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Rising China's Influence in Developing Asia$

Evelyn Goh

Print publication date: 2016

Print ISBN-13: 9780198758518

Published to Oxford Scholarship Online: May 2016

DOI: 10.1093/acprof:oso/9780198758518.001.0001

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China’s Influence in Sri Lanka

China’s Influence in Sri Lanka

Negotiating Development, Authoritarianism, and Regional Transformation

Chapter:
(p.129) 6 China’s Influence in Sri Lanka
Source:
Rising China's Influence in Developing Asia
Author(s):

Neil DeVotta

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198758518.003.0006

Abstract and Keywords

This chapter emphasizes the important mediating role played by domestic politics and corruption in determining the degree of Chinese influence. It describes Sri Lanka’s ‘hard authoritarian’ governance system under the Mahinda Rajapaksa government and reveals the regime’s deep-seated complicity with China’s growing presence. China has not so far made significant demands on Sri Lanka’s behaviour or outlook, and there is little evidence of Chinese attempts to prevail upon it. To the contrary, it is the ruling elite in Colombo that has mobilized Chinese investment, presence and interest to promote its own domestic political, commercial, and regional agendas. By exploring the commercial, political, and strategic impacts of key Chinese infrastructure projects in Sri Lanka, the author finds that the main impact of China’s growing involvement in Sri Lanka has been to fuel some conciliatory change in India’s approach to its neighbour—an unintended consequence that may undermine future Chinese influence.

Keywords:   Sri Lanka, China, Rajapaksa, Hambantota, infrastructure, corruption, civil war, soft authoritarianism, preference multiplying, discursive persuasion

Whether China eventually becomes a superpower is not in question anymore. How China goes about achieving that status is what scholars and policymakers differ on. Within South Asia, China’s rise has mostly riled India, which considers itself the region’s superintendent. China’s increased involvement in the affairs of South Asian countries has goaded India into getting more involved in these states’ affairs as well, with mixed results. Over the past fifty years India has, from time to time, had tense relations with most South Asian states, and these countries appeared to be using their ties to China to ward off undue Indian pressure. Sri Lanka under President Mahinda Rajapaksa was one such country, although the authoritarian Rajapaksa’s defeat in the January 2015 presidential elections has led to the island seeking a more balanced approach in its relations with China, India, and the West. China was happy to support President Rajapaksa as this provided profitable investment opportunities for Chinese state-owned companies and an expanding presence in India’s backyard. The attempt by Sri Lanka’s new government to rebalance relations among leading states has led to Chinese unease, even though both Colombo and Beijing publicly support maintaining strong ties.

This chapter evaluates China’s influence in Sri Lanka to determine the extent to which it may be encouraging and pressuring the island’s leaders to pursue objectives consistent with Chinese designs. It concludes that while China was likely in the process of using its economic involvement in Sri Lanka to pursue strategic designs in the Indo–Pacific region, there is little evidence to suggest China pressured Sri Lanka during the Rajapaksa years to reorient its foreign policies or pursue particular domestic objectives; on the contrary, it was the Sri Lankan state under Mahinda Rajapaksa that, in (p.130) the main, sought to get China to promote its preferences both domestically and internationally. These preferences included getting (mainly non-concessionary and often not very transparent) Chinese loans to finance mega infrastructure projects that generated kickbacks for the Rajapaksas, and ensuring China’s support in international forums against western demands for an independent investigation into war crimes allegedly committed by Sri Lanka’s military during the final phase of the ethnic conflict with the Liberation Tigers of Tamil Eelam (LTTE).

In a real sense, the Mahinda Rajapaksa government was encouraging Chinese projects to such an extent that there was little reason for China to superimpose its wishes on Sri Lanka. For instance, twenty-seven agreements between Sri Lanka and China were signed (with many others supposedly not publicized) when President Xi Jinping visited Colombo in September 2014. That China was intent on using Sri Lanka for its own naval expansion into the Indo–Pacific region was perhaps evident when a Chinese submarine visited the Colombo harbour in September (at the same time that Japanese Prime Minister Shinzo Abe visited the island) and another submarine visited in November 2014.

The Rajapaksa–China nexus led to charges that the only ones benefitting from the ensuing development were Chinese state banks, contractors, workers, and members of the Rajapaksa family. And Rajapaksa’s opponent Maithripala Sirisena made this an election issue in 2014, with his manifesto declaring that ‘The land that the White Man took away by means of military strength is now being obtained by foreigners by paying ransom to a handful of persons. This robbery is taking place before everybody in broad daylight…If this trend continues for another six years our country would become a colony and we would become slaves.’1 Rajapaksa’s defeat was therefore also portrayed as a defeat for China. Given how the Rajapaksa administration maligned the West and upset India by reneging on promises made to accommodate the Tamil minority, Sirisena’s victory was further considered a victory for the West and India at China’s expense. The new government has sought to return Sri Lanka to a more non-aligned posture even as it has reassured China that it wants to maintain cordial relations while reassessing the ill-considered China-funded projects the Rajapaksas spearheaded; and China, in turn, has promised to be an ‘all weather friend’ to Sri Lanka and work with the Maithripala Sirisena government to pursue mutually beneficial outcomes. China, however, has repeatedly noted that it is obligated to protect its companies’ investments and the country could become more assertive with the new Sri Lankan (p.131) government if it feels such investments and China’s regional influence are being rolled back.

From the standpoint of the theoretical framework utilized in this volume, China when dealing with the Rajapaksa government pursued a ‘preference multiplier’ strategy that enabled it to profit economically even while expanding its geostrategic influence. Many in Sri Lanka feared that the island had become so indebted to China that this strategy could easily segue into one of a ‘power to prevail.’ For instance, the relatively high interest loans the Rajapaksa government borrowed from China amount to between $5–6 billion and an inability to pay back these and other slated loans in the future could see Sri Lanka kowtowing to Chinese desires. Rajapaksa’s defeat, however, has led to China combining the ‘preference multiplier’ mode of influence with ‘discursive persuasion,’ because it now reiterates the narrative about wanting to expand economic involvement in Sri Lanka for mutual benefit even while simultaneously working to disabuse notions that its companies operated in predatory fashion. While China has the ability to resort to a ‘power to prevail’ strategy should the Sirisena government try to radically alter agreements and contracts between the two countries in a manner that undermines Chinese investments and security aspirations, this is unlikely. Sri Lanka could use Chinese funds to develop the island, and China in turn wants to protect and expand its investments there. Furthermore, given legal and diplomatic reasons the new Sri Lankan government will find it difficult to fully extricate itself from agreements Rajapaksa and the Chinese inked. China also has a history of engaging new regimes with mutually beneficial initiatives following political transitions,2 and it appears to have already begun that process with the Sirisena government. For instance, when President Sirisena visited China in March 2015, the Chinese proposed to renovate the island’s Supreme Court complex, build a biomedical technological laboratory, set up a fully equipped hospital in the region the president hails from to treat patients suffering from widespread kidney disease, train 2,000 young scientists in China, and provide management training to public servants. Furthermore, China promised US$1 billion in grant money with no conditions attached.

The following analysis is organized in four sections: the first examines the confluence of interests between China and Sri Lanka underpinning China’s growing presence in the island, while the second looks at Sino–Lanka relations within the broader geopolitical context in South Asia. The third section notes how Sri Lanka’s soft-authoritarian dispensation under the Rajapaksa regime made the process tracing approach (as preferred by this project) to analysing China’s influence in Sri Lanka challenging. Authoritarian countries tend to be (p.132) the least transparent and China’s ‘hard authoritarian’ state and Sri Lanka’s ‘soft authoritarian’ Rajapaksa government3 engaged each other with sufficient discretion and secrecy so as to make process tracing all the more difficult. The fourth section focuses on a number of key cases of Chinese influence in Sri Lanka, analysing the politics associated with the Hambantota Port complex, the Colombo Port City Project, and other significant Chinese-funded schemes.

