Sri Lanka’s creditors pull out all the stops

Dhe fires at the current focal point of South Asia continue to blaze: Despite the Rajapaksa clan’s farewell to government power in Sri Lanka, which may only be temporary, the country has not yet found its way into a stable future. The island state collapsed under its debt burden in the spring, more and more people are starving, and the government was deposed.

Christopher Hein

Business correspondent for South Asia/Pacific based in Singapore.

The inflation rate is officially 83 percent. Medicines and many staple foods can only be obtained on the black market for exorbitant prices. Representatives from the International Monetary Fund (IMF) are negotiating the rescue of the strategically important island off the southern tip of India. The struggle for power on the resort island continues while the people suffer. And the great powers China and India are attempting, in some surprising ways, to secure or expand their influence.

The largest creditor China

Many would have expected Beijing to help the suffering island and provide billions of dollars in emergency aid. After all, China is the largest bilateral donor with a share of almost 20 percent of its debt mountain of Sri Lanka, has pumped billions of dollars into the construction of infrastructure there and, after repayment difficulties, has taken over part of it from state-owned companies – such as the strategically important port of Hambantota, which it has leased for 99 years. So far that has not happened.

But Beijing is trying to see if its long arm can still reach Colombo: the Chinese naval research ship Yuan Wang 5 moored in Hambantota for six days against the express wish of the American and Indian governments. As a concession to Delhi, it had to wait a day at sea because that was India’s national holiday. The government under Narendra Modi if the worldwide headlines had been lost, the white colossus with its four huge antenna trees would have arrived in Sri Lanka on the same day.

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