China's 'soft-power blitzkrieg' on Sri Lanka's Tamils rings alarm bells in India

There's a new twist in the tug of war between China and India over Sri Lanka, one of a string of countries where the geopolitical rivalry between the Asian giants is playing out.

China has staged an unprecedented charm offensive to court ethnic Tamils in their Jaffna Peninsula heartland where India has been the traditional power. In December, China's ambassador to Sri Lanka, Qi Zhenhong, spent three days visiting the Tamil-dominated Jaffna region, conducting what Indian political analyst Shrey Khanna called a "soft-power blitzkrieg". A Sri Lankan risk analyst, speaking on condition of anonymity, said: "This region has always been off-limits to the Chinese so the visit was done with the [Sri Lankan] government's blessing."

To understand why this Chinese initiative to extend its influence beyond the Sinhalese-speaking majority, concentrated in the south of the island, rings security alarm bells in New Delhi, look to India's southern Tamil Nadu state, just 40km away at the nearest point between the two countries. The state is home to nearly 70 million Tamils who have strong linguistic, religious and cultural ties with the Jaffna area where many of Sri Lanka's estimated four million Tamils live. New Delhi's long-standing worry is that Sri Lanka, which India has traditionally viewed as part of its "strategic backyard", could become a Chinese military outpost.

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For his visit, Qi donned a gold-bordered white dhoti and went bare-chested in accordance with Tamil Hindu rites to make offerings at a famed local temple. He also distributed Covid-19 relief and fishing gear to Tamil fishermen who have complained Indian fishermen are poaching in their waters.

Qi, escorted by Sri Lanka's military, sailed as well to Adam's Bridge, or the Ram Setu as Indians call it. It's a chain of limestone shoals that until the 15th century is believed to have served as a land bridge between the countries. Many Hindus believe it was built by the Hindu god Lord Ram. Staring out to sea, Qi at one point asked those assembled if he was facing India (he was).

Qi's visit to Sri Lanka's nearest Indian border point was "aimed at provoking New Delhi, in strategic and political terms, given the Indian sensitivities to the 'ethnic [Tamil] issue'," said N. Sathiya Moorthy, a distinguished fellow at India's Observer Research Foundation, a think tank.

"The message is clear: no strategic place Sri Lanka shares with India ... is out of bounds for China," Moorthy said.

Sri Lanka's Sunday Times observed in an editorial: "That China wanted to be a provocative irritant to 'another country' [India] was obvious."

Qi dismissed suggestions of any political overtones to his trip and said that, as ambassador, he had wanted to visit all parts of the country and only the pandemic had stopped him from doing so earlier.

The Chinese overtures to the Tamils seemed all the more remarkable to some observers as it was Beijing that provided indispensable help in arming and funding Sri Lanka's military to crush a 26-year revolt by ethnic Tamil separatists in 2009. After the civil war's brutal end in 2009, the Sinhalese-led government was shunned over allegations of human rights abuses. Sri Lanka turned to China for financial and reconstruction aid and for the past decade, China has been Sri Lanka's biggest foreign investor

Sri Lanka, which officially has a non-aligned foreign policy, has long had close relations with China. Colombo early on recognised Mao Zedong's Communist government following the Chinese revolution - 2022 marks the 65th anniversary of diplomatic ties and in January, Chinese Foreign Minister Wang Yi visited Colombo to mark the event.

China considers Sri Lanka to be a linchpin in its Belt and Road Initiative infrastructure-building and it has provided billions of dollars in loans for Sri Lankan projects, including a seaport, airport, port city, highways, and power stations. But as its nearest geographic neighbour, India has also had close relations with Sri Lanka and the countries consistently allude to their "civilisational and linguistic ties".

Sri Lanka also has an established habit of playing China and India off against each other. At the same time as Sri Lanka approved Qi's visit to Jaffna, Colombo was busy courting New Delhi, as part of a drive to avoid defaulting on its massive debt built up since 2007.

New Delhi has since extended to Sri Lanka a US$400 million currency swap, deferred payment of a $509-million loan and given a credit line of US$500 million for importing fuel from India. Indian foreign minister S. Jaishankar "reaffirmed" that India would "be a steadfast and reliable partner".

Late Thursday, India's The Hindu newspaper reported Sri Lanka's Foreign Minister G.L Peiris would start a three-day visit to New Delhi on Sunday to line up a further US$1-billion credit line to fund medicine and food imports from India expected to come through by the first week in March. Sri Lanka's central bank has said Colombo also is in talks with Beijing for help. Finance Minister Basil Rajapaksa said the island, whose economic woes have been exacerbated by the pandemic-induced collapse of its tourism industry, will require US$30 billion for imports and debt repayments in 2022.

