Wickremesinghe Revives India's Plan for Economic Integration

With the Rajapaksas pushed into the background, and due to the high powers vested in the Sri Lankan Executive Presidency, President Ranil Wcikremesinghe is now in a position to take his island nation closer to India and away from China by promoting economic, investment and national security ties. China's distancing itself from Sri Lanka during the unprecedented economic crisis this year, has greatly facilitated the shift to India.

Though his predecessor, President Gotabaya Rajapaksa, personally favoured closer ties with India rather than with China, the "Rajapaksa clan" which provided him a political base, was suspicious of India and favoured closer ties with China. Gotabaya's hands were thus tied.

Therefore, despite some improvement in ties when Gotabaya Rajapaksa was at the helm, many of India's grievances against Sri Lanka went unaddressed, to New Delhi's dismay.

Many Memoranda of Understanding (MoU) on development projects signed in 2017 were gathering dust in ministerial shelves in Colombo, though the implementation of these projects would have prevented the economic catastrophe which hit Sri Lanka in 2021-22.

The promise to give a project to construct and run the Eastern Container Terminal at Colombo port was not kept. The project to give the construction of the West Container Terminal to Adani ports was mooted much later, as a compensation, but not before souring relations with India considerably.

Sri Lanka had shown scant regard for India's anxiety to have a foothold in Colombo port given the fact that the port's main business is Indian transshipment. India was also concerned that a Chinese presence was already there in the port in the form of the Colombo International Container Terminal.

First Responder

However, the COVID-19 pandemic in 2020-2021 gave India an opportunity to demonstrate its relevance to Sri Lanka as the "First Responder" in times of crises. India rushed vaccines and almost dominated the island's vaccination program. Then came the 2022 economic crisis marked by an acute forex shortage leading to a severe shortage of essentials like food, fuel and medicines.

Again, India became the "First Responder" and opened lines of credit to the tune of US$ 4 billion. It itself delivered enormous quantities of food, fuel and medicines in time. This was in contrast to China which found fault with Sri Lanka's economic management instead of rushing aid. The West also was a passive spectator expecting the IMF to work out a solution first.

Yuan Wang 5 Visit

However, in this midst of such an excellent atmosphere of Indo-Sri Lankan cooperation, the boat was rocked by Colombo's permitting the Chinese survey ship Yuan Wang 5 to dock at Hambantota port for a week in August without intimating India. India expected Sri Lanka to give it advance information as per the 2013 and 2020 understanding on Indian Ocean Maritime Domain Awareness. India protested strongly, though finally an understanding was reached which allowed the vessel to dock.

The docking of the Yuan Wang 5 this year and two Chinese submarines at Colombo in 2014, made the influential Indian think tank Vivekananda International Foundation (VIF) say that New Delhi must make it clear to Colombo that some "red lines" should not be crossed. The VIF also sharply criticised the Chinese Ambassador in Sri Lanka, Qi Zhenhong, for publishing an article portraying China and Sri Lanka as being subjected to bullying by outside powers and suggesting that the two countries should join to resist such external threats.

The episode brought the India-China conflict in Sri Lanka into the open and made President Wickremesinghe openly say that Sri Lanka should not be the theatre of superpower confrontations.

Wickremesinghe Augurs Well for India

Be that as it may, both New Delhi and Colombo appear to have come to the conclusion that despite China's being entrenched in Sri Lanka, there is enormous scope for the expansion of India-Lanka ties. The VIF said that the presence of Wickremesinghe as President and Milinda Moragoda as High Commissioner in New Delhi augurs well for India.

The VIF has noted in a research paper that Wickremesinghe has, in his Throne Speech in parliament, underscored the important role India has played in rescuing Sri Lanka from the depths of economic despair. No other Lankan leader had done that before from such a platform, the VIF said.

