India Sri Lanka ties

Syllabus: General Studies Paper 2

Context

• Sri Lanka’s Foreign Minister recently met his counterpart in New Delhi, as part of the ongoing high-level, and increasingly frequent, bilateral engagement between the neighbours.
• New Delhi’s economic assistance to Colombo in recent weeks has made a “world of difference”.
• There have been significant developments in the relations in recent times.

India’s assistance

• Beginning January 2022, India has been providing crucial economic support to the island nation in the grip of a severe dollar crisis that, many fear, might lead to a sovereign default, and a severe shortage of essentials in the import-reliant country.
  • Basil sort emergency assistance from India when Sri Lanka’s foreign reserves dropped to $1.6 billionin November 2021, leaving no dollars for importing essentials, or meeting debt obligations.
• The relief extended by India from the beginning of this year totals over $1.4 billion
  • a $400 million currency swap,
  • a $500 million loan defermentand
  • a $500 million Line of Creditfor fuel imports.
  • Sri Lanka is further negotiating $1 billionassistance from India to help the near 22 million-strong country as it faces an unprecedented economic crisis.

Background of the issue

• Before the pandemic struck, and soon after, it was India that the ruling Rajapaksas first approached with requests for a debt freeze and currency swap. However, for about two years there was no response from Delhi.
• Meanwhile,Colombo also sought and obtained financial assistance from China through the pandemic years, by way of new loans and a currency swap.
• China also provided about 80% of the vaccinesadministered by Sri Lanka, where about 65% of the population is fully vaccinated.
• Colombo also received some assistancefrom other countries, such as Bangladesh.

Shift in bilateral relations

• The last year saw a dramatic turn in Indo-Lanka relations, beginning with Colombo’s sudden decision in February 2021, to unilaterally cancel a 2019 agreement to jointly develop a strategic port(East Container) terminal in Colombo with India and Japan. New Delhi and Tokyo were shocked. They expressed their displeasure at the Rajapaksa government’s decision unambiguously.
  • However, Colombo soon offered what it called a“compromise deal” to India, roping in the Adani Group as the main investor in a neighbouring, West Container Terminal.
• India quickly took the offer but its concerns over along-pending agreement on the joint development of the World War II-era oil tanks in the strategically located, eastern Trincomalee district remained.
  • It was a key talking point during Sri Lankan Finance Minister Basil Rajapaksa’s visit to New Delhi end of last year, when he discussed a “four-pronged” approachwith India to address Sri Lanka’s food and energy security.
• New Delhi’s assistance, diplomatic sources indicated, was contingent on Colombo firming upthe Trincomalee project agreement. Sure enough, Sri Lanka soon announced that it would sign the Trincomalee oil tank farm deal with India.
  • On January 6, 2022,the two sides inked the agreement, marking a major milestone in the long-dragging project.
• A week later, India confirmed a $400 million currency swap for Sri Lanka, while deferring another $500 million due for settlement to the Asian Clearing Union (ACU).
  • On February 2, 2022, the Export Import Bank (EXIM) of India and the Government of Sri Lanka signed a $500- million Line of Credit agreement to ease Sri Lanka’s fuel imports.

Pending issues

• The Palk Bay fisheries conflict,involving fishermen of Tamil Nadu and their counterparts in war-affected northern Sri Lanka has escalated in recent weeks, following mid-sea clashes between fishermen from both sides.
  • Two fishermen from Sri Lanka’s northern Jaffna districtwere found dead after one such clash, triggering massive protests.
  • The Sri Lankan fishermen protested Indian fishermen’s use of the destructive bottom trawlingfishing method along their coast, despite their voicing concern over its impact on marine resources and their post-war livelihoods for years now.
  • Bilateral talks between governments and fisher leaders have proved unsuccessfulso far, with Tamil Nadu fishermen reluctant to move away from the practice of bottom trawling that yields high profits.
• Pending political solution to Sri Lanka’s Tamil question.
  • Arguably, India’s emphasis on the rights of Tamils has come down in recent years, with a growing China pre-occupation dominating its Sri Lanka policy.
  • Prominent Tamil leaders recently wrote to the Indian Prime Minister, seeking India’s intervention in ensuring a durable political solution to Sri Lanka’s historic ethnic question. However, it remains to be seen if India has the leverage to influence the Rajapaksa administration to decisively address the Tamils’ long-pending concerns, in the new Constitution promised by President Gotabaya Rajapaksa.

The Hindu link

https://www.thehindu.com/news/international/renewing-indo-lanka-relations-after-a-period-of-strain/article38400468.ece

Question- India Sri Lanka ties have seen improvement in the recent times. However, many issues still remain unresolved among the two countries. Elucidate.