Overall, the chapter shows that insofar as China has influenced Sri Lanka’s policy choices, it has not done so in a manner that contradicted the Rajapaksa government’s preferences. It concludes by arguing that while the Rajapaksa regime found it convenient to bank on increased Chinese involvement in Sri Lanka, the island’s stability within a geopolitical context ultimately depends on good relations with India, which is still accepted as the regional hegemon. The international community at large takes Indian considerations seriously when dealing with South Asia and western countries especially tend not to engage Sri Lanka in ways that may roil India. Indeed, many analysts think that the Rajapaksa government’s decision to allow two Chinese submarines to use the Colombo port complex in September and November 2014 caused India to work with the Sirisena campaign and oust Rajapaksa.4 Thus, it is unrealistic to think India would disregard intrusions in Sri Lanka that undermine its security preponderance or that China would go out of its way to support Sri Lanka should India clash with the island.5

Confluence of Interests

China’s strong support for Sri Lanka stems from a number of factors: (a) a longstanding Sri Lankan foreign policy stance that appreciates Chinese preferences (by eschewing links with Taiwan and relations with the Dalai Lama); (b) the fact that friendly Sino–Lanka relations would perturb India; (c) empathy for a country that experienced a separatist conflict (given China’s own experiences dealing with separatist movements in Tibet and the Xinjiang Uyghur Autonomous Region); (d) opportunities for China’s state banks and companies to profit by investing in the island; and (e) the ability to burnish its image as a country that pursues a policy of non-interference in the affairs of (p.133) other states (thanks to not demanding any investigations into Sri Lanka’s human rights violations or promoting a restructured political order to accommodate the island’s minorities).

China did supply Jian-7 fighter aircraft, JY-11 3D surveillance radars, anti-aircraft guns, and other weaponry during the latter stages of the war with the LTTE and may have also encouraged Pakistan to support the island’s military requirements.6 According to the Stockholm International Peace Research Institute, China sent Sri Lanka military goods worth US$75 million in 2008—a year before the war ended.7 The fact that Sri Lanka cancelled a weapons order worth US$200 million from China right after the war ended further evidences the military ties between the two states during the latter stages of the island’s civil war. It appears weaponry was provided without Sri Lanka paying for it upfront and Sri Lanka’s armed forces may not have decimated the LTTE as quickly as it did if not for China’s—and its ally Pakistan’s—military support. That military support, however, was not extended on a quid pro quo basis whereby China sought to take undue advantage of Sri Lanka—although the loans associated with the Hambantota port complex and other infrastructure projects may have accompanied an understanding that Chinese companies would benefit from Chinese investment in the island. This sense was perhaps best captured by Sri Lanka’s highly-regarded late Foreign Minister Lakshman Kadirgamar in 2004, when he noted that ‘China has never sought to influence the domestic politics of Sri Lanka’ and that the country ‘has never tried to dominate, undermine or destabilize Sri Lanka.’ Perhaps with India in mind, Kadirgamar further noted that China has ‘never tried to strike a quick bargain in a crisis. There have been no strings attached to Chinese aid.’8 In short, China acceded to Sri Lanka’s requests and helped end the island’s civil war, which contrasted with India’s involvement in the 1980s when that country not only trained Tamil rebels seeking to sunder Sri Lanka but thereafter superimposed the Indo–Lanka Peace Agreement that partly led to an Indian peacekeeping force being stationed in the island.

While there is no clear evidence to suggest that Chinese aid and grants have been used to cause a rift between India–Sri Lanka relations, the triangular power politics claim is partly made because the Rajapaksa government and some Sinhalese Buddhist nationalists propagated the notion that rising China provides a counterweight and leverage against India and the West. As (p.134) Sri Lanka’s Foreign Secretary put it at the height of the war with the LTTE, unlike Sri Lanka’s traditional, Western donors, Asian countries like China ‘don’t go around teaching each other how to behave. There are ways we deal with each other—perhaps a quiet chat, but not wagging the finger.’9 And a prominent Sri Lankan minister, referring to the U.S. and other western countries’ refusal to sell Sri Lanka weapons due to the island’s poor human rights record, likewise claimed that ‘We [Sri Lanka] have the United States to thank for pushing us closer to China.’10 Such sentiment was more pronounced after the war ended because the Rajapaksa government stood accused of deliberately shelling and killing at least 40,000 Tamils during the final stages of the conflict, and the attempt by the UN and some western states to bring to justice those responsible for these deaths and the subsequent grotesque accounts of rape and disappearances forced the government to draw closer to states like China. But the Rajapaksas would have cosied up to China even if the civil war had ended without controversy because only Chinese-style non-transparent, quid pro quo loans guaranteed its venal designs.

Thus, alongside regional geopolitics, domestic imperatives stemming from Sri Lanka’s ethnic conflict and post-civil war dynamics rooted in Sinhalese Buddhist nationalism and corruption had much to do with why the Mahinda Rajapaksa government sought out Chinese support: (i) the government’s development agenda necessitated huge loans that very few entities, except China, were willing to provide, especially given the Rajapaksas’ aversion for transparency and sketchy record on good governance; (ii) the Rajapaksa family’s authoritarian quest to perpetuate its power by any means and to create a political dynasty was least opposed by non-democratic China; and (iii) an increased Chinese presence in the island allowed the government to keep India off balance especially regarding the post-war ethnic reconciliation process.

China’s increased involvement in Sri Lanka during the Rajapaksa government’s tenure is thus best explained by that government’s overarching preferences than by Chinese designs to instigate policies and practices contrary to the wishes of Sri Lanka’s leaders. It helped that the Rajapaksa government’s preferences coincided with China’s long-term strategic objectives in the region. This is not to say that the Chinese may not have persuasively communicated their preferences to Sri Lankan leaders. If so, this was done without fanfare; and with both parties ensuring little was shared with the outer world.

(p.135) Chinese involvement in Sri Lanka could, of course, be part of a long-term strategy, whereby it cultivates close ties that promote the country’s economic interests until it becomes necessary to superimpose revisionist designs that alter the international status quo. Scholars have suggested that China provides incentives and makes friends with countries along its periphery so as to prevent these states aligning with the United States and other rising powers that may constrain China.11 Others have suggested that Chinese aid may be driven less by geopolitical machinations and more by China’s self-identification with formerly colonial states, leading to a developing country assisting other developing countries based on the latter’s dire needs yet premised on principles of mutual benefit, equality, and sovereignty.12 The extensive aid to certain countries like Sri Lanka and the diplomatic trappings associated with such aid, however, suggest strategic intent, and it is this possibility that concerns India and the United States. A neutral foreign policy by the Maithripala Sirisena government will halt the inroads China was making in Sri Lanka; hence, the way China handles relations with the Sirisena government ought to suggest whether its involvement in Sri Lanka was mainly influenced by economic or strategic considerations.

If China’s strategic intent in expanding involvement in Sri Lanka is opaque, its commercial interests are conspicuous. When combined with how the ruling Rajapaksa family used flashy Chinese infrastructure projects to legitimize its rule and arrogate kickbacks, China’s increasing footprint in Sri Lanka most certainly has domestic ramifications. Their geopolitical ramifications, however, are less clear. Consequently, what one can currently say with confidence (based on the public record and interviews with various sources)13 is that China’s extant interests in Sri Lanka are dictated more by economic gain and that China has been more willing to promote the interests of Sri Lanka’s leaders domestically and internationally than force Sri Lanka to institute pro-China policies against the island’s will. A big reason for this was that China’s economic and long-term strategic goals in the island and Asia aligned with the Mahinda Rajapaksa government’s short-term economic interests and facilitated its ‘preference multiplier’ influence, rather than China seeking to prevail over Sri Lankan resistance. The Maithripala Sirisena government’s promise to reassess all major contracts signed with Chinese companies has led China to emphasize discursive persuasion. China’s relations with Sri Lanka will most likely straddle these two modes of influence going forward. (p.136)

China–Sri Lanka Relations within a South Asian Context

Sri Lanka’s two main political parties, the Sri Lanka Freedom Party (SLFP) and United National Party (UNP), have both maintained cordial relations with China. Sri Lanka achieved independence in February 1948 and the UNP-led government declared its recognition of China in January 1950—merely three months after the People’s Republic of China was founded—even as it ended relations with the Chinese Nationalist Government.14 The UNP government also signed a Rubber-Rice Barter Agreement with China in 1952, which automatically led to the suspension of United States aid to the island under the so-called Battle Act.15 The SLFP under S. W. R. D. Bandaranaike invited Chinese Premier Zhou Enlai for the island’s ninth independence day celebrations in February 1957 and began diplomatic relations with China that same month; while Mrs Sirimavo Bandaranaike, who succeeded her husband, especially cultivated close relations with China beginning in the early 1960s despite China’s relative isolation in the international arena at the time.16 Notwithstanding pressure within the SLFP to brand China the aggressor during the 1962 Indo-China border war, Mrs Bandaranaike avoided taking sides and instead took the lead in organizing the six-nation Colombo Conference that sought to bring the two combatants to the negotiating table.17 Throughout this period, Sri Lanka not only staunchly supported China joining the United Nations but strongly opposed Taiwan’s membership.

