A Indian Navy officer in Colombo, Sri Lanka April,2018
Dinuka Liyanawatte/REUTERS

After 50 days of political turmoil, a measure of normality is returning to Sri Lanka. A Supreme Court ruling on December 14 declared President Maithripala Sirisena’s dissolution of Parliament illegal, forcing the president to backtrack and reappoint the country’s erstwhile prime minister. The crisis had erupted in late October, when Sirisena dismissed his prime minister, Ranil Wickremesinghe, and replaced him with Mahinda Rajapaksa, a member of the opposition and former president. The president would later explain his sudden move by alleging that Wickremesinghe had plotted to assassinate him and was undermining national interests.

But Wickremesinghe decided to remain in his official residence and refused to step down. His coalition in Parliament accused Sirisena of executing a coup. In response, the president moved to dissolve the Parliament and called for early elections. Chaos, at times even violence, engulfed the legislature. Barely ten years after the end of a brutal, decades-long civil war, Sri Lanka was once again facing the threat of conflict.

Last week’s resolution broke the stalemate, but the country’s factious politics will likely continue to destabilize its government until the next presidential and parliamentary elections, scheduled for 2020.

In the meantime, the crisis in Sri Lanka has thrown into relief the competition between India, the region’s traditional heavyweight, and China, the surging power to its north. India prefers Wickremesinghe, while China has a relationship of long standing with Rajapaksa. But the manner in which the two powers expressed their preferences made clear that New Delhi faces a reckoning: having once intervened at will in Sri Lanka’s affairs, India is responding now with uncharacteristic caution.

This circumspection shone through when the crisis first flared up in October. Two days after Wickremesinghe’s sacking, the Indian government issued a perfunctory statement expressing “hope that democratic values and the constitutional process will be respected.” China’s ambassador in Colombo, by contrast, had already met with Rajapaksa and hailed him as “the new prime minister.” Beijing’s sympathy for Sirisena’s chosen premier was unsurprising: as president between 2005 and 2015, Rajapaksa made a record seven trips to Beijing and went out of his way to deepen economic and security ties with China. During his brief, abortive stint as the new prime minister over the last few weeks, Rajapaksa signed on to two infrastructure deals with Beijing.

Leaders in New Delhi were therefore relieved to hear of Wickremesinghe’s reinstatement this weekend, declaring that his return reflected “the resilience of Sri Lankan democracy.” China initially greeted the announcement with conspicuous silence. Reports conflict as to how much the two powers had a hand in breaking the Sri Lankan stalemate and whether they tried to prop up their respective favorites. But one thing is clear: India’s diplomatic restraint over the last weeks suggests the realization that it is no longer the predominant power in Sri Lanka and the region. China is now a permanent resident of South Asia, and India is learning to adapt, however reluctantly.

India's Prime Minister Narendra Modi AND Sri Lankan President Maithripala Sirisena in New Delhi, March 2018 
Adnan Abidi/REUTERS

A NEW PECKING ORDER

China has upended South Asia’s traditional balance of power by flexing economic muscle in a region that India has dominated since the nineteenth century. Countries that until recently had little more than formal diplomatic relations with the Middle Kingdom now look to Beijing rather than to New Delhi for crucial investments and economic assistance.

New Delhi has not easily adapted to this loss of status. Throughout the Cold War, South Asia offered India a protective cocoon, insulating it from the bipolar U.S.-Soviet rivalry. With the exception of Pakistan, India’s smaller neighbors fell almost exclusively under its influence, from Nepal and Bhutan in the north to Bangladesh, Sri Lanka, and the Maldives in the south.

New Delhi did not shrink from interfering in the domestic affairs of these neighbors, often with a free hand. In 1988, India intervened in the Sri Lankan civil war, sending 50,000 troops to the island, then helped the Maldives government survive a coup attempt with a swift military action. The following year, the king of Nepal reached out to China for military assistance. India punished him with a crippling trade blockade, which helped spur a pro-democracy movement that eventually forced the absolutist monarch to embrace political reforms.

Historically, New Delhi often intervened in the domestic affairs of its neighbors with a free hand.

Since the 1990s, however, India’s grip on the region has weakened, in part because its neighbors increasingly turn to China as an alternative source of development support. All of India’s immediate neighbors except Pakistan and Bhutan have signed on to China’s Belt and Road Initiative, which New Delhi opposes. Beijing can offer more attractive financial packages, including credits and loans, than New Delhi, and it can implement them faster and more reliably. Chinese President Xi Jinping has wooed the region diplomatically by making presidential visits to Bangladesh and Sri Lanka for the first time in 30 years. Recent sightings of Chinese submarines in the Indian Ocean also set off alarm bells in New Delhi.  

In Sri Lanka, relations with China flourished under former President Rajapaksa, who signed on to dozens of economic and military deals. Partly as a result, China has overtaken India as Sri Lanka’s top export market. It is now the island nation’s foremost foreign investor and has developed Sri Lanka’s first exclusive economic zone.

Yet Beijing’s economic embrace eventually proved suffocating. Because of the bad terms and exorbitant interest rates of several Chinese loans, Sri Lanka’s public debt has skyrocketed in recent years, costing Colombo more than a third of its tax revenue. Desperate to alleviate this burden, the country leased a port to Beijing for the next 99 years. This arrangement has aggravated Indian concerns about China’s rising security profile in the Indian Ocean.

