Reset of India-Lanka ties in the cards

Adani Group to build container terminal in Colombo

In a stunning coincidence, on Monday, the Sri Lankan government issued a Letter of Intent to the Adani Ports and Special Economic Zones Ltd (APSEZ) to develop and operate the West Container Terminal in Colombo. 

To be sure, the Rajapaksa government took a calculated risk. If Delhi were in Colombo’s shoes, it would have probably waited for another week to make up its mind before formalising the audacious decision to invite a big Indian presence — for a couple of generations to come — right at the epicentre of the Sri Lankan dream to be “another Singapore”. 

For, in another week, Colombo would know which way the Indians actually voted in Geneva when the crunch time came on the US-sponsored resolution at the UNHRC regarding the alleged war crimes during the last brutally violent phase of the struggle to vanquish the LTTE. 

In effect, Colombo has drawn Delhi into a ring of long-term engagement which will be difficult not only for Modi government but any future government to shake off easily. The Indian High Commissioner is reportedly touring the eastern and northern provinces of Sri Lanka to explain to the Tamil parties what is on the anvil in Geneva. 

What a brilliant geopolitical “outsourcing”! Simply put, Colombo expects that Delhi would discourage Washington from undermining the stability of the Rajapaksa Govt by threatening to dispatch the island nation’s president to the Hague to meet with the same tragic fate as Slobodan Milošević, the last president of the former Yugoslavia (before it was carved up by NATO like a turkey on Thanksgiving Day.)

The WCT project envisages that the APSEZ will partner with John Keells Holdings PLC, Sri Lanka’s largest diversified conglomerate, and with the Sri Lanka Ports Authority as a part of the consortium with 51% majority shareholding. It will be developed on a build, operate and transfer basis for a period of 35 years as a public-private partnership. 

The WCT will have a quay length of 1,400 meters and alongside depth of 20 meters, thereby making it a prime transhipment cargo destination to handle Ultra Large Container Carriers. The project cost is estimated at $750 million as of now, which may go up. The WCT becomes, perhaps, the single biggest economic project ever executed by an Indian company in the country’s immediate neighbourhood. 

Indeed, the huge significance of the WCT for the region’s economy cannot be minimised. An APSEZ statement highlighted that the project is expected to boost WCT’s container handling capacity and further consolidate Sri Lanka’s locational advantage as one of the world’s top strategic nodes along the busiest global transhipment route. The Colombo port is already the most preferred regional hub for transhipment of Indian containers and mainline ship operators with 45% of Colombo’s transhipment volumes either originating from or destined to an Adani port terminal in India. 

Simply put, Sri Lankan government is intertwining its economic prosperity with India’s massive market in an inseparable way. This takes the breath away, considering that it was only 5 years ago that Delhi allegedly got messed up with an Anglo-American project to overthrow the established government in Colombo, which was, ironically, headed by the same leadership as today. 

Interestingly, India had teamed up with its Quad partner Japan originally to bid (unsuccessfully) for the East Container Terminal project in Colombo Port. There was much suppressed fury when the Sri Lankan government spurned the offer. The Indian strategic analysts thereupon went overboard with the stupid hypothesis that Colombo buckled under “Chinese pressure”. 

But now, the WCT, a much bigger BOT project, has been offered to India on a platter with no strings attached. Colombo seems to prefer the Indians to shake off their Quad ally and undertake the WCT  on own steam. India is de facto becoming a stakeholder in the political stability of Sri Lanka. The bitter-sweet Lesson of 2015 is that an easier, cost-effective, risk-free, predictable and durable outcome is possible to be secured with a a pragmatic outlook and strategic patience.

No one in Delhi talks anymore about the “China factor”. The paradox is that the WCT project is going to be adjacent to the massive Colombo Port project that Chinese companies are funding and executing currently. Yet, apparently, there is no heartburn in Beijing either that Adani Group is moving in as next-door neighbour to China’s state- run China Merchants Port Holdings Company Ltd. in India’s backyard.

Arguably, Beijing knew about the WCT project, which has been under discussion for a while. But in its ingenuity and wisdom, Beijing assessed that it is just as well if India’s paranoia about Chinese presence in Sri Lanka is set at rest.

The WCT saga is unfolding just ten days before Prime Minister Modi’s visit to Bangladesh. Bangladesh is another example where it emerges that India doesn’t need to carry a Quad visiting card to build partnership. The Sri Lankan experience nonetheless has great relevance to Bangladesh.

According to a new World Bank report titled Connecting to Thrive : Challenges and Opportunities of Transport Integration in Eastern South Asia, seamless transport connectivity between India and Bangladesh has the potential to increase national income by as much as 17% in Bangladesh and 8% in India. The report says, inter alia, that a 297% increase in Bangladesh’s exports to India and a 172% increase in India’s exports to Bangladesh could be within reach if only transport connectivity improves between the two countries and both neighbours were to sign a Free Trade Agreement.

From the perspective of diplomacy and foreign policy, the bottom line is that Indian strategic community should remain self-assured that the political elites in the SAARC capitals surrounding India are not only nobody’s puppets but have always regarded Delhi as their most important partner. That, in turn, puts the onus on India to act with maturity and a sense of responsibility and decorum. 

With such a comfort level only can India eschew its paranoia about Chinese presence behind every South Asian bush or coconut tree and instead focus single-mindedly on the pursuit of its business interests optimally in the regional capitals. Ideally, leave it to the Adani Group to reset the India-Sri Lanka relationship and put it on a realistic, pragmatic footing.

As for the strategists and think tankers in Delhi, do not suspend rational thinking after reading the garbage disseminated by the US propaganda outfits from time to time expanding on the CIA’s decade-old hypothesis about a Chinese “string of pearls” around India’s delicate neck.