Why Sri Lanka’s Election Matters for China

china sri lanka 2Of all the world leaders watching the outcome of Sri Lanka’s presidential elections tomorrow, Chinese President Xi Jinping has the most at stake.

China has poured money into the island nation off India’s southern coastline over the past decade to become its largest investor, top government lender and second-biggest trading partner. Chinese submarines docked twice in Colombo last year, triggering protests from India.

President Mahinda Rajapaksa, who has shifted Sri Lanka toward China since taking power in 2005, finds himself in a precarious position. Although few reliable opinion polls are available, risk assessor Eurasia Group says he’ll probably be unseated by top opponent Maithripala Sirisena, who has promised a more balanced foreign policy.

“China would be happier if Rajapaksa came back,” said W.P.S. Sidhu, a senior foreign policy fellow at the Brookings Institution in India who researches geopolitics. “Sirisena would likely backtrack more, especially on the military front, in engaging China. I don’t think he’d pull the plug entirely, but you’d probably see a more tempered approach.”

Rajapaksa, 69, will be running for an unprecedented third term after calling the vote two years ahead of schedule. His popularity has suffered amid allegations that his family is amassing too much power even as economic growth has surged since the end of Sri Lanka’s 26-year civil war in 2009.

Sirisena, 63, defected from Rajapaksa’s camp in November to head an opposition alliance seeking to oust him. In his manifesto, he pledged to establish “equal relations” with India, China, Pakistan and Japan while lambasting projects built with credit from foreign countries, a veiled swipe at China.

‘Become Slaves’

“The land that the White Man took over by means of military strength is now being obtained by foreigners by paying ransom to a handful of persons,” Sirisena said in the manifesto. “If this trend continues for another six years our country would become a colony and we would become slaves.”

Chinese government lending to Sri Lanka increased 50-fold over the past decade to $490 million in 2012, compared with $211 million combined from the U.S. as well as allied governments and lending agencies. China accounted for 20.7 percent of the island’s foreign loans and grants in 2013, up from 2.8 percent in 2003, according to Sri Lanka’s finance ministry.

Chinese-funded projects include a $1.4 billion plan to build a city roughly the size of Monaco on reclaimed land in Colombo port, Sri Lanka’s biggest foreign-funded investment on record. Xi, who visited Sri Lanka in September, has pledged $40 billion to fund infrastructure for his so-called Silk Road project, which includes a maritime route encompassing the island.

Best Friend

“Rajapaksa has made it clear in public rhetoric and propaganda that China is our best friend,” said Paikiasothy Saravanamuttu, executive director of the Colombo-based Centre for Policy Alternatives. “There’s a perception that the Chinese are underpinning misgovernance and corruption in the regime.”

Sri Lanka sits 40 miles from India’s coastline along a busy shipping route in which tankers carry oil from the Middle East to Asia. The island’s diplomats are aware of its strategic importance, with a former envoy to Cuba saying in 2010 that Sri Lanka’s geographic position “makes it a natural aircraft carrier” and represented “a major attraction” to China.

“Some in Beijing may think it’s time for China to play a more active military role in the Indian Ocean region,” said David Brewster, a visiting fellow at Australian National University’s Strategic and Defence Studies Centre. More Chinese naval visits and investment projects are likely if Rajapaksa wins another term, he said.

‘Enormous Concerns’

Sri Lanka told officials in New Delhi that the Chinese submarines visited Colombo twice since August for “replenishment purposes” and that the island nation wouldn’t act against India’s security interests, V.K. Singh, deputy minister for external affairs, said in a written response to India’s parliament in November.

Tighter China ties have helped Rajapaksa fight diplomatic pressure to investigate his government’s defeat in 2009 of a Tamil minority uprising that ended a conflict that killed as many as 40,000 people. In March, China voted against a U.S.- sponsored United Nations Human Rights Council resolution to investigate allegations of war crimes. It passed with 23 in favor, 12 opposed and 12 abstentions, including from India.

Sirisena didn’t directly address the human rights investigation in his manifesto, only saying that he’d “build a new image in Sri Lanka in the world” through disseminating Buddhist principles such as non-violence and compassion.

China Investment

“It’s not a normal election,” being the first since term limits were removed in 2010, said Nishan de Mel, executive director of Colombo-based Verite Research Pvt. “The possibility of the incumbent being ousted makes it a little more tense.”

Sirisena’s opposition alliance is buoyed by the United National Party led by two-time prime minister Ranil Wickremesinghe. During his time in power, he encouraged privatizations, trimmed state enterprises and improved relations with western nations including the U.S. and Norway, which helped broker a cease-fire agreement with the Tamil Tiger rebels.

Still, it remains to be seen whether Sirisena’s campaign rhetoric against China will be matched with concrete steps if he takes power. Until two months ago, he had regularly praised China’s role in Sri Lanka’s economic development while serving in Rajapaksa’s cabinet.

“I fail to see any logic in stopping Chinese investment at the door,” said Li Li, a researcher who studies South Asia at the China Institutes of Contemporary International Relations in Beijing. “Whoever takes the leadership role in Sri Lanka will not miss the chance to catch the express train of China’s development.” (Bloomberg Businessweek)

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