Docking of Chinese vessel at Hambantota is disappointing, but it should spur more strategic thinking in Delhi

In Sri Lanka — as in much of Asia and beyond — Beijing has great leverage thanks to its financial clout. Facing arguably its worst economic crisis, Sri Lanka needs China more than ever. The country needs an IMF loan to see it through these times and such a deal is only possible if its major creditors agree to a debt restructuring programme. China has thus far been reluctant to take a haircut on its loans. Beijing has also invested heavily in strategic infrastructure — like at Hambantota — and is now calling in its chips. However, it would be a mistake to see the Yuan Wang 5 episode as a serious setback, or review India’s assistance to Sri Lanka during its time of crisis.

India’s assistance to Sri Lanka — it has emerged as the top lender, extending $376.9 million in the first four months of this year — has grown during this crisis. Yet, in the medium term, Delhi cannot match Beijing’s economic clout. One way to help the people of Sri Lanka as well as provide its government with more options could be to partner with like-minded countries — many of whom are also major creditors of Sri Lanka — to try and reorient Colombo’s foreign and economic policies. The Quad countries, for example, could work together in this regard. Japan, too, has lent significant amounts to Sri Lanka and, given the country’s need for an IMF loan, the path out of this crisis will run through the US. Strategically, too, it is in the interest of countries that back a rules-based order in the Indian Ocean to try and wean Sri Lanka from China’s embrace. This will, of course, require concerted effort. The docking of the Yuan Wang 5, then, is not the end of diplomatic jockeying in Sri Lanka, it only inaugurates a new chapter.