What makes this change for the US was implied by US Secretary of State John Kerry before his departure from Colombo when he addressed the media to “commend the (new) Government and the people of Sri Lanka for the decisions taken to strengthen democracy”. The two words “strengthen democracy” was more than about a regime change at the January 08 (2015) presidential polls. It was about having a government as a secure US ally in the increasingly important Indian Ocean (IO) Rim. This was amply exhibited immediately after the parliament elections in August (2015) when two more important US officials, Ms. Biswal and Mr. Malinowski made an extremely hurried trip to Colombo. The visit was so fast, President Sirisena had to immediately swear in 03 ministers for foreign affairs, justice and rehabilitation to keep to protocol in discussions that would ensue.
The US entry has in its background the Chinese growth and expansion across the globe. A clear shift from a post World War II US centred global economy with military power over most of the Southern hemisphere to a Chinese centred Asian economy that is now building up a new global order centred in Beijing. That Chinese power seems to be working towards controlling one of the busiest seaborne routes, the Indian Ocean (IO) sea lanes.
Entrenching Chinese interests in global economics began in the first decade of the new millennium, with below US $ 3 billion Chinese direct investments in foreign countries by 2005 that grew to more than US $ 50 billion by 2008 and reached 60 billion in 2010. China was one among the world’s top 10 foreign direct investors in 2011 with $365 billion in direct foreign investment. These investments were in developing countries in Asia and Africa. Exceptions were investments in Australian mining industry and in Canada. After 2008 global economic meltdown Chinese investment in Europe and North America grew strong.
In 2013 China stepped in with a new economic platform as an alternative to the World Bank proposing an Asian Infrastructure Investment Bank (AIIB). Despite US resentment, reservations and not so covert interventions against AIIB, China secured membership from all major global players including Germany, the UK, Norway, France, Finland, Switzerland, Sweden, Netherlands, Australia, New Zealand, Brazil and Russia among 57 nations that gathered in Beijing in June this year (2015) to sign the Articles of Agreement of the new international bank floated by China.
This Chinese expansion is different to the “global grip” the US was maintaining during and after the “Cold War” era. The US military might and the MNCs that controlled consumer markets across borders were then factors in global power. Quite different to that Chinese capital investments keep developing or under developed countries on bi-lateral agreements or on FTAs. Entering as projects and contracts they are also accompanied by Chinese experts, technicians and labour in large numbers.
Indian concern on growing Chinese presence in Sri Lanka sees this as almost permanent physical presence. It skyrocketed with a SL regime that did not see India as equally important in its regional diplomacy. India thus had to manipulate itself, often using the North-East conflict and its economic presence, SL governments cannot completely ignore. The Indian Oil Company operating in SL since 2003, for instance has over 43% share in retail fuel market and a major share in bunker fuels and lubricants in all ports, while supplying grease and lubricants to State security forces.
Chinese economic invasion begins without much competition from India in late 2006, when the Rajapaksa government decided to go for all-out war against the LTTE. Indian hands were tied to Tamil Nadu politics that agitated against war on Tamil people. New Delhi was forced to play a very silent, covert role in supporting President Rajapaksa’s war against LTTE while China upped its supply of military hardware, weapons and ammunition. For the Rajapaksa regime China fitted well with no conditions laid on violation of human rights and international law.
The Rajapaksa regime profited too in accepting Chinese projects, funds and aid. By 2013 China had invaded the IT sector with all service providers in SL tying up with the Chinese Huawei Technologies. By then China had invested or provided aid for most mega projects including the Hambantota port, Hambantota Development Zone, Mirigama Investment Promotion Zone for Chinese investors, Colombo International Container Terminal, Colombo Port City on reclaimed land, the Lotus Tower to be the tallest in South Asia for communication and leisure, two 500 MW thermal power plants and developing infrastructure including expressways and highways. The total financial involvement was calculated to be well over US $ 4,800 million by 2013 with some numbers being estimates. Added was the Chinese labour said to be around 30,000 brought into the country during the past 03 years.
It is this Chinese presence that matters most to India given Chinese interventions in other parts of Asia. Chinese interests in Pakistan, SL and Myanmar makes India feel it is being gradually encircled. In Pakistan and Myanmar there is a difference. China is there with energy driven projects crucial for Chinese growth. Bulk of fuel imports to China come from Middle Eastern and African countries. By the end of the year 2013, China became the largest net importer of oil in the world. That year, China spent US $ 277 billion on importing energy (coal, oil and natural gas). They had to be transported from beyond the Strait of Hormuz along the IO sea route through Malacca Strait into the South China Sea.
Importance of this IO sea route for trade is recorded in history since antiquity when the Roman Empire traded with India. Today it’s importance is not just as a transport corridor between Africa, Middle East and Australasia through the Malacca Straits. IO is rich in marine and natural resources including Bauxite, Chromite, Copper, Titanium, Tungsten, natural gas and oil reserves. In terms of cargo, half of world’s containerised cargo plies on this IO sea route. This becomes extremely important in a context where 80% of the world trade in terms of value is on seaborne transport.
