By Jehan Perera –

Jehan Perera

The Port of Colombo is the largest and busiest transshipment port in the Indian Ocean. It has been operating at more than 90 percent utilization since 2021, signaling its need for additional capacity. The US government investment of USD 553 million in Colombo port has come as a surprise. There were no public indications of this massive investment in one of the country’s most strategic assets. The investment will be in the Western Terminal of Colombo port which was offered to the Adani Group in India after the joint Japan-India bid to obtain control over the long established Eastern Terminal was blocked by trade union protests. The trade unions took the position that they did not wish the workers to be put under new management and to sell a national asset to foreigners. But the hand of geopolitics was believed to be behind the protests as China too controls a major terminal in Colombo port.

The new terminal it is said will cater to growing economies in the Bay of Bengal, taking advantage of Sri Lanka’s prime position on major shipping routes and its proximity to these expanding markets. The US International Development Finance Corporation (DFC) announced it had committed more than half a billion dollars to support the development of a deep water shipping container terminal in the Port of Colombo, Sri Lanka, that will provide critical infrastructure for the South Asian region. DFC CEO Scott Nathan said “Sri Lanka is one of the world’s key transit hubs, with half of all container ships transiting through its waters. DFC’s commitment of $553 million in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region.” 

The investment in Colombo port by the US International Development Finance Corporation, the existence of which was not well known in Sri Lanka, will provide a boost to Sri Lanka’s economy at a time it is floundering and continuing to sink in negative growth. However, it is unlikely to compensate for the near total absence of major direct foreign investment in the country for the past few years, and especially since the economic collapse. it is noteworthy that this foreign direct investment in Colombo port is by a foreign government and not by a private sector company. US companies such as Apple and Microsoft are investing billions in other parts of the developing world, but not in Sri Lanka. The political instability, bureaucratic obstacles and corruption in Sri Lanka continue to be a deterrence to private sector investment, with even Sri Lankan companies investing their resources in other countries. 

National Interests 

In 2009, shortly after the war ended a research team from the Committee on Foreign Relations of the US Senate visited Sri Lanka. They produced a report titled “Re-charting US Strategy after the war” which was also known as the Kerry-Lugar report in honour of the two US Senators who were leading the bipartisan committee. Unlike in Sri Lanka, where foreign policy is ad hoc and often left to the genius or otherwise of an individual or two, perhaps the president or minister, in more developed countries foreign policy is decided on a bipartisan basis. The report stated that “the US shares with the Indians and Chinese a common interest in securing maritime routes through the Indian Ocean…the US cannot afford to lose Sri Lanka…”  

On the other hand, the western approach to the Israel-Palestine conflict is indicative that their national interests trump democracy, human rights and good governance when it comes to other countries they deem to be not part of them. Lord Palmerston, British Prime Minister in the middle of the 19th century is quoted for having said in the House of Commons that “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.” It is important not to lose sight of the reality that countries have no permanent friends, they have only permanent interests. The same would hold true for Sri Lanka whose foreign policy needs to be developed with Sri Lanka’s national interests coming first. 

The roping in of Sri Lanka into the western orbit is taking place in a context in which a government with a questionable mandate has had to face unprecedented mass opposition and economic problems. The western countries are proponents of principles of democracy, human rights and good governance which are values that Sri Lanka needs to reinforce within itself and for which it needs external support in the face of government resistance. The western countries also provide the most lucrative markets for Sri Lanka’s exports. Those in the political opposition and civil society who are concerned about the possible derailing of the democratic process need to take this opportunity into consideration. They need to keep in mind that the overall principle of foreign policy ought to be freedom to have trade and investment relations with any country that adds value to the economy in Sri Lanka’s national interest. 

Prioritising Security 

There are no greater powers than the US, China and India in the Indian Ocean where Sri Lanka is like a minnow in their midst. Therefore, it is of the utmost importance that Sri Lanka should have a clear policy in dealing with them. Sri Lanka’s geopolitical location is clearly important to all three great powers which is why they have all invested in the country in different ways. In the recent past it was India that emerged as Sri Lanka’s largest benefactor, when it gave nearly USD 4 billion in emergency assistance to help the country tide over its economic crisis when it became internationally bankrupt and unable to obtain any new loans. Prior to that China was Sri Lanka’s benefactor providing money and armaments in the time of war and thereafter into infrastructure projects that were low yielding (with the acquiescence of ever corruptible leaders) and hastened the country into its current predicament.

The recent visit of a Chinese ship, which China calls a research ship and India calls a spy ship has put Sri Lanka into a compromised situation akin to being between a rock and hard place. Pragmatism dictates that India’s national security would need to be given due attention. This is an observation born out of the lesson of the past. In the 1980s, when Sri Lanka appeared to be taking off economically, and with the western countries backing it, India deemed Sri Lanka to be getting too close to the west. In particular, there were stories afloat of a US naval base in Trincomalee. The thirty-year internal war that followed, with the Tamil rebels being armed and trained in India, put an end to Sri Lanka’s best opportunity to join the Tiger economies of Southeast Asia—South Korea, Taiwan, Malaysia and Singapore.

As Sri Lanka’s neighbour India’s security is most affected by what happens in Sri Lanka and in its territorial waters. A country whose people number 1200 million will not permit their security and wellbeing to be put in jeopardy by a country of 22 million. It is therefore reasonable and sensible for Sri Lanka to give its closest neighbour’s national security concerns its priority attention in the conduct of foreign relations. The first priority of any country is to ensure its national security. It was for this reason that Sri Lanka went to China and Pakistan for economic assistance and armaments during the time of war regardless of India’s concerns. National security concerns, however, have to be shown to be reasonable and verifiable. Decisions regarding national security should involve a multi-partisan approach, including the opposition and civil society, to avoid reliance solely on the government leadership in power.