Even as he bade farewell to Indian Prime Minister Narendra Modi at the end of his Vesak visit, Prime Minister Wickremesinghe was all but ready to take flight to China to attend the economic summit of the 21st Century. This was Beijing’s big splash on the world economic map, and one that India chose not to officially attend. Japan was another boycotter.
by Rajan Philips
A number of Indian business and think-tank figures went to Beijing as ‘unofficial delegates’, and they were critical of their government’s decision not to send at least an official delegation. 130 countries marked their presence at the two-day (May 14-15) event in Beijing, including 29 state and government leaders. Even the Trump Administration, despite its spiralling turmoil in Washington, was represented in Beijing.
There was no question of Sri Lanka not attending. Sri Lanka is already both a beneficiary of China’s global infrastructure thrust, as well as a victim of its "debt-trap diplomacy" and debt-equity swap agreements. In world development circles Sri Lanka is known for two leading examples of easy infrastructure money and heavy debt burden: the Mattala Rajapaksa International Airport (sometimes dubbed as the "world’s emptiest airport") and the Magampura Mahinda Rajapaksa (sea) Port. Sri Lanka’s small experience is now writ large in a powerful critique of China’s ambitious intentions by Pakistani journalist and scholar, Khurram Husain.
But many are willing to take the risk, including the government of Pakistan and its Prime Minister Nawaz Sharif, seeing potentially more opportunities than problems in China’s One Belt-One Road (OBOR) initiative. It seems almost a global hope that the massive Chinese munificence can be collectively managed to produce more benefits and fewer harms. However, small countries will have a hard time extracting benefits while avoiding the debt trap from the OBOR initiative.
Sri Lanka’s dilemmas
Sri Lanka’s dilemmas are compounded by the government’s dilemmas. The present government has managed to annoy everyone and satisfy no one in its handling of the debt-laden Chinese projects that it inherited from the Rajapaksa (mal)-administration. The government’s flip-flop on the Colombo Port City and its secretive handling of the new Hambantota Port agreement has generated greater protests than the Rajapaksas ever faced. That there is freedom to protest now unlike earlier is not a wholly satisfactory explanation.
The bigger reason is that the government has no coherent development plan based on country resources and requirements that are hardly uniform despite the small geography and top-heavy administration. In fact, there is little difference between what the Rajapaksa government did by way of development and what the present government is trying to do. Except, the debt chickens hatched by the Rajapaksas are coming home now. And, a restive population that sat on its hands under the Rajapaksas is now up in arms in protest on every street in Colombo.
The other, and more complicating, difference is dealing with India. And the government has done nothing to mitigate that challenge internally, but everything to aggravate it. Externally, on the other hand, the government appears to be balancing well between Delhi and Beijing, which is a prudent approach than the native-cunning approach of the Rajapaksas to play one against the other. The Chinese media favourably reported the meeting between Prime Minister Wickremesinghe and his Chinese counterpart, Premier Li Keqiang.
Equally, the Indian press had positive things to say about Sri Lanka’s understanding of India’s absence in Beijing, based on Minister Sarath Amanugama’s observation that India could not simply accept China identifying a potential China-Pakistan Economic Corridor (CPEC), one of the six overland corridors envisaged by the OBOR initiative, cutting through Kashmir without consulting India. The Sri Lankan government must ask Delhi to similarly understand concerns in Sri Lanka about the unilateral declarations by Indian Ministers about building a new (Pampan) bridge connecting Sri Lanka and South India.
Silk Road and Spice Route
The economic justification of infrastructure development is, in theory, based on demand and timing (not too soon and not too late). But neither criterion is usually satisfied for political reasons and the availability of resources. A new and important consideration is the impact on the environment, natural as well as social. The bridge connection between India and Sri Lanka is hardly an economic need now to justify the environmental impacts it will create. And from an opportunity cost standpoint, Sri Lanka has other more pressing needs to address than to build a new bridge that no one is missing. The same argument applies to the spate of highway building started by the Rajapaksas and pressed on by the present government while neglecting the upgrading of the already existing network of roads and rails which are in a parlous state of disrepair.
While Sri Lanka cannot afford to miss any positive opportunity arising from the growing economies of China and India, it must have its own plan to assess which opportunity is appropriate and where it will fit in the country’s broadly national and specifically local need gaps. China’s OBOR initiative is totally unique and no other country has circumstances that come anywhere close. On the other hand, Modi’s "Make in India" manufacturing thrust is closer to what Sri Lanka may aspire to but on vastly different scales.
China’s impetus is primarily driven by its infrastructure overcapacity and the need to find places to deploy its huge savings and construction resources. The fact that the OBOR initiative is mostly government driven but under market conditions is what creates legitimate fears of imbalances and unequal results. Sri Lanka has experienced this in a relatively small, but nationally significant ways. Khurram Husein’s critique, I referred to earlier, exposes with documented evidence similar prospects for Pakistan but on a much a larger scale. Small countries need smart governments to choose beneficial initiatives while avoiding harmful ones.
In the case of Sri Lanka, a sense of history is also helpful. The Chinese government and western commentators have been linking the new OBOR initiative to the ancient ‘Silk Road’ that was the trade route for silk and horses between China, the rest of Asia and Europe. Not mucah to the liking of the Chinese, commentators also recall the Chinese imperial tradition of collecting tributes from smaller powers. There is also a school of historians who view that the importance of the ancient Silk Road is being exaggerated, and that the old spice routes linking South Asia, especially the South India-Sri Lanka (SISL) region, and the Roman Empire was far more consequential for ancient trade. Ancient or modern, Sri Lanka and South India cannot sail out of their geographical proximity.