Sri Lanka-Iran Relationship Is Economic And Strategic

The one-day visit of the Iranian President Dr. Ebrahim Raisi to Sri Lanka on April 24, was of critical importance for both Sri Lanka and Iran.

Sri Lanka aims to build on the fruitful economic relations that it had with Iran in order to safeguard itself against the West’s hostility towards it. And Iran, on its part, aims to make more friends in a world in which the West is seeking to curb its rise as an independent regional power.

Both countries need to counter the West’s enormous global and regional influence in order to exercise their national sovereignty and strategic autonomy.

Therefore, the Sri Lanka-Iran relationship has both economic and strategic aspects.

The primary purpose of Dr.Raisi’s visit was to sign five Memoranda of Understanding (MoUs) and inaugurate the Uma Oya Multipurpose Development Project (UOMDP), an Iran-Sri Lanka joint venture.

Since 2013, Iran had been subtly using its economic ties with Sri Lanka to build a strategic partnership with the island nation.

According to Michael Rubin of the American Enterprise Institute (AEI), Sri Lanka and Iran could be strategic partners, with Iran wanting its navy to have a wider reach since 2011.

Iranian outreach to Sri Lanka took advantage of Sri Lanka’s frustration with the West, Rubin explains in his piece published in 2016.

Between 1983 and 2009 Sri Lankan forces fought a war against the Tamil Tiger separatists, a war which the West opposed. But Iran supported the Sri Lankan government’s military operations.

Rubin points out that when the United Nations Secretary General Ban Ki-moon agreed to appoint a special panel to investigate human rights violations by Sri Lanka during its final military drive to eradicate the Tamil Tiger separatists, the Iranian Minister of Transportation Ali Nikzad lambasted the UN panel, describing it as a “paper tiger” and a “pet of the Western nations.”

Nikzad further said: “If any organisation or country takes action that will harm Sri Lanka, Iran will always very strongly oppose such a move.”

The then Iranian Foreign Minister Manouchehr Mottaki called his Sri Lankan counterpart to congratulate him on successfully ending the war and remind him that Iran had always supported Sri Lanka’s unity.

Mottakki also said: “Iran is sincerely committed to the development of Sri Lanka, whom we consider to be a true friend.”

In April 2008 Iranian President Mahmoud Ahmadinejad visited Colombo and declared that Iran and Sri Lanka both sought “justice and fair play in the world,” and pledged further cooperation.

Rubin pointed out in his article that an Iranian naval flotilla docked in Colombo first in February 2013. Then, on 20 December 2013 Iran’s 28th Naval Flotilla, comprising two warships, a submarine, and a combat helicopter, arrived in Colombo.

The Iranian submarine commander Rear Admiral Siavash Jareh said that one of the goals of the deployment was “to show the Islamic Republic’s power and wave its flag in the southern hemisphere and to prepare for forthcoming operations to secure sea lanes in critical regions, especially the Strait of Malacca and the Bay of Bengal.”

In 2015 Iran sent a destroyer and an auxiliary ship to Sri Lanka. Iran also offered to train Sri Lankan naval cadets in Iran.

Adm. Jayantha Perera, the then Commander of Sri Lanka’s Navy, said that Sri Lanka’s relationship with Iran “is not just military but also political.”

According to Rubin, in 2005, just weeks after the tsunami struck the island, Iran supplied USD 150 million worth of weaponry to Sri Lanka to fight the Tamil Tiger separatists.

On February 21 this year, Iran's Foreign Minister, Hossein Amir-Abdollahian, held talks with the President of Sri Lanka, Ranil Wickremesinghe in Colombo. Abdollahian stated that Iran's economic and industrial sectors, including the Ministry of Energy, are prepared to develop cooperation with Sri Lanka.

Referring to Iran's strategic position, the Sri Lankan President said that Sri Lanka considers Iran a gateway to Central Asia and called for increasing economic interactions with Iran.

As pointed out earlier, political and strategic ties between Iran and Sri Lanka were founded on fruitful economic cooperation over the years.

