To Stave Off China's Influence, U.S. Extends Military Finance to Sri Lanka

The Trump administration has announced it was granting Sri Lanka $39 million to boost maritime security. "We look forward to discussing with the government of Sri Lanka how this contribution can support our Bay of Bengal initiative and Sri Lanka's humanitarian assistance and disaster response priorities," the U.S. embassy in Colombo said.

The U.S. embassy said the State Department will provide funds as "foreign military financing" subject to approval by the U.S. Congress. On 7 August, U.S.  Department of State Spokesperson Heather Nauert commented, “The Secretary travelled to Indonesia, Singapore, and Malaysia last week for bilateral and multilateral meetings to advance the security of the United States and the region, and to underscore our support for a rules-based order, reaffirm our commitment to friends and allies, and demonstrate the robust engagement in the Indo-Pacific.

In Singapore, the Secretary outlined the security pillar of the administration’s Indo-Pacific strategy and announced nearly $300 million in additional funding intended for South and Southeast Asia.

But the Trump Administration’s extension of aid is paltry in comparison to Beijing’s continued investment in the island nation. As recently as July, China extended a $1 billion loan to Colombo. The loan was reportedly granted at 5.25 per cent interest rate with a three year grace period by the China Development Bank.

China is also ensuring its ties with Sri Lanka through military training and the country gifted a navy frigate to Colombo around the time of the clearance of the $1 billion loan.

Sri Lanka’s Central bank Governor Indrajit Coomaraswamy has acknowledged Beijing’s deep influence in the country’s economy and explained it as, “Mainly due to the fact that China sees Lanka as "a strategic partner as far as the (Belt and Road) initiative is concerned, given its location."

As of 2017, Sri Lanka’s total debt stood at $64bn. About 95% of all government revenues go towards debt repayment.

The U.S. government’s package for Sri Lanka is part of the Trump administration's initiative to ensure a "free, open, and rules-based order in the Indo-Pacific region" but this gesture seems too little too late.

Sri Lanka has already handed over its Hambantota port to China for a lease period of 99 years. Hambantota was built by a Chinese company and funded by Chinese loans. But now Sri Lanka is struggling to repay that money, and so has signed an agreement to give a Chinese firm a stake in the port as a way of paying down some of that debt.

(The above story first appeared on LatestLY on Aug 14, 2018 06:25 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).