Ties between the two countries developed so well irrespective of the political party in power in Sri Lanka that a UNP government declined the opportunity to join the Association of South East Asian States in 1967 because it was felt that body was designed to contain China.18 Mrs Bandaranaike’s governments (1960–65 and 1970–77) especially supported the non-aligned movement, which China too fully supported. Both the UNP and SLFP have also disallowed the Dalai Lama from visiting Sri Lanka, despite the island taking pride in being a bastion for Buddhism. In international forums Sri Lanka votes in line with developing countries’ preferences and typically ends up supporting (p.137) the Chinese and Indian positions. Thus there have hitherto been hardly any major issues that caused tension between the island and China.

This is in contrast to Sri Lanka’s relations with India, which have been complicated and vexed at times. The discriminatory and anti-Tamil policies that successive Sri Lankan governments pursued caused India’s Tamils in the southern state of Tamil Nadu to pressure New Delhi to aid their ethnic cousins. When the UNP government under J. R. Jayewardene (1977–88) pursued close ties with the United States and the West at a time when India was experiencing tense relations with the United States, India supported clandestinely Sri Lankan Tamil separatists and eventually stationed the Indian Peace Keeping Force in the island’s northeast. While India proscribed the LTTE (after the group assassinated former Prime Minister Rajiv Gandhi in May 1991) and provided Sri Lanka with intelligence to defeat the group in May 2009, the ethnic reconciliation that the Mahinda Rajapaksa government promised to institute so as to accommodate legitimate Tamil grievances never materialized and was one major factor that strained Indo-Lanka relations during recent years.

New Delhi thus felt duped, and the Rajapaksa government’s continued persecution of Tamils in the island’s north especially angered Tamils in Tamil Nadu. Indeed, political parties and student groups in Tamil Nadu mounted major protests against Sri Lanka, demanding accountability for the alleged war crimes the island’s military perpetrated against surrendering LTTE cadres and innocent civilians. The protests pressured the Congress-led United Progressive Alliance government in New Delhi and contributed to India voting against Sri Lanka at the 2012 and 2013 United Nations Human Rights Council (UNHRC) meetings in Geneva. While India surprised everyone by abstaining during the 2014 UNHRC vote, China stood steadfastly by Sri Lanka and even lobbied various developing countries to support Sri Lanka. China’s position of not interfering in states’ internal affairs is self-serving, given its own widespread human rights violations especially in Tibet and Xinjiang Province. At the same time, non-interference in other states’ internal affairs is a long-standing Chinese policy, and China’s opposition to an international investigation on war crimes in Sri Lanka allows it to project a principled stance and claim it is consistent in this aspect of its foreign policy. As Jia Qinglin, a member of the Beijing politburo, recently reiterated, ‘We maintain that all countries, big or small, are equal, and we are opposed to the big, strong and rich bullying the small, weak and poor.’19 Such rhetoric was music to Rajapaksa ears.

With most countries in South Asia harbouring some gripe against India, which often gets portrayed as arrogant and supercilious when dealing with its smaller neighbours, China gains by being considered accommodating and (p.138) non-interfering. Indeed, some among Sri Lanka’s political elite claim that India tends to dictate, demand, and impose, whereas China merely consults. Indian policymakers were said to be abrasive (although this seemed to pertain mainly to the past); Chinese policymakers, on the contrary, were considered understanding, cordial, reciprocal, receptive, helpful, respectful, solicitous, and soothing.20 Some Sri Lankan elites were impressed that Chinese officials sought advice from Sri Lankan authorities on how to emulate the Gam Udawa (Village Awakening) projects that Ranasinghe Premadasa, the island’s second president, initiated. This contrasted with complaints against Indian authorities, who were said to be pushy when trying to get Sri Lanka to devolve power to the country’s northeast.

There appears to be some hyperbole in the claims about India (especially in the post-civil war era) being pushy. While it is debatable if such negative views are deliberately propounded to put pressure on India, it is indisputable that the contrasting views of India and China have goaded India to modify its stance towards Sri Lanka. Hence, the argument that the Rajapaksa government used China to stem Indian interference has some merit. The irony here is that insofar as China’s increased involvement in Sri Lanka has modified behaviour, it was India’s behaviour that was mainly affected. For instance, China’s involvement with the Hambantota port complex spurred India to set up a consulate in the town—which most consider a backwater region not warranting any foreign mission, development projects notwithstanding. Indian businesses have also been encouraged to invest in Sri Lanka to help widen the Indian presence; and India has provided hundreds of millions of dollars through various lines of credit and drastically increased its aid to Sri Lanka in the past few years—from approximately US$30 million in 2011–12, US$48 million in 2012–13, to US$83 million in 2013–14.21 Most strikingly, soon after India abstained from voting against the March 2014 UNHRC resolution calling for the organization’s High Commissioner to investigate serious human rights violations in Sri Lanka—a resolution that most expected India to support—an Indian cabinet minister claimed his country did so only to neutralize China’s influence in the island. As per the minister, ‘Today, only India is involved in the rehabilitation and resettlement of Tamils in the war-torn North and Eastern provinces of Sri Lanka. If India had voted against Sri Lanka, it would have provided an opportunity to China…to step into Tamil areas.’22

(p.139) The fact remains that Sri Lankans have closer ties to India—religious, cultural, and historical—than to China. More Indians visit Sri Lanka than any other nationality, with 242,734 doing so in 2014;23 while nearly 250,000 Sri Lankans visited India in 2012.24 More Sri Lankans study in India than in China. Indian investment—both commercial and aid related—in Sri Lanka has also increased rapidly over the past few years. For example, while Indian investment in Sri Lanka was only US$24 million in 2000,25 it climbed to US$1 billion in 2013 and is slated to double in the next five years, even as Sri Lankan exports to India climbed from US$54 million in 2000–01 to US$720 million in 2011–12.26 On the other hand, Sri Lanka’s exports to China in 2013 totalled a mere US$131 million, while China’s imports to Sri Lanka that same year amounted to nearly US$3 billion. Sri Lanka and China are close to signing a Free Trade Agreement and many fear the disparity in trade is bound to increase and especially adversely affect the island’s local manufacturers.

Sri Lanka—and China—knows that India is unlikely to stay quiescent should the island pursue actions detrimental to India’s national security and, justified or not, India tends to think of the Indian Ocean region as being part of its security orbit. Indeed, many now believe—and Mahinda Rajapaksa himself has claimed—that India’s Research and Analysis Wing (RAW) worked with the Maithripala Sirisena camp to terminate the Rajapaksa presidency. India protested strongly when a Chinese submarine first visited the Colombo port in September 2014 but turned livid when the Rajapaksas allowed a second submarine entry in November. While the attempt to oust President Rajapaksa may have begun before then, the Chinese submarines appear to have made RAW more determined. When combined with the Modi government’s expanding ties with the United States, the Indian Navy’s ongoing build-up of ships and submarines, and the recent deal with the Seychelles and Mauritius to build Indian military bases on their islands, it appears India is reasserting itself in the region and that countries like Sri Lanka must take cognizance of Indian preponderance.