Though not always vocal about it, India—the world’s largest democracy—has long promoted democratization in its neighborhood. Since the 1980s, the Indian Parliament has trained thousands of foreign civil servants, including hundreds from Myanmar and Afghanistan in recent years. Its programs now provide support for democratic elections across Asia and Africa. When New Delhi has deemed circumstances to be favorable, it has sometimes also coerced political liberalization or conflict resolution, as it did in Sri Lanka during the late 1980s. Earlier this year, India played a crucial role in ending the increasingly authoritarian rule of President Abdulla Yameen in the Maldives.

Faced with a rising China, however, India is wary of exerting too much pressure on its neighbors and alienating them. The country’s democratic commitments, officials in New Delhi argue, should not derail practical efforts to retain some influence over its neighborhood. This explains India’s cautious handling of the Sri Lankan crisis: although it favors Wickremesinghe, India is well aware that his rival, Rajapaksa, remains widely popular and may be voted back into office soon. Rather than shun him, Indian leaders will likely continue to court him, as they did before the attempted coup.

The same pragmatism drives India’s approach to national elections in Bangladesh later this month. There, New Delhi hopes for continuity under incumbent Prime Minister Sheikh Hasina, despite her drift toward authoritarianism. Since 2014, Hasina has curtailed freedom of expression, cracked down on student protests, and allegedly interfered with the courts. Her actions have raised eyebrows in the West, but India has chosen to overlook them and has signed one bilateral cooperation agreement after another. As long as Hasina stays in control and safeguards Indian economic and security interests, New Delhi is unlikely to raise serious objections over the erosion of Bangladeshi democracy.

The Colombo Port City construction site, which is backed by Chinese, in Sri Lanka, November 2018
Dinuka Liyanawatte/REUTERS

INTERVENTION AND INTERDEPENDENCE

Beijing’s growing assertiveness in the region has woken India from its hegemonic slumber. New Delhi can no longer take its predominance for granted and must take the initiative if it is to remain a regional power. Prime Minister Narendra Modi seems well aware of this imperative. His “neighborhood first” policy has accorded the country’s periphery the priority it last enjoyed back in the 1950s. After taking charge, Modi made his first trip abroad to Bhutan and was the first Indian prime minister to pay a proper bilateral visit to Nepal in 20 years—and to Sri Lanka in almost 40. Even so, the Indian government has failed to support important regional organizations, which remain either inoperative or understaffed.

India cannot thwart Chinese influence simply by forbidding its neighbors to engage with Beijing. Instead, New Delhi has to deliver more, better, and faster economic and military assistance of its own. Members of Modi’s government are beginning to recognize that New Delhi should focus on connecting the region internally and with other peripheral regions. Owing to its location at the heart of the Indo-Pacific, Sri Lanka has emerged as a cornerstone of India’s “neighborhood first” policy, which includes major infrastructure investments, such as a series of new ports, rail links, and airports, to enhance India’s connectivity plans for the Indian Ocean region.  

China has been quicker to recognize the importance of close economic ties.

China has been quicker to recognize the importance of such economic ties. Decades of Indian protectionism have made South Asia into one of the world’s least economically integrated regions. New Delhi must reverse that trend. After all, to speak of India as a regional power makes little sense when the country’s land-based trade with neighboring Myanmar amounts to little more than its total trade with far-off Nicaragua. After India recently hiked up tariffs on Bangladeshi textile imports, the 2000s vision of a South Asian Free Trade Area now seems more distant than ever. And just earlier this year, New Delhi reportedly warned Nepal that it would refuse to buy any electricity generated by Chinese dams planned in the neighboring country. Such demands force choices on the region that India can ill afford.

The same is true in politics. The rise of China has made New Delhi’s habit of using “pro-India” and “anti-India” labels to support or undermine factions in neighboring countries particularly counterproductive. In the case of Sri Lanka, for example, the current crisis may be one of India’s own making, as in 2015 New Delhi reportedly midwifed the Sirisena-Wickremesinghe alliance to successfully oust the “pro-China” Rajapaksa. In the Maldives, it is only a question of time before the new “pro-India” leadership cozies up again to China. And in 2015, an Indian economic blockade to force Nepal to enshrine more ethnic minority rights in its new constitution backfired almost immediately, provoking popular anger against New Delhi and paving the way for a communist coalition government that has moved closer to China. New Delhi’s cautious response to turmoil in Sri Lanka—its refusal to clearly position itself vis-à-vis Rajapaksa—suggests that it may have tried to avoid a similar outcome there.

Indian hegemony is now a dream at best, so rather than playing defense and trying to keep the whole field for itself, New Delhi must appreciate the advantages of playing offense as the captain in a team of like-minded players. Some change is already under way: Japan, the United States, Australia, and the European Union have all started to collaborate with India on development projects in the region. India is also partnering with the Asian Development Bank on projects worth almost $2.5 billion to improve land, sea, and air links between its eastern coast and Southeast Asia.

To regain some glimmer of its past predominance in South Asia, India will have to continue adapting to a competitive environment where leverage over its neighbors stems from economic interdependence, not political and military interventionism. For New Delhi, meeting this task may be as much a matter of domestic politics as it is a question of statecraft, since important constituencies at home have yet to shed their protectionist impulses. The outcome, however, will determine whether India can offer a credible counterweight to Chinese influence in South Asia or whether its erstwhile power will keep eroding. 

  • CONSTANTINO XAVIER is a Research Fellow at Brookings India, in New Delhi. He studies regional security, connectivity, and democracy in South Asia and is writing a book on India’s regional strategy since the 1950s.
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