The financial cooperation agreement aims to enhance economic stability
and support trade between the two countries.
As against this, India ‘s
Reserve Bank of India (RBI) and CBSL entered into a bilateral currency swap
agreement on July 24, 2020. This was part of the SAARC Currency Swap Framework
2019-23. Under this agreement CBSL can draw up to $400 million in multiple
tranches to meet short term forex requirements. The CBSL and RBI are also
discussing securing an additional $1 billion under a special swap agreement.
BRI and Maritime cooperation
Greater commitment for
integrated development of infrastructure projects – Colombo Port City and
Hambantota Port – which are expected to draw more investments and offer
economic opportunities. China also wants Sri Lanka’s participation in the BRI
Green Development Coalition in view of climate change. They have agreed to
collaborate in disaster prevention, mitigation and emergency management and
rescue. They are to negotiate a MoU on Ocean Cooperation towards a Blue
Partnership for sustainable use of ocean resources. This will mean more Chinese
“research ships” visiting Sri Lanka’s neighbourhood.
Security cooperation with
China and India
China and Sri Lanka in their
joint statement recognised “judicial, law enforcement and security cooperation
as an important component of bilateral cooperation, and stand ready to jointly
crack down on cross-border crimes such as telecom fraud and online gambling.
China is ready to do its best to support capacity building in Sri Lanka's
judicial, law enforcement and security areas and provide assistance with police
supplies.” This is interesting as it may lead to the establishment of Chinese
police stations in Sri Lanka. According to a Brookings report “between 2016 and
2022, four local Chinese public security bureaus established 102 overseas
police service stations in 53 countries across North and South America, Europe,
Africa, and Asia.
India’s security cooperation
with Sri Lanka is on a different level. The New Delhi joint statement says the
two countries “reaffirmed their commitment to work together in countering
traditional and non-traditional threats as well as to ensure a free, open, safe
and secure Indian Ocean Region. India being Sri Lanka’s closest maritime
neighbour, President Disanayaka reiterated Sri Lanka’s stated position of not
permitting its territory to be used in any manner inimical to the security of
India as well as towards regional stability.”
The two countries agreed to
explore the possibility of concluding a framework Agreement on Defence
Cooperation. India had also agreed to extend assistance in providing defence
platforms and assets to augment Sri Lanka’s defence capabilities with tailor made
training programmes.
Enterprise support
China has agreed to continue
supporting Sri Lankan tea, gems, and other enterprises. This programme “would
propel exports of Sri Lankan goods.” The leader’s discussion “included various
ways to push forward digital transformation, green development, and logistics
to offer Sri Lanka an opportunity to introduce modernized activities within
industries.
During President AKD’s New
Delhi visit, he expressed Sri Lanka’s interest in exploring the establishment
of people-centric digitization as in India to improve governance, service
delivery and social welfare. Accordingly, India agreed to help in expediting
implementation of Sri Lanka's Unique Digital Identity (SLUDI) project and
assist Sri Lanka to roll out Digital Public Infrastructure (DPI). India had
also agreed to promote digital financial transactions by extending the use of
UPI digital payments to benefit both countries.
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