When not discussing devolution and accountability for alleged war crimes against Tamils, Sri Lankan officials candidly note that close Indo–Lanka cooperation is indispensable. Referring to the links between Sri Lankans and Indians, one Foreign Service official said, ‘go past the Chinese Embassy and Indian High Commission and the [long] lines to get visas [at the latter] will tell you which country Sri Lankans are clamouring to get to.’ Chinese officials also (p.140) both publicly and privately acknowledge that India should enjoy close ties to Sri Lanka. This is not to say that China is averse to seeing Indo–Lanka tensions, for any development in South Asia that pits India against its neighbours allows China to leverage such tensions to keep India confined within South Asia.

Adding to the relatively constrained prospects of China directly pursuing power-political competition with India by influencing Sri Lanka is the fact that Sri Lanka, under the Rajapaksa government especially, was doing what China expects from a small country outside its immediate orbit. Indeed, China profits substantially from its support of Sri Lanka: as already noted, its banks and contractors benefit from charging relatively high interest and working on the island’s developmental projects even as China consolidates already cordial relations with Sri Lanka’s leaders.27 China is currently Sri Lanka’s largest foreign investor, having poured in around US$1.2 billion in 2013, which amounted to 24 per cent of foreign direct investment for the year.28 Overall, Chinese investments and contracts are set to approximate US$12 billion by 2015, with commissions paid to the Rajapaksa family between 2005–15 estimated to be as high as US$1.8 billion.29

Process Tracing and Soft-Authoritarianism

Two main reasons impeded the process tracing exercise in Sri Lanka when seeking to evaluate China’s influence. The first is China’s discretion, which discourages commentary and details about its investments.30 For instance, development projects funded by China often involve higher interest rates from Chinese state banks (when especially compared to loans provided by the World Bank and IMF), with the projects carried out by Chinese state companies, and often times involving Chinese labourers—some of whom are said to be convicts. The loans provided by China also do not demand transparency, (p.141) because the Chinese expect local politicians to skim off a portion of it. Thus one can argue that Chinese discretion is actually designed to mask transactions that benefit Chinese banks and companies and their Sri Lankan political clientele at the expense of Sri Lankan taxpayers.

Process tracing in Sri Lanka was also difficult given the Rajapaksa government’s penchant for secrecy, especially when it pertained to budgetary issues and state contracts with foreign entities. The Mahinda Rajapaksa government was easily the most corrupt government in post-independence Sri Lanka, with some reports claiming the president and his family may have looted over US$10 billion. This government was consequently averse to being transparent when it came to questionable investments and programmes, and it avoided releasing information that previously used to be part of the public domain. For instance, government agents increasingly failed to receive government circulars; cabinet ministers sometimes did not even get provided minutes of cabinet meetings; and civil society groups and journalists failed to access government contracts. Even assessments done on mega projects were hard to obtain and often times the contracts dealing with huge infrastructure projects were not publicized. At the same time, businesspersons and subcontractors bemoaned (in private) how they had to cough up between 10 and 20 per cent of their bids to high-ranking government ministers. Such extortion and the subsequent inflated project costs coupled with high-interest loans were major reasons for the ensuing government secrecy concerning many of the China-funded initiatives especially. Chinese nonchalance regarding how monies are spent thus suited President Mahinda Rajapaksa, his family, and cronies. The Sirisena government has promised to investigate Rajapaksa malpractices and some have called on China to help uncover such misappropriations. It is doubtful, however, that China will go out of its way to expose the Rajapaksas, as doing so would likely end up also implicating Chinese entities that colluded in corruption.

The relative secrecy the Rajapaksas resorted to when pursuing development projects was assisted by a soft-authoritarian culture that President Rajapaksa instituted soon after coming to power in November 2005. The ethnocentric politics that successive Sri Lankan leaders resorted to beginning in the mid-1950s and the subsequent civil war compromised what used to be a commendable democracy.31 But under President Rajapaksa, who was determined to perpetuate his and his family’s power and also create a political dynasty, the island’s already compromised institutions became further enfeebled by First Family interference.32 Soft authoritarian states resort to various stratagems to (p.142) continue in power, including ensuring a weak opposition by enabling defections; manipulating rules to disqualify formidable opponents; conducting multiple investigations that target opposition members for real and manufactured infractions to keep them off balance; tarnishing the opposition’s credentials by linking it to hostile foreign powers; muzzling the media even while permitting some critical coverage; vilifying local and western election monitors as saboteurs associated with foreign-funded conspiracies while welcoming monitors from similarly soft-authoritarian states; introducing undue registration requirements and making the voting process gruelling among communities likely to vote for the opposition; using the bureaucracy and state machinery to promote the governing party; demonizing civil society; intimidating, attacking, disappearing, and murdering opponents; and politicizing and undermining the independence of institutions (i.e., courts, parliament, and bureaucracy) that exert checks on the executive.33 President Rajapaksa resorted to such stratagems to ensure a slavish cabinet, a hag-ridden civil society, a muzzled media, and an impotent opposition. But such mal-governance culminated in impunity and nepotism among Rajapaksa family members and supporters and a breakdown in the rule of law, which all contributed to President Rajapaksa’s defeat in January 2015.

While Sri Lanka like South Asia is noted for its political families, no family in the history of the region arrogated so much power in so little time as the Rajapaksas. President Rajapaksa and his two brothers Basil and Gotabhaya (another, Chamal, was the speaker of parliament) controlled between 60 per cent and 70 per cent of the country’s budget through their ministerial portfolios, which included all defence and economic related affairs. The Rajapaksa government’s rule was rooted in a cult of kinship that also took on the trappings of kingship. For the president, à la monarchs of old, dispensed favours without regard to probity, rules, and laws; and those questioning his actions were summarily branded traitors. The Rajapaksa family seemed to believe that ‘an era of “ruler kings” has begun’ (as Basil Rajapaksa told The Economist).34 Foreign investors may have shared in this assessment, because most developers—and this is certainly true of the state-sponsored Chinese investment companies—typically met only with Basil or one of the brothers before finalizing their decisions. Such governance smacking of kinship and kingship marginalized many seniors in the SLFP and politicians at the local and provincial levels, and promoted a political culture where impunity reigned. President Rajapaksa’s defeat led to various investigations and his attempt to make a political comeback as prime minister through the August (p.143) 2015 parliamentary elections were mainly influenced by a desire to see such investigations terminated. The upshot is that the environment in which the president, his family, and supporters operated was conducive to making decisions with little transparency, which in turn made process tracing government decisions an almost impossible exercise. With this limitation in mind, this chapter has partly relied on numerous interviews and discussions with journalists, economists, academics, civil society activists, Foreign Service officials, members of Sri Lanka’s opposition, and some in the island’s diplomatic corps for its analysis.

