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Fresh approach for joint ventures between India and Sri Lanka

28 May 2020 12:36 am - 0     - {{hitsCtrl.values.hits}}

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President Rajapaksa visited New Delhi soon after he was elected to office at the presidential elections conducted on November 16, 2019

 

For investment projects to succeed, such political will has to be coupled with public support

The political opposition that instigated public protest at that time is now in power

Some key projects were mooted to be executed at that time

Prime Minister Modi even raised concerns with Sri Lanka over the lack of progress in accelerating India-assisted projects here

 

President Gotabaya Rajapaksa received a telephone call from Indian Prime Minister Narendra Modi on May 23. Prime Minister Modi tweeted afterwards that his government was ready to extend cooperation to Sri Lanka in dealing with the COVID-19 pandemic and economic recovery in the post crisis context.


The Indian Prime Minister’s call came ten days after Chinese President Xi Jinping contacted President Rajapaksa over the phone and discussed the need to resume practical cooperation between the two countries. The leaders of India and China—the two powers pursuing strategic interests in the Indian Ocean region where Sri Lanka is uniquely positioned—laid emphasis on the advancement of the economic cooperation in their telephone conversations with the Sri Lankan President.


According to a statement released by the Indian External Affairs Ministry after the latest phone conversation, President Rajapaksa and the Indian leader agreed on the need to accelerate India-assisted development projects in Sri Lanka.


The acceleration of proposed joint ventures between the two countries has been a topic since the time of the previous government. Some key projects were mooted to be executed at that time. Main among the projects proposed during that time were the petroleum hub in Trincomalee, the Colombo East Container Terminal, the management of the Mattala International Airport and the Sampur power project. In fact, the petroleum hub was announced in public for the first time  when Prime Minister Modi addressed Sri Lankan Parliament in March 2015 during his official visit to Sri Lanka, shortly after the Yahapalana government was formed. This bespeaks of the kind of importance being attached to the project by India.  Later, in 2017, Prime Minister Modi even raised concerns with Sri Lanka over the lack of progress in accelerating India-assisted projects here.


Despite all that, none of these took off the ground at that time, although there was political will on the part of the then government in most cases. The then opposition and the trade unions raised alarm over the projects and it generated a kind of public outcry. In the conduct of bilateral relations, India seems to have learnt a lesson from this experience; that is that mere political will on the part of the party in power in Sri Lanka will not suffice in furthering economic cooperation in terms of bilateral joint ventures, particularly the ones which are strategic in nature. For investment projects to succeed, such political will has to be coupled with public support, policy consistency of the government of the day and decision making. That former President Maithripala Sirisena and former Prime Minister Ranil Wickremesinghe did not see eye to eye on most of the issues also delayed or hamstrung the execution of India-assisted projects. The political opposition that instigated public protest at that time is now in power. It is unlikely that the present government can now agree to some of the projects such as the joint management of the Mattala Airport since its leaders were opposed to them tooth and nail at that time as then leaders of the opposition.
In the new political context, the two countries appear to have reconciled with such ground realities in forging ahead with the joint ventures and other forms of investments in a political and economic environment shaped by the ground political changes in Sri Lanka and the global health pandemic. President Rajapaksa visited New Delhi soon after he was elected to office at the presidential elections conducted on November 16, 2019. Already, India has pledged a US $ 400 million Line of Credit.


Instead of furthering the previously proposed ventures, it is now left upon the Sri Lankan government in the present political context to come up with fresh proposals to utilise the new Line of Credit. According to informed sources, this has also been discussed during the phone conversation with the two leaders. 


Besides, there is another US $ 50 million Line of Credit for defence cooperation between the two countries in the wake of the ISIS attack on Sri Lanka on April 21, 2019. This is a new opening for bilateral cooperation, because both countries face such terrorism.


In the post COVID-19 economy recovery, both India and China have now come forward to enhance economic ties with Sri Lanka. China is likely to play a key role in the infrastructure development projects which are presently lined up. Economic projects which are sometimes attached with strategic strings though look purely commercial in nature. The Sri Lankan government woos investments from both India and China. At the same time, it looks wary about geopolitical interests of the major powers in the region in accommodating investments from them. If carefully calculated and balanced, it will be an opportunity for Sri Lanka to stimulate its growth momentum in the post COVID-19 context.

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