Crisis-ridden Lanka needs course correction in choosing friends
   Date :08-Apr-2022
Crisis ridden Lanka
By Kartik Lokhande
There is a wonderful story in ‘Panchtantra’. A white lice named ‘Mandavisarpini’ lives in the soft mattress on the bed of a king. She used to suck his blood gently when the king fell fast asleep. One day, a big fat bug named ‘Agnimukh’ comes to her and requests her to allow it to suck sweet blood of the king. It becomes friendly with the lice and convinces her, giving several arguments in favour of his pitch. She relents. When the king comes to rest, the bug loses patience and bites him to suck more blood in the first instance. Pained, the king orders his servants to find the insect that bit him and kill it. However, the bug immediately slips into the cracks of the bed, and the servants find only the white lice and kill her.
The story offers an important lesson in geopolitics – regarding choice of friends. The choice of friends often has a bearing on the survival of nations when it comes to geopolitics and diplomacy. An ‘all-weather’ friendship can build trust and helps serve mutual interests in varied sectors, but actions have to be rationalized after sitting together. Have a friendship driven by temporary interest and debt trap encouraging corrupt practices, and one can see the lending nation dictate the terms. In the process, the borrower becomes like Sri Lanka – crisis-ridden. The latest visible crisis is Sri Lanka running out of cash to buy fuel, and gradual descent into chaos and emergency. India has been a good friend of Sri Lanka for years, but a few years ago, Sri Lanka dropped enough indications that she had chosen China over India.
As far as China is concerned, her tapping Sri Lanka had begun over a decade ago in an attempt to form what came to be called as ‘string of pearls’ to surround India from various directions. The first major visible indication came when Sri Lanka allowed Chinese submarine to dock in Humbantota port. It sparked concerns especially in India. But, the Sri Lankan leaders were so consumed by huge loans offered by China that they overlooked concerns of India, a long-term friend and the closest neighbour. Gradually, it became clear to the world how China had started dictating the terms for Sri Lanka.
The report ‘How China Lends: A rare look into 100 debt contracts with foreign governments’ released jointly by AidData, Kiel Institute for The World Economy, Center for Global Development, and Peterson Institute for International Economics in March 2021 sheds some light on this aspect. It offers three main ‘insights’ on how China lends: “First, the Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt. Second, Chinese lenders seek advantage over other creditors, using collateral arrangements such as lender-controlled revenue accounts and promises to keep the debt out of collective restructuring (‘No Paris Club’ clauses). Third, cancellation, acceleration, and stabilisation clauses in Chinese contracts potentially allow the lenders to influence debtors’ domestic and foreign policies.
Even if these terms were enforceable in court, the mix of confidentiality, seniority, and policy influence could limit the sovereign debtor’s crisis management options and complicate debt renegotiation.”
The observations in the report are based on analysis of 100 contracts between Chinese state-owned entities and government borrowers in 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania. Though the said report does not name Sri Lanka, the ‘insights’ quoted above match with what has happened with Sri Lanka since she started cosying up with China and sending ‘not so right’ signals to long-term friend -- India.
However, amid the present crisis, Sri Lankan leadership appears to have woken up to reality and has started reaching out to India for help.
Being a good-natured friend, India immediately came to the rescue of the old cultural friend in the sub-continent. But, India needs to exercise caution and Sri Lanka needs to act in a manner that will restore trust of India in her. If Sri Lanka, with India’s help at present, comes out of crisis but self-interest driven Lankan politicians go back to China placing own selfish goals above Lankan people’s long-term interests, then Sri Lanka is bound to face chaos of even bigger scale and for a longer time. That will be a sad thing to happen not only for Sri Lanka but also for the Indian sub-continent, given the instability, lack of democracy, corrupt leadership, and religious fanaticism in Pakistan, Afghanistan, and military dictatorship in Myanmar. That will adversely affect the potential of rise of the Indian sub-continent on global map. Superficially, it may be a pleasing scenario for China, but in the long run, this situation will definitely harm her badly.
It is utmost necessary that Sri Lanka corrects her course, realising her importance in geopolitics of the Indian Ocean Region. For now, one just wishes that good sense shall prevail and Sri Lanka-India friendship’s new chapter begins.