Key Chinese-Funded Projects in Sri Lanka

The case of the Hambantota port qualifies as a good example of China’s increased involvement and putative influence in Sri Lanka. The agreement to build the Hambantota port was finalized in October 2007 between the Sri Lankan government and the Exim Bank of China, by which China agreed to fund 85 per cent of the first phase at a cost of US$360 million. Recent reports seem to suggest that this first phase has cost nearly US$400 million. The next two phases will cost another US$1 billion. The ongoing development of the port has received much hype because it gets juxtaposed with similar port projects involving China in Gwadar, Pakistan; Chittagong, Bangladesh; Marao Atoll, Maldives; and Sittwe and Khaukphyu, Myanmar. Popularly referred to as the ‘string of pearls,’ these ports are portrayed as a Chinese attempt to encircle the Indian Ocean. For instance, in its 2009 report to the US Congress, the US-China Economic and Security Review Commission warned that Hambantota was among the ports that the People’s Liberation Army (PLA) Navy hoped to use for ‘maritime operations.’35 Others have drawn a direct link between China’s involvement in the Hambantota port and the multifaceted Chinese aid and loans to Sri Lanka.36

What many appear to be unaware of is that the Sri Lankan government headed by Mahinda Rajapaksa first asked India to consider developing a port at Hambantota. The Indians, more interested in maintaining a presence in Sri Lanka’s north, given its proximity to India, disregarded the request.37 (p.144) According to a former U.S. ambassador to Sri Lanka, President Rajapaksa on several occasions even tried to get the United States to fund the project.38 It was only after India’s refusal that the Rajapaksa government approached China, which appears to have eagerly agreed because it made both financial and strategic sense to do so: financial—because it allowed state-owned Chinese banks to loan money to the Sri Lankan government even as Chinese state-owned construction companies were provided opportunities to use Chinese labourers to build the port; and strategic—because nearly 80 per cent of China’s energy imports are transported along sea lanes approximately six nautical miles off Hambantota.39 When asked about China’s strategic interest in Sri Lanka and its relevance to the Hambantota Port, President Rajapaksa said: ‘I asked for it. China didn’t propose it. It was not a Chinese proposal. The proposal was from us; they gave money. If India says yes, we’ll give you a port, I will gladly accept. If America says, we will give a fully equipped airport—yes, why not? Unfortunately, they are not offering to us.’40

Rajapaksa government officials emphasized that no entity will be permitted to use the Hambantota port in a manner detrimental to the interests of any country and that it is a purely commercial entity. But others have questioned whether Sri Lanka would be forced to allow China to use the facility and the nearby Chinese-built Mattala Rajapaksa International Airport (now closed due to lack of traffic) should conflict ensue between China and India and, if so, what this may mean for Indo–Lanka ties. Indian foreign policy experts now concede that India made a mistake disregarding the Sri Lankan request. While China and Sri Lanka welcome any country, including India, using the Hambantota port, India is also concerned that the facility may eventually get used as a rest and recreation site for Chinese naval forces, providing a precursor for a Chinese military presence in the island. Sri Lankan officials repeatedly make clear that China has never broached the possibility of the Hambantota port being used for security or military purposes. Former U.S. ambassadors to Sri Lanka have likewise expressed scepticism that China may be hoping to use the Hambantota port as a base.41 Sri Lanka has invited interested countries—including India and Australia—to use Hambantota to build and repair ships, although the port has thus far generated little activity despite the Rajapaksas zealously trying to transfer cargo to the facility. For instance, the government has ordered certain ships transporting vehicles to (p.145) avoid the Colombo harbour and instead unload their cargo at Hambantota, leading an analyst to call the Hambantota port the world’s ‘most expensive car park.’42

The most controversial Chinese investment is the unsolicited, China-initiated Colombo Port City Project, which is to be built by the China Communications Construction Company (CCCC) by reclaiming from the sea an artificial island amounting to about 575 acres. It is the largest single foreign direct investment (FDI) project in the island, but fears over environmental damage, China’s ability to use the location to further its security interests, and the giving away of approximately 270 acres to CCCC (about 50 acres outright and the rest on a 99-year lease) has raised hackles among many Sri Lankans. Lack of transparency associated with the deal and rumours that a Formula One race-track was to be built to satisfy President Rajapaksa’s children added to the extant controversy surrounding the project. Rumours also suggest that the Chinese company plans to build high-rise apartments for Chinese nationals, which may force the government to make changes to the island’s laws currently pertaining to foreign residency.

The CCCC, which the World Bank has placed on its prohibited list for having violated procurement standards, is investing US$1.5 billion to reclaim the land, with some reports claiming this initial stage will actually cost nearly US$2 billion. Thereafter the CCCC is slated to spend US$13 billion to build hotels, restaurants, shopping malls, apartments, and theme parks among other attractions on the 270 acres it will control. Sri Lanka will be responsible for coming up with money to develop the 300 plus acres under its control. With the island nearly US$80 billion in debt, how exactly it will be able to fully develop and control its share of the land is no small question.

The Colombo Port City is adjacent to the Colombo port, which together with the Hambantota Port is slated to feature prominently in China’s Maritime Silk Route as China seeks to connect its mainland to the Gulf States. India and the United States believe the Chinese want to use the Port City to monitor their submarine and other naval activities. Many within the new Sri Lankan government, when in opposition, threatened to cancel the entire Port City Project if elected. The importance the Chinese attach to the project was evident when Assistant Foreign Minister Liu Jianchao rushed off to meet Sri Lanka’s new government leaders in February and subsequent comments by Chinese authorities. Cancelling the project will please both India and the United States, but this may not happen even though the Port City is unlikely to generate meaningful economic and social benefits to Sri Lanka.43 With various contracts gone missing, the new Sirisena government suspended work (p.146) on the project in March 2015. This appears to have been partly done to appease domestic critics of the project and also avoid embarrassing Indian Prime Minister Narendra Modi who was the first Indian leader in twenty-eight years to make an official state visit to Sri Lanka that month. On the other hand, the Colombo Port City Project was inaugurated by President Xi Jinping himself in September 2014, and China is unlikely to take kindly to it being completely cancelled. Doing so will most likely also cause the CCCC to pursue legal action against the Sri Lankan government and, furthermore, raise questions among investors about Sri Lanka’s dependability at a time when the government is desperately seeking new FDI. The latter is a point the Chinese side has especially been making as it works to ensure the Port City project goes ahead.

China banked on the Rajapaksas staying in power and was apparently preparing to leverage its influence to pursue geostrategic designs. For instance, when President Xi Jinping visited Sri Lanka in September 2014 he and President Rajapaksa signed a defence cooperation and maritime security agreement. China has lately also been using the term ‘strategic partnership’ when referring to Sri Lanka, although the Sirisena administration has consciously avoided associating with such terminology. With India and the United States also competing to control nearby sea lanes, Sri Lanka has now become an important ‘swing state’ and the new government wants to appear neutral. President Sirisena has noted that while ‘India is a good neighbour, China is a good ally.’44 The rhetoric is designed to realign the island’s foreign policy and allow Sri Lanka to pursue friendly relations with all major powers even as it acts sensitively towards India’s security considerations—thereby rectifying President Rajapaksa’s pro-China tilt that was mainly dictated by his family’s corrupt interests.

Chinese overseas assistance appears to be undergirded by the belief that infrastructure development leads to economic growth and a preference for helping create strong allies.45 And its involvement in helping Sri Lanka with its infrastructure needs goes back over four decades. In 1973 China donated the Bandaranaike Memorial International Conference Hall (BMICH) in memory of S. W. R. D. Bandaranaike, and in 1998 it also built the Sirimavo Bandaranaike Memorial Exhibition Centre in the adjacent grounds. In 2010 China agreed to join Sri Lanka in maintaining and developing the BMICH and China is now building two convention halls similar to the BMICH in Anuradhapura, in the North Central Province, and Kandy, in the Central Province. Furthermore, China built the current Supreme Court Complex in the 1980s. But recent Chinese projects in Sri Lanka, unlike those of the past, have been geared to enable Chinese companies to make money. With many of these now also (p.147) considered white elephants designed to satisfy Mahinda Rajapaksa’s vanity, Sri Lankans have questioned China’s motivations; and this includes many in the current Maithripala Sirisena government. For instance, the current Sri Lankan finance minister has accused Chinese companies of using ‘the opportunity of a corrupt regime [the Rajapaksas] to crowd out other companies coming in.’46

The two ports aside, China has in recent years financed a number of high profile but functionally questionable infrastructure projects in Sri Lanka, and one such prominent enterprise is the Mattala Rajapaksa International Airport (also in Hambantota) that was constructed at a cost of US$209 million. The Mattala Airport conducted little business and, various concessions notwithstanding, airlines lacking passengers avoided flying there—causing The Economist magazine to say the airport saw ‘as many snakes in its terminal as passengers.’47 The Sirisena government shut down the airport soon after coming to power, but even before then many were referring to it as a museum, given the large number of children who visited the premises on school excursions.

