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With historic, religious, cultural and linguistic links balancing our relations with India has always been a very important aspect of Sri Lankan politics. During the time of our kings as there were many kingdoms on both sides  these relations were dominated by trade and diplomatic links among individual royal houses while at worse times there were military confrontations and invasions.

The colonial period changed the entire set up and during the centuries of western domination Indo-Lanka relations were not relevant as both politics and trade in the entire region were controlled by the colonial powers.

In the post-colonial period as nation states grew as individual powers with some of them becoming regional powers managing these links particularly amongneighbouring countries has become a vital aspect of day-to-day politics everywhere in the world. Thus, for Sri Lanka today relations with India have become far more important than ever before.
There are two aspects to it. On one side the colossal Indian market with 1.3 billion population,is too big to be ignored while its military strength has made it a regional power recognized so by all other powerful countries. Therefore, during the last few decades managing these relations has become a diplomatic challenge for Sri Lanka as became evident with Indian involvement in northern politics, rising of the LTTE, the peace accord and the Indian Peace Keeping Force.note-book

After the military defeat of the LTTE the government of Mahinda Rajapaksa had a bigger difficulty in managing relations with India. On one side with Rajapaksa not delivering what he promised to India regarding a political solution to the Tamil issue, he developed differences with the Indian administration, while on the other, he displeased Indians by becoming a known China ally because of his very close economic and political relations with that country.

Diplomatic challenge

Things became even more complicated for Sri Lanka when the new government of India under Prime Minister Narendra Mody started working closely with the US administration.The change of government in Sri Lanka took place under these circumstances and it was hailed by India, the US and the west.In August 2016 India and the United States signed a landmark defence agreement that would increase the military cooperation between the two countries.

The Logistics Exchange Memorandum of Agreement (LEMOA) allows the two allies to use each other’s military facilities for checking China’s growing influence in Asia and in the fight against terrorism. It was widely believed that the agreement was a key part of the Obama administration’s strategy to contain China, which has been spreading its influence across Asia.

The new Yahapalana government thus faced a big challenge – that of keeping India and the United States happy while continuing with economic and investment links with China. They     had the gigantic task of continuing with major infrastructure projects begun with Chinese funding. Despite some initial setbacksthe new government under MaithripalaSirisena and RanilWickremesinghe has managed to get all the Chinese funded projects almost on track after some renegotiations.

A sticky issue has been the debt ridden US 1.4 billion Hambantota Port constructed with Chinese loans.The government had proposed selling an 80% stake in the port to state-owned CMPort, previously known as China Merchants Port Holdings, for US$1.12 billion on a 99 year lease. Opposition from some sections of the government itself has delayed the deal and forced the government to renegotiate it.

Meantime, there has also been displeasure from India over the idea of giving an ownership stake and the operating rights of the port to the Chinese because of security concerns. It is in this context that the recent proposal to develop the World War 11 oil tank farm at China Bay, Trincomalee and the adjacent area with Indian participation becomes relevant. The 1987 Indo-Sri Lanka Accord granted first preference to India in the running of the oil storage facility.

With its fine natural harbour and crucial location, Trincomalee remains in spotlight as a potential transit point for international trade routes, particularly drawing India which has known strategic interests there. The effort to develop the oil tanks is an important decision because these assets have to be put into some good use before they go waste due to neglect and India is perhaps the most suitable partner in this task. However, the exercise is diplomatically viewed as a fine way of balancing the Chinese involvement.
Then came, the visit of India’s Prime Minister Narendra Mody to inaugurate International Vesak Day celebrations in Sri Lanka during which he participated in several other official engagements and discussions as well. It was a significant development in the chain of events although no official agreements were signed during his visit.

Belt and Road Forum

Alongside that was the most important event from the Chinese point of view – Beijing’s Belt and Road Forum where Prime Minister Ranil Wickremesinghe represented Sri Lanka. India skipped the summit citing concerns that the project runs through disputed Kashmir.
India’s criticism of a project, which Chinese president Xi Jinping has called “the project of the century,” was unequivocal. “No country can accept a project that ignores its core concerns on sovereignty and territorial integrity,” said Indian Foreign Ministry spokesman Gopal Bagley pointing out the flagship initiative of the Belt and Road project passes through Pakistani Kashmir — a territory that India claims.

China says its initiative, an ambitious multibillion-dollar project to build a transport network spanning 65 countries, is a new way to boost global development.But many in India seem to believe that in addition to economics, the initiative is part of China’s expansionist policies designed to extend its economic, military and diplomatic clout across Asia, up to Europe, and beyond.

Way forward

So now with the new realignment of powers in South Asia and economic opportunities emerging fromChina’s new silk route initiative and the fast growing market in India the way forward for Sri Lanka is to have a well balanced approach in its foreign policy.
While most of the future funding necessary for Sri Lanka’s economic development will have to be sourced from China which has loads of money at her disposal, India too will fit in with some investments in infrastructure and energy mainly to counter growing Chinese influence in the area. The Japanese who had distanced itself from major investment projects in Sri Lanka due to political instability and democracy issues also has already shown much interest in developing urban infrastructure and ports.

Meanwhile, the restoration of the GSP Plus facility by the European Union from this week can also be viewed as another major diplomatic win and thus the current government up to now appears to have done well in this regard.

Inward-looking economic prosperity through self-sufficiency and so on are not feasible in this time age and it is essential for Sri Lanka to go along with mega development trends in the world and the region. In this context there are ample prospects in port development, financial services and trade along with manufacturingand none of these can be realized without building the necessary infrastructure which has been neglected over decades.
To achieve all these objectives, mega investments are required and sourcing and successfully mustering them is a gigantic diplomatic exercise and the country’s future will depend on how well our leaders balance the regional and international factors to get the maximum economic benefits for the country. It’s certainly a tightrope walk where only few politicians can fit in.

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