India does not have the deep pockets to rescue the island from what Citigroup has highlighted as the danger of a "future potentially disorderly" default.

"We won't be able to match [the Chinese] buck for buck," said Khanna, an analyst with The Takshashila Institute think tank. But India's help in January came just in time before a US$500 million bond matured, the first big slice of debt repayments due in 2022 pegged at US$6.9 billion by Fitch Ratings. The Indian food-and-fuel credit lines were crucial as foreign reserves had fallen to cover only weeks of imports.

For years, whenever Sri Lanka has turned to China for help, Beijing has usually said yes. In December, Sri Lanka took up a US$1.5 billion currency swap with China, offered the previous year. But China has been turning a less responsive ear to Sri Lanka's appeals lately. Chinese lenders have recently been applying the brakes to lending to poorer countries in Africa as default risks heighten. (Sri Lanka's government, led by hardline nationalist President Gotabaya Rajapaksa, is strongly resisting advice by economists and even his own cabinet members to seek what would be the country's 17th IMF bailout to resolve the debt crisis as it would mean unpopular austerity measures).

Unusually, there has been some friction between Colombo and Beijing. One issue is a row over organic fertiliser sent by China to Sri Lanka after Colombo abruptly switched to an "organic-only" agricultural policy - it has since rescinded that policy, which proved disastrous for farmers. Colombo alleged the Chinese fertiliser was contaminated and refused to pay. It then turned to India which dispatched air force planes to deliver replacement fertiliser. Beijing struck back by blacklisting a state-run Sri Lankan bank and began arbitration proceedings. China also lost out when Sri Lanka cancelled a US$12 million renewable energy project in its northern islands, which had been awarded to Chinese companies in January 2021. India had strongly protested against the project as it lay close to the Indian border.

Another win for India has been an agreement with Sri Lanka, as part of its financial aid package, to redevelop the eastern coast Trincomalee oil terminal that lies on a shipping route between Gulf oil exporters and Asian buyers. The deal over the Second World War Allied refuelling stop still has to be finalised, but it indicates Colombo recognises India's strategic stake in the region, Indian analysts say.

Sri Lanka has also just launched a "country strategy" for India with an eye on integrating what it calls its "fragile" economy with the Indian economy with a focus on eight sectors, including energy, refineries, ports, and IT. "Our idea is to integrate our economy into the Indian economy for a win-win situation," the island's envoy to India Milinda Moragoda told The Economic Times. Colombo also aims to expand strategic cooperation, defence and Indian Ocean security between Sri Lanka and India, according to the strategy document.

The country's move to broaden its outreach comes amid heated domestic criticism of China focused on its lending for a string of large infrastructure projects with the island under the belt and road plan. These include a US$15 billion seafront business hub intended to be an offshore international finance centre under construction in Colombo, and a completed port and airport in Hambantota, widely seen as commercial white elephants. Qi has responded by saying if the criticisms had merit, "I don't think our relations would have strengthened to this high [level]."

There are worries that cash-strapped Colombo may not be able to pay for it and it will face the same fate as the Hambantota port. When the government couldn't make payments, it handed the port in a debt-to-equity swap to Beijing for 99 years, giving China a foothold along a strategical waterway that India worries Beijing could take over for military use.

Critics of China's help to Sri Lanka say Beijing has created a debt trap for the island, offering easy money for unviable projects with the aim of gaining control of assets. But central bank data showed Sri Lanka, whose foreign exchange woes have been exacerbated by the pandemic, which has shattered its vital tourism industry, owed China US$3.5 billion at the end of 2020, excluding loans from state enterprises, just a little less than it owes to Japan. China is Sri Lanka's fourth-largest creditor.

The Carnegie Endowment for International Peace concluded in a 2020 study that the Chinese had not created a "debt trap" for Sri Lanka but that Colombo had "an overall debt management problem". The London-based think-tank Chatham House said in another 2020 report that in Sri Lanka and Malaysia, "the two most widely cited" victims of China's "debt-trap diplomacy", the most controversial belt and road projects "were initiated by the recipient governments which pursued their own domestic agendas".

Possibly the shifts in relations between Colombo and Beijing and Colombo and New Delhi served to show "that foreign policy formulation in Sri Lanka is by no means following a straight line", said Sri Lankan international relations specialist Uditha Devapriya in The Diplomat magazine, adding that "this has been the case for much of the country's post-independence history".

This article originally appeared on the South China Morning Post (SCMP).

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