Chinese-funded projects have also run into trouble due to what many see as shoddy engineering. The Norochcholai coal power plant, which was built at a cost of US$455 million, is a good example. Justifiably considered the least successful venture associated with China given that the first of three phases has experienced multiple breakdowns, it is still to be fully operational, and is part of the reason for Sri Lankans’ high utility bills. Some Sri Lankan businesspersons privately complain that while the Chinese complete projects at breakneck speed they sometimes fail to maintain requisite standards. While some such complaints may be associated with business rivalries, the problems associated with the Norochcholai power plant affirm that they are real.48

In the main, the China-funded projects burnished the Rajapaksa administration’s developmental credentials, and these include the Katunayake (Airport)–Colombo Expressway that was built at a cost of US$292 million and the National Performing Arts Theater, now rebranded the Nelum Pokuna (Lotus Pond) Mahinda Rajapaksa Theater, which China has donated at a cost of US$23 million. When the Commonwealth Heads of Government Meeting took place in November 2013 the entourages were transported from the airport on (p.148) the China-built Katunayake–Colombo Expressway to meetings in the China-donated Nelum Pokuna Mahinda Rajapaksa Theater. China Merchants Holdings (International) Company Limited has also completed the first phase of the Colombo International Container Terminal which, when completed in 2020 at a cost of US$2.5 billion, will rank among the twenty largest container ports in the world. The Chinese company holds an 85 per cent interest under a thirty-five-year build-operate-transfer agreement. The port mainly operates as a trans-shipment hub that unloads containers from large vessels and transfers them to smaller ships that thereafter move goods to ports with less capacity especially in India.49 Speed and size typify China’s commercial involvement in the world, and this is the case in Sri Lanka as well. For instance, while the Colombo port took centuries to reach it current status, China’s expansion will ensure that its capacity doubles in a few years.50

Under the Rajapaksa government China agreed to also build a Northern Expressway at a cost of US$1.5 billion even as it extended the Southern Expressway from Galle to Matara at a cost of US$192 million. China loaned US$130 million for the Northern Road Rehabilitation Project, which is geared towards repairing the A-9 highway (which was branded the ‘highway of death’ during the civil war) and supported development in the war-torn north as a panacea for minority grievances. China’s Export-Import Bank also agreed to provide Sri Lanka with a loan of US$278 million to build a rail track connecting the southern city of Matara with Hambantota. This is in addition to China being provided the first ever, exclusive economic zone in 2009 in Mirigama, a town around 35 miles from Colombo. To cap it all, Sri Lanka’s first ever communication satellite was launched into space using a Chinese rocket in 2013.

Altogether the Rajapaksa government has spent around US$6 billion on roads, ports, and railways since the civil war ended in May 2009, and most of the money has come from China and India, with China easily ahead in the lending game. Sri Lankan government sources show that China has provided the island US$5.05 billion in assistance between 1971 and 2012, with 94 per cent of that amount, or US$4.76 billion, being given between 2005 and 2012.51 Nearly all Chinese loans have been provided at commercial rates. On the other (p.149) hand, nearly all India’s recent projects, totalling around US$800 million, have been part of aid projects. Whatever China’s strategic designs, they coalesce with its determination to seek profits. The huge loans also mean that Sri Lanka, which resorted to a debt rollover strategy by borrowing to pay off outstanding loans during the Rajapaksa years, is going to be beholden to China for years to come.

While Sri Lankans in general harbour suspicions about India, they increasingly consider China’s business behaviour to be more predatory than altruistic. This is because China’s projects, as noted above, are financed by Chinese state-owned banks, built by Chinese construction companies, using Chinese workers—including prisoners.52 Such sentiments were reinforced among some Sri Lankan elites in March 2013 when China refused a Sri Lankan request for a US$500 million loan to purchase petroleum products, claiming that it could only fund project loans. They were bolstered when the initial interest rate for the Hambantota port project, which was 1.3 per cent, was subsequently raised to 6.3 per cent. Currently the interest rates Sri Lanka pays for the myriad loans from China range from 2.9 per cent to 8.25 per cent.53 Many fear that the Rajapaksa government’s development spree took place at unsustainable levels and reports indicate that Sri Lanka was borrowing at 9 per cent interest to pay off interest on its outstanding loans.54 In addition to the Rajapaksa government borrowing directly, it also used the island’s private commercial banks—on whose boards sit government representatives because state pension funds have been invested in these banks—to borrow on its behalf. China’s staunch defence of Sri Lanka in the face of western attempts to hold the island accountable for alleged war crimes has hitherto helped mask Sri Lankans’ disenchantment with perceived Chinese economic exploitation. Anti-China sentiment, however, could surface should Sri Lanka experience a financial crisis—which is possible in the medium term—and Chinese loans and interest on those loans become part of such a crisis.

There is a strong sense even among Mahinda Rajapaksa’s supporters in Hambantota that the only ones who benefitted from all the infrastructure development were the Chinese and the Rajapaksa family. This is mainly because locals have failed to secure adequate and meaningful employment from the various development schemes. Regional politicians also complain (p.150) that there was little consultation between the government in Colombo and local entities on development projects, which prevented them from gaining employment for local youths whose homes sometimes bordered the various infrastructure sites. On the other hand, all concerned appear to know that the Rajapaksas pocketed between 15 and 20 per cent of infrastructure contracts. Indeed, the bigger the project, the greater the amount skimmed; and many consider this the biggest reason for the Rajapaksa government’s obsession with mega infrastructure deals. Just as troubling is how various multi-million dollar projects were handed over to Chinese companies without calling for competitive bids. These include a sports complex in Nuwara Eliya, the Trincomalee Outer Circular Road, and a water project in the Gampaha District (which is about an hour’s drive from Colombo). The government’s response was that no alternative sources bid on these schemes. Sri Lankan business groups, however, say that such bids were not advertised and also claim that provided the opportunity they could have easily outbid the Chinese entities. Currently nearly eighty Chinese companies operate in Sri Lanka with over thirty among them receiving incentives from the Sri Lanka Board of Investment to do so. Some in the Sri Lankan business community say that these Chinese companies benefit above local ones because government officials believe receiving kickbacks from foreign entities (that in turn add such costs to the uncompetitive bids) minimizes exposure.

The Chinese are aware that the Sirisena government cannot continue funding new infrastructure projects as did the Rajapaksas. They must be concerned that the new government may try and renegotiate the terms of the loans China has extended the island. They certainly know that all the allegations against the Rajapaksas also taint China, because in many instances Chinese companies made unsolicited proposals on questionable infrastructure projects so as to benefit themselves and the Rajapaksas at the expense of the island’s interests. As a prominent Sri Lankan newspaper snidely noted a week before President Maithripala Sirisena visited Beijing, China ‘collaborated in the secrecy of these projects’ and it should be told that while Sri Lanka wants to continue to do business with China, she prefers doing so ‘in a transparent manner. And while he [President Sirisena] is at it, he may tell the Chinese that Sri Lanka would also like to invite His Holiness the Dalai Lama to its shores as well.’55

China has sought to counter such criticism using discursive persuasion. The key claim is that Chinese investments in the island have been conducted at the request of the Sri Lankan government and as per the island’s rules and regulations in a manner that benefit both countries. The Chinese press also (p.151) claims that ‘Sri Lanka’s strategic goals will be better guaranteed if Colombo can integrate them with China-backed projects such as the 21st century maritime Silk Road and the Asian Infrastructure Investment Bank’ and that the Port City especially is crucial to Sri Lanka generating employment opportunities and foreign direct investment.56 At the same time, the Chinese Embassy in Colombo has gone into overdrive to advertise the benefits of the Port City while those associated with CCCC have allowed journalists to tour the landfill area and spent large amounts of money advertising the project in local newspapers.57 All this is part of China’s attempt to try and convince sceptical Sri Lankans who have come to fear that ‘Sri Lanka is in China’s pocket’58 and counter arguments made by environmental and civil society organizations like The Movement against the Colombo Port City, which seek to permanently shelve the entire project.

