As global food prices have risen with a Covid-mitigated production slump, countries like Sri Lanka have borne the brunt given their reliance on imports. Tourism has been hit, a sector that generates maximum revenue for the country, which has resulted in a depreciation in the Sri Lankan rupee, thereby putting more pressure on the country's foreign exchange reserves.
Colombo has tried to tackle this with a set of policy measures that includes restricting imports and capping prices of food items. Food scarcity of the kind never seen before has led to widespread disaffection and questions about the ability of the government among Sri Lankans.
President Gotabaya Rajapaksa admitted last month that his government was 'not delivering'. But accepting the challenge and delivering the results are two different things. Colombo has, in the last few months, shown a remarkable ability to repeatedly make wrong policy judgements.
There was a sudden decision earlier this year to cease imports of chemical fertilisers and pesticides to give a push to the transition to organic farming. Despite the ban having been lifted now, it has had a devastating impact on local agriculture. The government's mismanagement of the economy during the pandemic is one part of the story. The other problem is one where China has played a big role. The attempt by the Rajapaksa government to get too close to Beijing has resulted in decisions where the only beneficiary has been China.
Sri Lankan interests have been hurt and the challenge has only escalated. It was India that had to bail Sri Lanka out with fertilisers after Qingdao Seawin Biotech supplied contaminated organic fertilisers, which led to the cancellation of the order.
While the Chinese company rejected the allegations, Colombo argued that the samples were infected with Erwinia, a bacteria that destroys crops, and refused to allow a ship carrying 20,000 tonnes of organic fertilisers from China to offload the consignment. New Delhi promptly sent two IAF C-17 Globemaster aircraft with 100,000 kg of nano nitrogen to expedite the availability of fertiliser to Lankan farmers. A furious Beijing responded by blacklisting the People's Bank of Sri Lanka for failing to make a payment due to a ban imposed by a local court.
More broadly, Sri Lanka's economic dependence on China has resulted in a peculiar debt-ridden relationship, where mounting debt due to heavy borrowing has made the future of a once-vibrant economy rather parlous. Most of the big projects supported by China have had a deleterious impact on Sri Lanka's future. Chinese investments in various infrastructure projects under the Belt and Road Initiative (BRI) have been a bane for the country.
The much-touted Hambantota port had to be handed over to a state-run Chinese firm in 2017 for a 99-year lease as a debt swap amounting to $1.2 billion. Despite this experience, Colombo has gone ahead and given the state-run China Harbour Engineering Co the contract to develop Colombo Port's eastern container terminal. Not only was this done after the cancellation of the tripartite agreement with India and Japan to build this port, but also this project under China may end up having a similar outcome like Hambantota - too much debt for Sri Lanka and low probability of commercial success.
The challenge for Sri Lanka and India is to be realistic in their appraisal of this important bilateral partnership. Both New Delhi and Colombo are important for each other. But India will have to cease looking at every move of Sri Lanka through the China lens. For Beijing, Colombo may just be a strategic outpost to outmanoeuvre India. But for New Delhi, this is about a long-term sustainable engagement with a neighbour.
For Colombo, it may be tempting to use the China card against India and get concessions. But it needs a strategic perspective in its engagement with New Delhi. Expecting India to bail Sri Lanka out every time there is a crisis may work for some time, but it's a recipe for disaster - both for ordinary Sri Lankans and for Delhi-Colombo ties. ",
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