Reading the Sri Lanka-India MoU

Prime Minister Ranil Wickremesinghe’s visit to New Delhi from April 25 to 29, 2017 and the Memorandum of Understanding (MoU) the two countries signed hogged the limelight of events during the month. Though foreign affairs analyst and unabashed Rajapakshaphile Dr Dayan Jayatilleka, given to hyperbole, called it “Ranil’s worst betrayal: Giving Trincomalee to India” even before the visit, there is a broader context both for the visit and the MoU.

As India’s Ministry of External Affairs’ spokesperson described, it was a “working visit” to strengthen close relations existing between the two countries. For Sri Lanka, it meant not only India showing its readiness to underwrite development projects, but also its affirmation of the Sirisena-Wickremesinghe course correction to the relations. For India, it was a show of solidarity with Sri Lanka, particularly when it was negotiating with the Chinese for better concessional terms on Hambantota port and Colombo reclamation projects.

Of course, there is an even larger international context of Indian Ocean Region (IOR) security. Both India and the US have been increasingly concerned about the security of IOR after China started asserting its increasing naval muscle in the region. With China gaining a firm foothold in Sri Lanka’s maritime infrastructure in Colombo port and Hambantota port under its control, it has become essential for India to periodically share its mutual security concerns with Sri Lanka, which has close bonds with India. This has become imperative as the IOR is likely to be the scene of increasingly muscular assertion among naval powers, particularly China.

The MoU is open ended except for deadlines preparatory to the finalization of projects. As the Indian MEA spokesman said it provides a vision that would need further discussion, when more inputs became available. He saw it as part of India’s desire to promote its “external environment and naturally to neighbourhood first.”

According to the copy of the MoU carried in the Sunday Times, Colombo, its focus is mainly on promoting projects in energy, infrastructure connectivity and port development sectors with Indian assistance and investment in Colombo and Trincomalee areas as well as road segments mostly in Northern Province.  Thus India would be substantially contributing to the development of industries and infrastructure links in the North and East, which could help the regions’ integration with the rest of Sri Lanka.

The projects include a re-gasified liquid natural gas (LNG) fired 500 MW power plant; an LNG terminal/floating storage re-gasification unit in Kerawalapitiya near Colombo; 50 MW solar power plant at Sampur; joint development of upper tank farm in Trincomalee, port, petroleum refinery and other industries in Trincomalee; industrial and special economic zones at locations to be identified; development of Mannar-Jaffna, Mannar-Trincomalee and Dambulla-Trincomalee expressways with Indian investment; up gradation and purchase of railway rolling stock; container terminal at Colombo port as a joint venture and agricultural sector and livestock development.

The MoU shows a number of features, efforts of both India and Sri Lanka to improve their project planning on a few counts. Time-bound schedule for projects is an interesting feature to avoid time-delay that had been the bane of Indian-aided projects in Sri Lanka. The power generation projects are environment friendly, based on LNG and solar power; perhaps the cancelling of 500 MW coal fired power plant to be built by India at Sampur, after advanced project planning, on environmental grounds induced the decision.

Another significant feature is India and Japan joining hands to build a floating LNG terminal, a 500 MW power plant based on LNG and a gas distribution pipeline at Kerwalpitiya. This would indicate the close bonds developing between India and Japan, furthering their strategic convergence in the IOR. It also has the potential for further cooperation and coordination between India and Japan in projects in Sri Lanka.

The MoU is yet another step in building bonds between the two countries beyond India-Sri Lanka Free Trade Agreement (ISFTA), which came in force in 2000. Both countries have been discussing a comprehensive Economic and Technical Cooperation Agreement (ETCA) for some time now. Sri Lanka chambers of commerce have welcomed the idea.

However, the subject has become politically sensitive as Sri Lankan professionals fear ETCA would ultimately enable India to export services personnel to Sri Lanka, though its objective is not to open up Sri Lanka to Indian services personnel. In view of this, India has shown no hurry in pushing it. Perhaps India would like to wait and watch the final shape of the China-Sri Lanka Free Trade Agreement (CSFTA), which has been on the anvil for some time. The MoU has shown the contours of areas in which India can build economic bonds as and when the ETCA is finalized.

Prime Minister Narendra Modi is scheduled to visit Colombo and Kandy to attend United Nations Day of Vesak in Sri Lanka. The three-day celebration will begin on May 12 at Colombo and closing ceremony will be held in Kandy. However, as of now the Indian prime minister’s visit will be strictly to attend the religious function. Other foreign dignitaries attending the celebration include Nepali President Ms Bidya Devi Bhandari.

Col R Hariharan, a retired MI officer, served as the head of Intelligence of the Indian Peace Keeping Force in Sri Lanka from 1987 to 90. He is associated with the Chennai Centre for China Studies

http://col.hariharan.info/2017/05/sri-lanka-perspectives-april-2017.html