Sri Lanka’s delicate balancing in the Indian Ocean Region
Executive Summary:
Sri Lanka’s location in the Indian Ocean allows it a strategic significance amidst the current geopolitical climate in the region. However, Sri Lanka maintains a non-aligned posture in the region.
China’s Blue Dragon strategy includes gaining control over Sri Lanka which has pushed rival countries to increasingly engage with the island nation.
The India-China rivalry has a huge influence over Sri Lankan foreign policy. While it considers India’s concerns, it does not totally align itself with either of the two countries.
Economic recovery is currently a primary objective for Sri Lanka and with bilateral negotiations, China has taken a leading position in its debt restructuring process.
Sri Lanka under the current administration has allowed space to countries who have strategic interests in Sri Lanka in exchange for financial assistance. Hence, it is able to maintain a non-aligned posture while simultaneously working toward economic recovery.
Sri Lanka’s location in the Indian Ocean has always been crucial to the economic and political aspects of its foreign policy. Given its location along the East-West sea lanes, Sri Lanka has long been a stopover for commercial, military and civilian vessels. Moreover, since the end of the civil war and the Indian Ocean taking primacy in contemporary geopolitics, it has emphasized on revamping its Indian Ocean identity, seeking to harness the opportunities associated with the Indian Ocean.
Sri Lanka’s position in the region
In September 2023, the Sri Lankan President’s address to the United Nations General Assembly (UNGA) focused on issues of climate financing and international cooperation particularly for smaller nations that are prone to climate and economic risks highlighting the importance of multilateral forums. He also acknowledged the concept of Indo-Pacific in light of China’s rise influencing the regional geopolitical dynamics. Sri Lankan parliamentarian Eran Wickramaratne had also stated that Sri Lanka’s economy is linked with its foreign policy, adding that being a small island nation, international events and decision-making play a crucial role in driving policies at the domestic level. Furthermore, he stressed on Sri Lanka’s foreign policy components like peaceful resolution of conflicts, rejecting the use of force, and adhering to sovereignty and human rights.
Being aware of the regional geopolitical dynamics and the risks it poses to Sri Lankan autonomy, the government has been wary of not being caught in the middle of great power competition in the region and has therefore maintained the rhetoric for international cooperation and non-alignment particularly in the context of the Indo-Pacific.
Geopolitical balancing in the ocean
China’s Blue Dragon strategy encompasses gaining control over three frontiers, namely, Taiwan and Senkaku islands, artificial islands in the South China Sea, and Sri Lanka in the Indian Ocean. Sri Lanka is often referred to as the crown jewel of the Belt and Road Initiative (BRI) which connects the Colombo Port City (CPC), Hambantota Port, and other infrastructure projects. Although Sri Lanka maintained the position that Chinese investments in the Hambantota Port were purely economic, it led to concerns that Sri Lanka could potentially become China’s unsinkable aircraft carrier if these ports were to be used for military purposes along with civilian activities. The term “unsinkable aircraft carrier” was used by General Douglas MacArthur for Taiwan, however, it is used in the context of a potential Chinese military presence in Sri Lanka as well.
Concerns regarding China’s increased influence on Sri Lanka have pushed other countries to strengthen their ties with the island nation through re-engaging at various levels. On 16 October, US Ambassador to Sri Lanka Julie Chung in the conference “Ocean Security: South Asia and the Indian Ocean” highlighted Sri Lanka’s role in the Indian Ocean’s blue economy emphasizing that it recognized “Sri Lanka’s right to assert its own aspirations and objectives”. Earlier on 10 October, during her three-day visit to Sri Lanka, Anne-Marie Trevelyan, UK’s Minister for the Indo-Pacific emphasized working through the IORA toward climate mitigation, collaborative programs aligned with the Glasgow Pact, pro-environment initiatives, human rights, and bilateral commercial engagements. French President Emmanuel Macron’s visit to the island nation on 28 July 2023 was marked by France’s recognition of Sri Lanka as a crucial entity in the Indo-Pacific region and its establishing a role for itself in the geopolitics of the region.
India-China rivalry:
The increasing involvement of China in development projects in Sri Lanka has raised concerns for India as well. With an unresolved border dispute in the north, India’s concern stems from a possible naval confrontation with China in the south.