India recognises that Wickremesinghe has always stood for close economic ties with it, especially with the four South Indian States. It was he who proposed the construction of a bridge across the Palk Strait and called it "Hanuman Bridge". It was Wickremesinghe who handed over the 99 giant oil tanks to the Indian Oil Corporation for joint development with the Ceylon Petroleum Corporation and gave 300 outlets to the Lanka IOC for distribution of fuel.

Differences Over Hambantota Persist

However, Wickremesinghe does not endorse New Delhi's view on the Hambantota port leased to China for 99 years, a deal which was signed when he was Prime Minister in 2017. While India and the West believe that the Chinese would use Hambantota as a naval base, Wickremesinghe, like his predecessors, insists that the port is a commercial one and will never be allowed to be used as a military base.

Addressing graduates of the Sri Lanka National Defence College recently, Wickremesinghe said that there are 17 Chinese-run ports in the region and other countries are running naval bases in the Horn of Africa. These are not considered a threat but Hambantota is identified as a threat when nothing military is going on there except routine visits by naval vessels from various countries. Be that as it may, the VIF insists that Hambantota is an issue and will be an irritant.

Vast Scope for Cooperation

However, neither India nor Wickremesinghe believes that India-Lanka relations should be held hostage to Hambantota. The port has been given to China on lease for 99 years and that cannot be reversed.

Therefore, both countries are making efforts to build bilateral ties using trade, connectivity, investment and security arrangements. While India is keen on seeing movement in projects for which an MOU had already been signed, Wickremesinghe has announced his own plans.

The President told the Sri Lanka-India Society recently, that he plans to transform the existing Indo-Lanka Free Trade Agreement into a Comprehensive Economic and Technological Partnership Agreement, a development mooted strongly by India earlier but was not pursued by the Rajapaksas. Wickremesinghe pleaded for the removal of trade barriers including non-tariff barriers which are a major problem in India.

India-Nepal-Bangladesh-Sri Lanka Economies Should Integrate

Speaking of the barriers to economic integration in South Asia Wickremesinghe said: "At least our view is that India and neighbouring countries Nepal, Sri Lanka Bangladesh, should integrate. We look forward to that. We look forward to trade integration in many areas with the RCEP with the EU. But the cornerstone of this is to achieve trade integration with India."

He stressed that there is scope for Sri Lanka and India to get together and look at different areas including logistics, renewable energy, tourism, trade, and IT. He also said that the Government is looking at all the projects which India and Sri Lanka had agreed to, but unfortunately got delayed at the Sri Lankan end.

Another Wickremesinghe move is to let the Indian rupee be used in Sri Lanka as a means to woo Indian tourists, who are the single largest group of visitors to Sri Lanka.

The President also spoke of cooperation for long-term energy security. He said the power grid connection between India and Sri Lanka, offshore wind energy, a solar power plant at Sampur and renewable energy projects on three islands of Jaffna will help strengthen cooperation with India.

"We have a tremendous scope in renewable energy, and India has stepped in first. There will be others. But from Puttalam to Mullativu, if we harness renewable energy and go in for green hydrogen and also provide power to India, you will see the uplift of the Northern economy, which had not happened earlier," Wickremesinghe pointed out, speaking of his plans for the minority Tamils who dominate the north Lankan population. Wickremesinghe wants Indian higher education institutes to come into Sri Lanka, especially to Jaffna.

The Trincomalee tank farm development, the development of the Trincomalee Port and the investment zones around it are being pursued. He recalled that Singapore's Surbana Jurong had given Sri Lanka a plan for the layout of Trincomalee.

He expressed happiness that the Lanka IOC has agreed to buy more filling stations from the Ceylon Petroleum Corporation. He also said that Sri Lanka and India are cooperating in developing logistics because "we are one of the main ports for India and Bangladesh."

Wickremesinghe said that he was proud that Sri Lankans too have gone out to India to invest, and cited Damro furniture as an example. "We should allow Sri Lankans to go and invest in India just as we call for Indians to come here."