Trapped between a rock and a hard place

Don’t exaggerate Lanka’s strategic importance to the Great Powers

by Kumar David

The foreign powers relevant to Sri Lanka’s predicament, in order of involvement are India, China, the United States, and Pakistan to a lesser degree. Japan, Australia and the UK will bestir themselves to the extent that the US compels them. To India the island is so critical that a threat to its security such as setting up a hostile military base will provoke a hard militarised response. US military interest is to backup India and deny China military facilities, but its economic forebodings are deeper and it has vowed to push back China’s economic wallop and in particular to spoke the Belt and Road Initiative (BRI) by which China is taking over the Asian politico-economic landscape. This colkumn last week (Sept 6) titled “America’s New Cold War” was about this.

India is concerned about the tilting Sino-Lanka axis from many perspectives – security, regional economy and Belt-and-Road; see strategic papers: http://www.southasiaanalysis.org/node/2656 and

http://www.southasiaanalysis.org/node/2658. The first paper is written from the perspective, true at one time, that Mahinda is China’s man. It is more complex now with GR-MR manoeuvring between the IMF, China, the US and India to keep the wolf of foreign debt and interest repayment from the door. They have recently even proposed the partial-sale of private banks to multilateral agencies. The Rajapaksas will throw themselves at the mercy of anyone for a debt moratorium, new loans and MCC grants; beggars can’t be choosers. Modi and Indian security folks would like to buy the Rasapaksas off with deals and loans and Lanka cannot afford to pose a strategic threat to anyone. On the other hand, GR and MR are well aware that the big money is with China. It’s a hard world!

Though Sri Lanka’s economic-strategic location is useful to China as a centre point on shipping lanes to the Suez Canal, the Persian Gulf (and its oil), and China dependent East Africa, the island’s military-strategic significance should not be exaggerated. The crucial choke point for China and for all Far Eastern shipping is the Malacca Strait, a narrow strip of water between Peninsular Malaya and Sumatra, two miles (2.8km) wide at its narrowest and 550 miles (890km) long. It carries a quarter of the world’s oil shipments, a quarter of global freight, and 100,000 vessels transit it each year. It is the Malacca Strait, not Sri Lanka, that is a nightmare for China because the US Navy can throttle the Strait and China does not have the clout to respond.

Hence BRI: Five corridors, three operational and two a bit dicey. The Mongolia-Russia railway to the Baltic Sea and the more southerly and more important Eurasia railway are both operational. A branch of the latter through Iran into the Middle East and Turkey maps the Ancient Silk Route – this Central and West Asia Corridor is a third, part-operational arm. The fourth in fitful “progress” is the Pakistan Corridor of roads crossing through contested parts of Kashmir and rail links to the Arabian Gulf port of Gwardar. Fifth the Myanmar-Bangladesh Corridor to the Bay of Bengal port of Chittagong runs through India so it may never get done, but Chittagong is being developed as a transit port. This fifth proposal has a slice on the side, sometimes called a Sixth Corridor, down the spine of Peninsula Malaysia to Singapore. This too is unlikely to get done.

A profoundly important new development is the China-Iran deal signed a few days ago. China will invest $400b in petrochemicals ($280b) and transport ($120b) in exchange for a 32% discount on Iranian oil for the next 25 years. The rail project will connect the Iranian port city of Chabahar to Zahedan near Iran’s Afghan border and presumably go north to join the Eurasia Corridor. Last year India stopped buying Iranian oil to please Washington and Delhi has also reinforced military ties with Israel. Tehran’s attitude changed; in effect the US and India have pushed Iran into China’s welcoming arms and a new strategic partnership is taking shape; perhaps it will include Russia and Turkey in the future. So, as per plan the via-Pakistan route to Gwadar will be paralleled by a via-Iran route to Chabahar, and significantly Chabahar is at the mouth of the Persian Gulf. This complex now becomes a Pakistan-Iran Corridor. What is significant after this gets done is that the Malacca Strait and Lankan ports may, but unlikely, be bypassed for freight, but will certainly dim on the Chinese strategic radar.

Were the Communist Party less hostile and repressive of every other mass organisation (the Catholic Church, Fulan Gong and now the Uyghur Muslims of Xinjiang who are not prepared to abandon their faith) China could much improve its image among Muslim nations, and critically in this context, among the people of Iran. One-party Stalinism (or semi-Stalinism) suffers from a complex, a deep sense of insecurity, a foreboding of all other big entities.

There are other reasons than sea-lanes and security not to exaggerate the standing of the Chinese connection. Lanka does not export much to China which needs oil, gas, high-tech and masses of electronic chips that we do not have. The PRC exports tons of the same stuff as we do to the whole world and a wider variety and better quality – garments, manufactures. We have not even found niche markets in China for our specialist foods. For training professionals (doctors, engineers, IT types) and post-graduate placements, we are bound hand and foot to the English-speaking world. Investments from China are large but front loaded with a big graft slab for our leaders – all mega projects include a slice. Actually, China does not care as loans are commercial-repayable and unlike Western agencies which are accountable at home, the Chinese public cares tuppence if projects are alabaster-pure white-elephants. Mattala, Hambantota Stadium, highway projects, anything that has the label Rajapaksa in front is likely to be superfluous and a graft opportunity.

The US blacklisting 24 Chinese companies is unlikely to affect Lanka. The giant holding entity China Communication Construction Company (CCCC) has not been named though several of its subsidiaries have. These subs are not involved in the Colombo Port City Project, a different CCCC spin-off, China Harbours – which criminally pumped tens of millions into the 2015 Presidential race – has a stake in the Port City project. This all seemed clear, though last week the Colombo US Embassy muddies the waters with a warning. Separately, the US Secretary of State, Defence Secretary and National Security advisor have been in telephone contact with President Gota not to mention a letter from Trump said to have been handed over to Gota. But all to make sure that Lanka does not get out of line in the new anti-China cold-war. But we are dead broke – the 2020 fiscal deficit will be about 10%, I believe the highest ever in the country’s history and the economy limps from bad to worse. China not India or the US has the money so as beggars who can’t afford to be choosers where are we to beg and what are we to choose? Things will roll on in this style for five, maybe ten more years.

[Both this and last week’s essay have greatly benefitted from information supplied by a Mongolian Comrade]