The India-China rivalry has immensely influenced Sri Lanka’s foreign policy. Sri Lanka is crucially located in terms of maritime trade as well as naval presence and has become a site of contention with both India and China trying to influence the island nation for its own advantage. Chinese investments and infrastructure development in Sri Lanka under the BRI banner is perceived as encirclement of India under the “String of Pearls’’ policy. India on the other hand, seeks to control the Trincomalee Port as a counterbalance to China's control over the Hambantota Port. Given its geographical proximity, India sees Chinese presence over Sri Lanka as a potential military threat and has consistently raised concerns over several Chinese activities.
Although the Sri Lankan government has maintained that the island nation will not be allowed to be used as a military base and will not pose any threats to India, the latter has been suspicious of Chinese presence, particularly regarding the research vessels that regularly dock at Sri Lankan ports. Earlier in September this year, a Chinese research vessel called Shi Yan 6 was given clearance for docking at Colombo by the Sri Lankan Ministry of Defence. Scheduled for 25 October, the docking was deferred by the Sri Lankan government due to the IORA meeting on 11 October and had reportedly requested China to exclude research activities in the northern territorial waters of Sri Lanka due to Indian security concerns. Sri Lanka found itself in a similar situation in the previous year when research vessel Yuan Wang 5 was cleared for docking at the Hambantota port.
The reason for security concerns around these research vessels is due to their dual purposes i.e., apart from scientific studies they can also undertake surveys allowing the Chinese strategic edge by traversing the Eastern Indian Ocean. Concerns regarding Chinese research ships are also shared by the USA and Japan. Initially, Sri Lanka initially considered India’s objection over the vessel, however, the docking of the ship was reportedly allowed under the condition that its Automatic Identification System (AIS) should be kept switched on within the EEZ. While Sri Lanka has been vocal about considering the importance of India’s security concerns, the mixed signals from Sri Lanka suggest that it plays a balancing act when it comes to the India-China rivalry.
Economic Recovery
For Sri Lanka, economic recovery is a primary objective ahead and other countries including bilateral creditors have been proactively participating in its debt restructuring process. India announced financial support to Sri Lanka in January 2023, for Sri Lanka’s debt restructuring followed by China announcing the same in March 2023. Recognising the interests of other powers in the regional contention, Sri Lanka allowed engagement with both India and China. Furthermore, a common platform for the Sri Lankan debt restructuring was launched together by India, Japan, and France. An invitation to join the effort was sent to all bilateral creditors including China. While China did not join the creditor’s platform officially, it participated as an observer. However, working bilaterally, tentative agreements were concluded between the Exim Bank of China and Sri Lanka allowing China to take a leading role in the debt restructuring process.
China’s choice for bilateral negotiations instead of a multilateral process for the Sri Lankan debt restructuring raised concerns of possible secret dealings. Given its economic vulnerability, Sri Lanka faces a genuine threat of falling into either of the spheres of influence ultimately compromising its sovereignty and autonomy for itself in the region.
The Way Forward
President Ranil Wickremesinghe during the 50th anniversary of the Bandaranaike Memorial International Conference outlined three principles as key components of its foreign policy while outlining the geopolitical landscape of the Indo-Pacific. These included adhering to the Bandung principles and the Panchshila of the Non-Aligned Movement (NAM), supporting the ASEAN outlook, and adopting a multilateral approach in the region, and promoting the Indian Ocean Peace Zone. He had particularly stated that Sri Lanka seeks for development of Asia without “getting caught in the middle.” While the Sri Lankan government has been vocal about its non-alignment and establishing an independent role in the region, it is aware that its domestic politics and international decision-making remain interlinked.
The current administration under Ranil Wickremesinghe formed after Sri Lanka’s credit default has recognized Indian, Chinese, and American strategic interests favourable to his administration. Amidst economic vulnerability, his administration has extended strategic ties to these countries in return for economic assistance. Furthermore, Sri Lanka also invited Japan to participate in its infrastructure projects, allowing Japan to form a deterrent posture against China in the Indo-Pacific.
The economic crisis poses a significant risk for Sri Lanka that may compromise its autonomy in the regional dynamics especially when it desires to be non-aligned. However, the current government has allowed space to countries that hold strategic interests in the region in return for financial assistance. In this scenario, it is possible that Sri Lanka will be able to maintain its non-alignment position by leveraging the ongoing regional contention and balance the power dynamics in the Indo-Pacific simultaneously maintaining its autonomy in decision-making.