The Iranian-Lankan Uma Oya Multipurpose Development Project (UOMDP), which was inaugurated by Dr.Raisi and the Sri Lankan President last Wednesday, is one of the largest irrigation projects in Sri Lanka and the largest Iranian-Lankan project in the island.

UOMPD’s primary objective is to alleviate water scarcity in the south-eastern dry region by redirecting an annual average of 145 million cubic metres (MCM) of excess water from the Uma Oya basin to the Kirindi Oya basin. About 4,500 hectares of new land and 1,500 hectares of existing agricultural land in the dry Monaragala District will receive irrigation water.

Parts of Badulla, Monaragala, and Hambantota districts will also benefit from 39 million cubic metres (MCM) of water for drinking and industrial purposes, while generating and adding 290 GWh of electrical energy annually to the National Grid.

The ambitious project encompasses the construction of two reservoirs at Puhulpola and Dyraaba, and a conveyance tunnel spanning 3.98 kilometres to connect the two reservoirs.

The ‘Tehran Times’ wrote that despite facing challenges such as sanctions, technical hurdles, and the COVID-19 pandemic, the project's construction was overseen entirely by Iran's FARAB engineering group.

“While Iran initially contributed $50 million to the project, funding was interrupted in 2013 due to international sanctions. However, the Sri Lankan government opted to continue the project using its own funds, with the same Iranian contractor.

“President Raisi's visit signifies both nations' commitment to deepening ties and expanding cooperation across various sectors, including the economy, tourism, science, and technology,” the Iranian daily stated.

In 2007, the then Sri Lankan President Mahinda Rajapaksa made an epoch-making visit to Iran and signed MoUs on development projects worth more than US$ 1.9 billion.

The following year Iranian President Mahmoud Ahmadinejad visited Sri Lanka and inaugurated a US$ 750 million project to upgrade Sri Lanka’s Sapugaskanda petroleum refinery.

Iran had agreed to provide no interest credit terms for petroleum purchases (approximately USD 700 million) and stated that it would finance the Uma Oya Project (worth USD 540 million).

When Ahmadinejad became President of Iran, Sri Lanka was the first country he visited on his inaugural Asian tour. Alarmed, the US State Department expressed concern over the growing economic relationship between Colombo and Tehran.

Iran’s Deputy Oil Minister Roknoddin Javadi said that Iran was prepared to provide 40,000 to 45,000 barrels per day, enough oil to supply Sri Lanka’s main oil refinery.

Sri Lanka and Iran signed the epoch-making ‘tea-for-oil’ barter agreement. It is now making good progress. Sri Lanka has already settled payments to the tune of over USD 20 million to Iran.

“This agreement was to settle a total of USD 250 million for purchases made by Ceylon Petroleum Corporation (CPC) for oil imported from Iran in 2012”, said Chairman Sri Lanka Tea Board (SLTB) Niraj de Mel in a special interview with “Daily News Business”.

“Since then we have made very strong progress and up to December 2023 we have settled around USD 20 million,” de Mel said.

In 2016 Iran used some of its hard currency windfall to lease Sri Lankan Airlines aeroplanes, effectively helping Sri Lanka’s national carrier reduce its US$ 1 billion debt, Rubin said in his article.

At the inauguration of the Uma Oya project, Lankan President Ranil Wickremesinghe said: “Iran’s technological prowess has spread across all fields. It should also be said that Iran is a country that maintains its own technological development. Therefore, we should strengthen the common points of both countries.”

“We are all countries of the Global South. Such projects are very important at a time when the countries of the Global South are establishing their identity and independence.”

In reply, President Ibrahim Raisi said that the Uma-Oya project symbolises not only friendship between Iran and Sri Lanka but also enhanced co-operation, integration, harmony, and unity among Asian nations.

He affirmed Iran’s readiness to foster a strong partnership with Sri Lanka and expressed Iran’s willingness to contribute to Sri Lanka’s progress and development through the provision of technical and engineering services for large-scale projects.