For China, the IO sea route is also about safety and security in plying important cargo like oil. After Somali piracy, the last few years have seen an increase in high sea piracy in the Malacca Straits, say the International Maritime Bureau (IMB). Pirate attacks in the Malacca Straits have increased from 46 in year 2009 to 128 in year 2013. Year 2014 had not been any better, according to the IMB station in Malaysia. Therefore any investment that can avoid total sea transport of fuel imports is vital for China. The much hyped Chinese maritime plan for the IO named the “String of Pearls” by mostly US and Indian media is more importantly a route “deviation” than IO “dominance”.
The first deviation is Gwadar port in Pakistan and the second is the Bay of Bengal bordered Sittwe port in Myanmar. Gwadar sea port once complete and commissioned is a key deviation for Chinese sea cargo to reach China. The whole sea route from the Hormuz to Malacca Strait can be skipped with cargo re routed to Xinjiang region of China. In May 2014 when Chinese President Hu Jintao visited Pakistan, the two governments signed a deal to construct a rail road that would link Gwadar to the high altitude Karakoram highway. The Chinese government pledged US $ 100 million for the project. In 2013 another contract was put in place to expand the Karakoram highway from the present 31 feet width to 99 feet width for heavy traffic to move faster and safe even during winter. Such would give China the added advantage of moving their industries to less developed provinces in the Western part and also in deploying its military faster to Xinjiang where Uighur Muslims have long been rebelling.
Sittwe port that comes as the second deviation was developed by India from 2009 to have easy and faster connectivity with its Eastern States that are basically land locked. Bangladesh consistently denied access from their Chittagong port. Sittwe will connect Mizoram and other Eastern States to mainland India via a road link. For the Chinese, Sittwe port is important when connected to China’s Yunnan province by road and rail. China has already gained mining rights for natural gas in the Arakan region that locates Sittwe port and has constructed gas and oil pipelines from Arakan to Yunnan. Sittwe thus becomes another deviation to Chinese cargo, avoiding the Malacca Straits and South China sea.
Thus Gwadar in Pakistan, Hambantota port in Sri Lanka, entrenched heavy Chinese presence on the Myanmar coast, extending railway networks in Tibet and the expansion of the Karakoram highway running close to the Kashmiri border makes India feel it is now being encircled by China. This Indian concern grew when China was involved in huge projects in Sri Lanka. Not just the Hambantota port, but extensions and development of the Colombo International Container Terminal, construction of the Colombo Port City on reclaimed land, the Lotus Tower to be the tallest in South Asia for communication and leisure, were all watched with concern. The “Colombo Port City” an artificial islet added more concern with the Chinese company given a free holding land area with total control of the islet under the Chinese company. Construction of the Lotus Tower in Colombo, the tallest in South Asia designed and constructed by China, was initially speculated to have “eavesdropping” ability on cyber traffic with communication facilities installed.
Indian concerns had been there and are there even after the Rajapaksa regime is overturned. It is linked to the larger Chinese canvas right across the IO. It is a growing concern with the US too that does not want to give up on its global dominance. It is therefore eroding of the “Clint Eastwood” American image the Obamian foreign policy is blamed for. Though a Bush creation, Iraq is a lost case under Obama. Egypt and Libya is in serious crisis after regime change and the ISIS creating more chaos in Syria and Iraq. Iran forced itself on Obama’s America to compromise on its nuclear power. Afghanistan is out of the US grip now but Russia is into Ukraine with pro Russian rebels. Bin Laden and drones have made Pakistan anti US leaning towards its old ally, the China. With Diego Garcia now left out as out dated in global power politics and being too far away from IO shipping lanes, the US seem left out from the emerging power in Asia.
Sri Lanka thus becomes important for the US’s waning presence in the IO Rim area, where new technology could compensate absence of physical presence. For the new government of Sirisena-Wickramasinghe coalition that is ideologically dominated by Wickramasinghe’s liberalism, the way out is on economic stability worked out in 2001 as “Regaining Sri Lanka”. That now is 15 years behind time and knew no emerging economic power in Asia. For old liberals the US comes as a more comfortable ally than China. For Wickramasinghe it was the US that could help escape the UNHRC led investigations and their follow up. The regime change the US wanted in Colombo was thus tied to the fourth US Resolution. For this new government the US initiated Resolution with space for a “Domestic” Probe on all war related crimes is good leverage to keep Southern Sinhala elements at bay and project a stable country for FDI inflows. There were other offers as well and Sri Lanka became the first in the whole world to sign with Google for its “Loon” project. The fact remains that the Google Loon project is not what it was publicised for. It does not provide free wi-fi as first said and is no service provider that any citizen can have access to. What it is for is extremely unclear and may well be part of the US presence in Colombo, negating the Lotus Tower presence of Chinese technology, if any.
What thus becomes important to the US is, they now have a political ally in a strategically important location in the IO, where it had no permanent foothold having lost all allies from Pakistan to Myanmar to the Philippines. With India’s resentment on US coming back to its region and China’s already established dominance, how this new foothold in SL could serve the US in keeping pace with China is a Trillion Yuan question. Given China’s ever increasing economic power, whether US could shift Sri Lanka’s economic allegiance away from China is also a Trillion Yuan question.
by Kusal Perera
(groundviews.org)