Aileen Baviera argues in this volume that the local channels of patronage and corruption that China has used to seek support for major projects in the Philippines have ultimately undermined its influence because of opposition from other domestic interest groups in Manila. In this context, while China’s ‘preference multiplying’ influence during the Rajapaksa years was more successful because of the extent to which the ruling family dominated the domestic political landscape, the change in regime has forced it to pay more attention to ‘discursive persuasion’ with a new Sri Lankan government that does not present an equally compelling confluence of interests—partly to veil its involvement in Rajapaksa corruption and partly to maintain its relevance in a small but increasingly strategically important country. Rajapaksa supporters claim that the former president, should he become prime minister following the August 2015 parliamentary elections, will continue to seek Chinese investments to develop the island. Irrespective of the election results, it is in China’s interests to promote uncontroversial investments in Sri Lanka that benefit both countries.

Conclusion

China’s involvement in Sri Lanka has been significant and increasing over the past two decades. In recent years, large scale Chinese investment in especially (p.152) Sri Lanka’s infrastructure build-up and Chinese diplomatic support made China an attractive partner for an island seeking to develop following nearly three decades of civil war. The ability of those in power to skim more easily from China’s investments also made Chinese involvement attractive. Furthermore, the Rajapaksa family was determined to perpetuate its power by hook or by crook, and China, especially given the amount of money it poured into Sri Lanka since Mahinda Rajapaksa came to power, was not averse to this development. China, unlike the West, had no issues with the democratic regression Sri Lanka experienced under Rajapaksa rule because the Rajapaksa–China nexus saw a remarkable convergence of preferences and interests. But Rajapaksa’s ouster as president has unveiled the massive corruption he and his family resorted to; and China’s connivance, if not complicity, in this has made it less popular in the island than at any time previously.

Post-independence Sri Lanka has mainly followed a non-aligned foreign policy. The first time it deviated from this—when the J. R. Jayewardene administration disregarded Indian sensitivities and promoted an increased American presence in the island that was partly influenced by its open market policies—saw India react in ways that exacerbated the Sinhalese-Tamil ethnic conflict and Indo–Lanka relations. The extant, albeit now waning, anti-Indian sentiments in the island are directly related to Jayewardene’s ill-advised and overconfident change in foreign policy. Mahinda Rajapaksa, too, deviated from Sri Lanka’s traditional foreign policy posture, but his tilt towards China was dictated more by a desire for family aggrandizement than the national interest. History could have repeated itself if the Rajapaksa government stayed on and continued overplaying its hand by trying to use China to undermine India.

Present day Sri Lanka is one example of how even a small country can leverage its position to be relevant in the international system. This is evident by how the new Sirisena government is being courted by India, the United States, Europe, and others. The government needs China to be part of this group, partly because it owes China so much money and partly because it could use additional Chinese investment. And China wants to continue to play a leading role in Sri Lanka’s development, partly to protect its extant investments and also to expand its influence in South Asia and beyond. This is not hard to achieve provided Chinese involvement stays within the realm of the commercial and does not in any serious way challenge Indian security interests via Sri Lanka; and provided also it respects the sensitivities of a people whose sense of nationalism has been conditioned by 450 years of colonialism, a nearly three decade long civil war, and a longstanding belief, especially among Buddhists, that their island’s territorial integrity is sacrosanct. In that sense, the Sirisena government’s determination to revert to Sri Lanka’s traditional non-aligned foreign policy bodes well for all concerned.

Notes:

(1) See Asian Mirror, 19 December 2014, at http://asianmirror.lk/news/item/5782-full-text-of-maithripala-sirisena-s-election-manifesto. (accessed 18 April 2015). This anti-imperial rhetoric has also been used against China in Africa, most prominently during the 2011 Zambia election.

(2) Ellen Barry, ‘New President in Sri Lanka Puts China’s Plans in Check,’ New York Times, 9 January 2015, available at http://nytimes.com/2015/01/10/world/asia/new-president-in-sri-lanka-puts-chinas-plans-in-check.html?_r=0 (accessed 11 January 2015).

(3) Generally speaking hard authoritarian states operate more by diktat while soft authoritarian states permit basic freedoms provided rulers and key institutions are not too directly challenged.

(4) Author interviews with various officials in Colombo, February 2015.

(5) As one leader of the Bharatiya Janata Party recently noted regarding Indo-Lanka relations, ‘We [India] need to just whisper in the ears of [President] Rajapaksa that he needs to listen else face the consequences.’ See ‘There Will Be Personality Change in Narendra Modi-led Govt: Yashwant Sinha,’ DNA India, 11 March 2014, available at http://dnaindia.com/india/report-there-will-be-personality-change-in-narendra-modi-led-govt-yashwant-sinha-1968469 (accessed 13 March 2014).

(6) Brahma Chellaney, ‘India Upset with China over Sri Lanka Crisis,’ Times of India, 27 April 2009, available at http://timesofindia.indiatimes.com/india/India-upset-with-China-over-Sri-Lanka-crisis/articleshow/4449209.cms (accessed 20 March 2014).

(7) As cited in Nilanthi Samaranayake, ‘Are Sri Lanka’s Relations with China Deepening? An Analysis of Economic, Military, and Diplomatic Data,’ Asian Security 7:2 (2011), p. 133.

(8) Quoted in Jayantha Dhanapala and John Gooneratne, ‘Sri Lanka: China as a Model of Growth and Modernisation,’ in A Resurgent China: South Asian Perspectives, eds. S. D. Muni and Tan Tai Yong (London: Routledge, 2012), pp. 245–6.

(9) Quoted in Somini Sengupta, ‘Take Aid From China and Take a Pass on Human Rights,’ New York Times, 9 March 2008, available at http://nytimes.com/2008/03/09/weekinreview/09sengupta.html?_r=0 (accessed 15 September 2013).

(10) Quoted in Committee on Foreign Relations, United States Senate, Sri Lanka: Recharting U.S. Strategy after the War, 111th Congress, First Session (7 December 2009), p. 13, available at http://foreign.senate.gov/imo/media/doc/SRI.pdf (accessed 2 November 2013).

(11) See, for instance, Evelyn Goh, The Struggle for Order: Hegemony, Hierarchy, and Transition in Post-Cold War East Asia (Oxford: Oxford University Press, 2013), p. 57.

(12) Merriden Varrall, ‘Chinese Views on China’s Role in International Development Assistance,’ Pacific Affairs 86:2 (June 2013), pp. 233–55.

(13) The interviews were conducted in Sri Lanka in February, October, November, and December 2012; July 2013; February and June–July 2014; and February 2015.

(14) India recognized China in December 1949 and Sri Lanka recognized China the same day the United Kingdom did, which suggests that notwithstanding the UNP’s aversion towards communism, the island’s leaders were influenced by India and its erstwhile colonial power.

(15) W. Howard Wriggins, Ceylon: Dilemmas of a New Nation (Princeton: Princeton University Press, 1961), pp. 403–11.

(16) Jayantha Dhanapala, ‘The Foreign Policy of Sirimavo Bandaranaike,’ in Sirimavo: Honoring the World’s First Woman Prime Minister, ed. Tissa Jayatilaka (Colombo: The Bandaranaike Museum Committee, 2010), pp. 24–5.

(17) Shelton U. Kodikara, Foreign Policy of Sri Lanka: A Third World Perspective, rev. 2nd edition (Delhi: Chanakya Publications, 1992), pp. 90–1.

(18) Dhanapala and Gooneratne, ‘Sri Lanka: China as a Model of Growth and Modernisation,’ p. 238.

(19) Quoted in William Wallis, ‘Chinese Put Space-Age Seal on Their Role in Africa,’ Financial Times (US Edition), 31 January 2012, p. 6.

(20) Author interviews with various stakeholders in Sri Lanka, Bangladesh, and Nepal between October 2012 and July 2014.

(21) ‘India Increases Aid to Sri Lanka,’ Times of India, 2 March 2013, available at http://timesofindia.indiatimes.com/india/India-increases-aid-to-Sri-Lanka/articleshow/18759118.cms (accessed 30 March 2013).

