Sri Lanka crisis: India’s biggest worries should be China and the insurgency
The growing influence of the Rajapaksa family in the public sphere was cemented following the Easter bombings, when Gotabaya Rajapaksa won popular office. The government that followed had five members of the Rajapaksa family in key positions, and it was their monumental incompetence that pushed Sri Lanka to the brink. Disastrous tax cuts had already weakened the government’s fiscal position, long before the COVID-19 pandemic hit.
India has closely followed the development of the crisis in Sri Lanka. The island nation, which has a long history of Tamil insurgency, is of strategic importance to India. New Delhi has been trying for more than three years to control China’s growing influence in the region. During Mahinda Rajapaksa’s tenure, cheap Chinese credit legitimized the government and helped strengthen his presidency. This included a $1.35 billion deal for the construction of the Lakvijaya coal-fired power station in Puttalam and the Port of Hambantota.
However, when Sri Lanka struggled to repay, it not only lost the port of Hambantota, but also had to cede 15,000 acres to China. The port has the potential to give China the ability to project power into the Indian Ocean, and therefore close to India.
The current crisis has seen China set up a $1.5 billion line of credit and lend another $1 billion to Colombo. India has provided $1 billion in humanitarian aid for food, medicine and other essentials. But that may not be enough. India needs to intervene more aggressively to contain the possibility that Sri Lanka may increase its alignment with China due to the escalating financial crisis. This can have long-term strategic and military consequences.