By P.K.Balachandran/Daily News
Colombo, February 20: Sri Lanka is gaining in importance in the geopolitics of the Indian Ocean region. This is evident in the flurry of visits by senior functionaries of the US, Israel and Iran to canvas support for their stand on key issues and also to firm up political and economic ties with Sri Lanka which is strategically located in the Indian Ocean.
Also of importance in this context are some recent remarks on Sri Lanka by the US Assistant Secretary of State for South and Central Asia, Donald Lu.
Following the visit of the Israeli Minister of Transport Ms.Miri Regev, the Iranian Foreign Minister Hossein Amir Abdollahein came calling. The US Under Secretary of State for Public Diplomacy Liz Allen was already in Sri Lanka, when the Israeli minister was in town.
Ms.Regev’s mission, the first in 13 years by an Israeli minister, was to explain Israel’s stand on the war in Gaza and also to firm up economic ties with Sri Lanka. During the 30-year war in Sri Lanka between the government forces and the Tamil militants, Israel had stood four square behind beleaguered Sri Lanka by selling arms at a time when Western governments and India had refused to do so. Israeli gunboats, jet fighters and drones helped Sri Lanka win the war in 2009.
But the relationship had no economic component to sustain itself in peace time. Though Sri Lanka had been seeking cooperation in agriculture, and Israel had the expertise and readiness to share it, economic cooperation had failed to take off. Ms.Regev’s visit would fill the gap.
The visit resulted in the signing of an aviation agreement between the two countries. That would help Sri Lankans traveling to Israel for work and also Israelis looking for investment opportunities in Sri Lanka. Air services would also bring thousands of Israeli tourists to Sri Lanka to help boost its foreign exchange reserves.
Already there are about 7,000 Sri Lankan caregivers working in Israel. And there are as many as 100,000 vacancies in the Israeli construction sector which Sri Lankans may be eyeing. No wonder then, the Israelis described Ms.Regev’s visit as an “exciting milestone” in the relationship.
A joint statement issued by the Israeli Foreign and Transport Ministries on February 10 stated that Sri Lanka had aided Israel in the rescue of hundreds of Israelis at the beginning of the “Swords of Iron War” following the October 7, 2023 Hamas attack on Israel. Sri Lankan nursing assistants had landed in Israel to help fill an acute need for such professionals. And this happened even without a formal aviation agreement, the Israelis pointed out.
Sri Lanka is expected to take advantage of the opportunities available in Israel, even though it will not overtly support Israel’s stand on the Gaza war and its aversion to a Two-State solution to the Palestinian-Israel problem. This was evident in the Sri Lankan official statement on the talks between President Wickremesinghe and Ms.Regev. The statement reflected the two countries’ divergent stands on these two issues.
Meanwhile, the US Under Secretary of State for Public Diplomacy, Liz Allen, on a visit to Sri Lanka, aimed to express Washington’s “unwavering commitment to reinforcing and expanding partnerships and alliances”. But she also aimed to convince Sri Lankans to go for inclusivity and uphold democracy and human rights. The US seeks to make Sri Lanka a key partner in its Indo-Pacific strategy to contain China’s expansionism and its debt enhancing Belt and Road Initiative (BRI).
Donald Lu’s Remarks
The Indian daily Hindustan Times reported that the US Assistant Secretary of State for South and Central Asia, Donald Lu, held out Sri Lanka as an example of the success of the US Administration’s Indo-Pacific strategy in collaboration with partners such as India.
He was speaking at a high-powered panel along with other administration officials from the State Department, National Security Council and Pentagon to mark two years of the Joe Biden administration’s Indo-Pacific strategy at US Institute of Peace (USIP), a think tank in Washington DC
Lu cited Sri Lanka’s recovery from the depths of an unprecedented economic crisis as “a comeback story” worth telling. He recalled that a year-and-a-half ago, Sri Lanka was in crisis with “mass riots on the streets, lines for petrol and food, the seizing of the President’s home, protesters swimming in his swimming pool”. But, Lu added, “if you have been to Sri Lanka lately, it is a very different place. Currency is stable. Goods and fuel prices are stable. They have gotten reassurances on their debt restructuring. And IMF money is flowing.”
The turnaround happened with a little help from friends, Lu said, as part of the US Indo-Pacific strategy.
The Indo-Pacific strategy he said is based on the premise that US and like-minded partners would try to offer a better proposition for economic recovery as compared to China’s offer.
In the case of Sri Lanka, what it needed was humanitarian assistance. “What we saw was countries like India coming up with concessional loans that allowed Sri Lanka to bring in vital supplies during the most difficult time. USAID, during the same days, provided hundreds of millions of dollars in agricultural inputs, fertilizers and seeds, so farmers could grow their own crops,” Lu pointed out.
On the debt issue, Lu said that the creditor community led by Japan, France and India, negotiated for months to find a formula to allow Sri Lanka to restructure its debt in a sustainable manner.
“That formula put pressure on the Chinese to go along with those debt reassurances. That opened up IMF funding and changes in the economy you witness today,” Lu said.
Lu also referred to the US Development Finance Corporation loans worth $553 million to develop a deep water shipping container terminal in the Port of Colombo, a project which has India’s Adani group as a key partner, as evidence of a loan that doesn’t balloon debt but a private sector investment for a profitable project.
In a hint at China’s threats in the region, Lu said that a part of what Sri Lanka “really needs” is “for all of us to be there to support its sovereignty. One of the ways we are doing it is by providing patrol boats to the Sri Lankan military.”
India’s Leadership
Importantly, Lu acknowledged India’s leadership of the Indian Ocean and stressed that the countries of the region should work with India for their security. He said that while the US was a “big force” in the Indian Ocean region India was a much “bigger force.”
“If you are going to get this right, you have to work with Indians and make sure what we are doing is consistent with the direction they (the Indians) are moving in with respect to the Indian Ocean. They are historically the big player.”
Iran’s Interest
During his visit, Iran’s Foreign Minister, Hossein Amir-Abdollahein, was expected to brief the Sri Lankan leaders on the Iranian view of the ongoing conflict in Gaza. Iran-backed Hamas and Hizbullah have taken on the Israeli forces in Gaza and Lebanon, while Yemen’s Iranian-backed Houthis have been attacking Israeli-linked ships in the Red Sea.
But the Iranian Minister would not get much traction for his country’s stand on the issue as Sri Lanka opposes the disruption to international shipping in the Red Sea.
Nevertheless, it is noteworthy that the Iranian Minister found it worthwhile to visit Sri Lanka and for Iran to send two naval vessels to Colombo on a friendly visit.
Iran was a crude oil supplier to Sri Lanka once. It is now a promising market for Sri Lankan tea. Since the start of the tea-for-oil barter mechanism in August 2023, Iran had bought US$ 25 million worth of tea from Sri Lanka. Sri Lanka intends to pay off US$ 240 million dollars in 48 months.
The barter deal represents a significant development for Sri Lanka amid its current foreign exchange liquidity crisis.
Tea exports to Iran amounted to about US$ 125 million per year before falling to around US$ 70 million in 2022. The demand for tea in Iran is about 100,000 metric tons annually.
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