(22) Concerns that voting for the resolution could set a precedent for a similar international probe against India also appears to have influenced the decision to abstain on the resolution. See B. Kolappan, ‘India’s Abstention Only to Neutralise Chinese Influence,’ The Hindu, 30 March 2014, at http://thehindu.com/news/national/tamil-nadu/indias-abstention-only-to-neutralise-chinese-influence/article5849241.ece. (accessed 31 March 2014).

(24)

‘CEPA Resurgence?’ Daily FT, 14 February 2014

, p. 8.

(25) Ibid.

(26) ‘India’s Investments in Sri Lanka topped 1 Billion Since 2003,’ Economic Times, 17 May 2013, available at http://articles.economictimes.indiatimes.com/2013-05-17/news/39336402_1_sri-lanka-indian-envoy-fta (accessed 15 February 2014).

(27) As per one leading economist in Sri Lanka, President Rajapaksa often decided arbitrarily in favour of Chinese construction companies because he considered China akin to an insurance policy that would come to his aid if Sri Lanka’s ‘debt rollover economy’ collapsed. Author interview, Colombo, February 2014.

(28) Uditha Jayasinghe, ‘China Cheer in record FDI,’ Daily FT, 4 December 2013, available at http://ft.lk/2013/12/04/china-cheer-in-record-fdi/ (accessed 25 January 2014).

(29) Rajeev Sharma, ‘China’s Forays in Sri Lanka,’ South Asia Analysis Group, Paper No. 5261, 25 October 2012, available at http://southasiaanalysis.org/node/1022 (accessed 20 March 2014).

(30) The difficulty in obtaining accurate figures regarding China’s loans and foreign assistance is well documented. See, for instance, Varrall, ‘Chinese Views on China’s role in International Development Assistance,’ p. 241; Thomas Lum, Hannah Fischer, Julissa Gomez-Granger, and Anne Leland, China’s Foreign Aid Activities in Africa, Latin America, and Southeast Asia, Congressional Research Service (February 2009), available at http://fas.org/sgp/crs/row/R40361.pdf (accessed 29 September 2013).

(31) Neil DeVotta, Blowback: Linguistic Nationalism, Institutional Decay, and Ethnic Conflict in Sri Lanka (Stanford: Stanford University Press, 2004).

(32) Neil DeVotta, ‘Sri Lanka: From Turmoil to Dynasty,’ Journal of Democracy 22:2 (April 2011), pp. 130–44; Neil DeVotta, ‘Parties, Political Decay, and Democratic Regression in Sri Lanka,’ Commonwealth and Comparative Politics 52:1 (January 2014), pp. 139–65.

(33) See ‘Weighing the Votes,’ The Economist, 3 March 2012, p. 23. Also see Steven Levitsky and Lucan A. Way, Competitive Authoritarianism: Hybrid Regimes After the Cold War (New York: Cambridge University Press, 2010).

(34) ‘Beating the Drum,’ The Economist, 18 November 2010, p. 49.

(35) See 2009 Report to Congress of the US–China Economic and Security Review Commission (Washington: U.S. Government Printing Office, 2009), p. 144, available at http://origin.uscc.gov/sites/default/files/annual_reports/2009-Report-to-Congress.pdf (accessed 5 November 2013).

(36) See, for instance, Jeremy Page, ‘Chinese Billions in Sri Lanka Fund Battle Against Tamil Tigers,’ Times, 2 May 2009, available at http://thetimes.co.uk/tto/news/world/asia/article2610230.ece (accessed 4 May 2009).

(37) The northernmost area of Sri Lanka is only around 22 miles from the southernmost part of India. Furthermore, some of India’s leading nuclear facilities are located in the country’s south so as to put as much distance between these strategic assets and India’s regional rivals China and Pakistan. Hence India’s greater preoccupation with what happens in the island’s north.

(38) See Samaranayake, ‘Are Sri Lanka’s Relations with China Deepening?’ p. 127.

(39) Close to 50 per cent of China’s energy imports also pass through the same sea lanes.

(40) Quoted in an interview with Jyoti Thottam, ‘The Man Who Tamed the Tamil Tigers,’ Time, 13 July 2009, available at http://content.time.com/time/world/article/0,8599,1910095,00.html (accessed 28 October 2013).

(41) Samaranayake, ‘Are Sri Lanka’s Relations with China Deepening?’ p. 131.

(42) Quoted in ‘The Centre Wants to Hold,’ The Economist, 9 November 2013, p. 46.

(43) Sam Samarasinghe, ‘Economics of the Colombo Port City Project,’ The Island, 9 February 2015, p. 7.

(44) ‘Storm in a Port,’ The Economist, 21 March 2015, p. 33.

(45) Varrall, ‘Chinese Views on China’s Role in International Development Assistance,’ p. 249.

(46) Andrew Stevens, ‘Did China Profit from Corrupt Sri Lanka Deals?’ available at http://money.cnn.com/2015/04/02/news/sri-lanka-china-corruption/ (accessed 17 April 2015).

(47) ‘The Centre Wants to Hold,’ The Economist, 9 November 2013, p. 46.

(48) As of December 2013 the US$1.2 billion Norochcholai power plant, which was commissioned in July 2011, had broken down nearly 35 times (credited to the Chinese having used second-hand materials to construct the plant) and led Sri Lankans to call it ‘Always Breakdown Norochcholai.’ Rumours claim that the China Machinery Engineering Corporation, which built the plant, is seeking to purchase it but the government cannot agree to the proposed price as it includes commissions paid to government officials while not including interest already paid on the loan. Author interviews with various individuals, Colombo, February 2014.

(49) Currently the Colombo port helps transfer about 70 per cent of cargo moving in and out of Indian ports. As per one foreign diplomat in Colombo, India’s ports may currently have shabby facilities when compared to the port in Colombo, but India could upgrade its ports and take away business from Colombo as a way to punish the island for drawing too close to China. Author interview November 2012.

(50) ‘The New Masters and Commanders,’ The Economist, 8 June 2013, p. 63.

(51) India has provided Sri Lanka US$1.45 billion between 2007 and 2012. See R. Hariharan, ‘China’s Strategic Presence in Sri Lanka,’ Colombo Telegraph, 1 September 2013, available at https://colombotelegraph.com/index.php/chinas-strategic-presence-in-sri-lanka/ (accessed 15 September 2013).

(52) Persons in southern Sri Lanka, for instance, claim that many of the Chinese labourers working on the Hambantota Port complex were convicts who almost never made it out of their living quarters. While no official figures exist for the number of Chinese working in Sri Lanka, the total was unlikely to exceed 25,000.

(53) ‘China Refuses US$500 Mn Loan for SL,’ Daily Mirror, 4 March 2013, available at http://www.dailymirror.lk/26139/china-refuses-us500mn-loan-for-sl (accessed 4 March 2013).

(54) See, for instance, ‘The Shocking Truth about the Economy,’ Daily Mirror, 31 October 2013, available at http://www.dailymirror.lk/37924/the-shocking-truth-about-the-economy-editorial (accessed 3 November 2013).

(55) ‘Corruption: The Coconut is on the Lap, Crack It,’ Sunday Times, 22 March 2015, at http://sundaytimes.lk/150322/editorial/corruption-the-coconut-is-on-the-lap-crack-it-141039.html. (accessed 22 March 2015).

(56) Lan Jianxue, ‘Sri Lanka Recognizes Value of Chinese Friendship in Post-Election Era,’ Global Times, 26 March 2015, available at http://globaltimes.cn/content/914051.shtml (accessed 15 April 2015).

(57) As per one academic, the company has approached local think tanks seeking positive coverage of the project. Author interview, February 2015.

(58) ‘How Indebted is Sri Lanka to China?’ Sunday Times, 14 September 2014, available at http://sundaytimes.lk/140914/editorial/how-indebted-is-sri-lanka-to-china-117580.html (accessed 15 April 2015).