India is helping Sri Lanka reduce its dependence on China, according to Cleo Paskal, an associate fellow at the Asia-Pacific Programme at London-based Chatham House.
Sri Lanka Crisis
Sri Lanka has $10 billion in bilateral debt as of August 2022, of which 44 percent is owed to China, according to Sri Lanka’s finance ministry (pdf). Japan holds 32 percent of Sri Lanka’s debt while India holds another 10 percent.India has emerged as Sri Lanka’s lifeline, providing about $4 billion in credit lines and swaps to keep the country’s economy afloat this year.
Paskal pointed to India’s objection to China’s spy ship docking at Sri Lanka’s Hambantota port, saying “they’re trying to set a precedent for saying this is not okay. It’s a kind of a pre-deterrence effect.
“This is part of trying to make China less comfortable in the Indian Ocean and push some of those tentacles back,” she added.
In December 2017, the Sri Lankan government leased the deep-water southern port of Hambantota to China for 99 years to convert its owed loans of $1.4 billion into equity, but India has been concerned that Beijing would use the strategic port as a military base.
China–India tension
Paskal further pointed out that India has ramped up its measures to push back China.“They are reconfiguring their military … they’re putting in theater commands, which is a new thing … they’re changing their recruitment. They are very concerned and are gearing up for battle,” she said.
“They’re bringing Chinese tech companies up on money laundering charges ... They’re doing military exercises with Vietnam for the first time,” she added.
In April, Indian authorities seized $725 million from Xiaomi, accusing it of breaking the country’s foreign exchange laws by making illegal remittances abroad. Meanwhile, both Vivo and Oppo faced allegations of customs fraud.
Solomon Islands
Paskal pointed to the security pact that the government of Solomon Islands signed with Beijing in April that will allow troops, weapons, police, and naval ships to be stationed in that country.The United States, Australia, and New Zealand all fear the deal could open the door for a Chinese naval base in the South Pacific. The narrative has been repeatedly dismissed by the islands’ Prime Minister Manasseh Sogavare.
Yet, Paskal warned that, even without the emergence of a base, Beijing can still increase its presence on the islands.
“They’re using a lot of the language around humanitarian assistance and disaster response saying, ‘You know, we’re just going to put stuff here in case there’s a typhoon or hurricane or something.’”
“That is beyond dual use that has military applications as well,” she noted.
“They use the fishing fleet … They’re trying to get into fishing more in the region that will allow them to have the ability to swarm,” Paskal added.
In her opinion, the United States needs to join hands with other allies to counter China’s threat in the region.
“One of the best solutions is to make it a QUAD (a U.S., Japan, Australia, and India alliance) project, where each of the four can bring their own elements,” Paskal said.
“Unless that happens very quickly, it’s going to be much, much more difficult to retrench and to free the area … to free it from this political warfare control that we’re seeing now,” she added.
