As a tiny island nation at the tip of a large subcontinent, Sri Lanka has long struggled to counterbalance its powerful northern neighbor, India. This often means bringing in powers from outside of the region, so it can fulfill its economic and security needs without having to bend to India's will. Fortunately for Sri Lanka, the country has an advantage that other Indian peripheral states, such as Nepal, do not: an enticing position along lucrative and strategic Indian Ocean maritime routes. Thus, it makes sense that recent geopolitical tussles over Sri Lanka between rivals India and China have focused on the construction of ports along these valued routes.
India's concerns on this matter are partly warranted. China is a budding regional power in the process of translating its economic heft into military might. And while Beijing's focus remains on the South China Sea for now, the Indian Ocean is very much in its sights as well — as evidenced by the recent deployment of troops to Djibouti for China's first permanent overseas military mission. India has an imperative to secure its periphery, and that means the seas as well as nearby states such as Sri Lanka.
When it comes to this periphery, one particular concern for New Delhi is Sri Lanka's Hambantota deep sea port project. This new port and others at Gwadar in Pakistan, Chittagong in Bangladesh and Djibouti constitute the Indian Ocean leg of China's 21st Century Maritime Silk Road. And ever since construction began in Hambantota in 2008, China has taken on an increasingly prominent role in the project, which includes not only the $1.4 billion port but also an airport, numerous highways and an as-yet-unbuilt 15,000-acre industrial zone. Initially, Sri Lanka intended to build the project with massive Chinese loans and operate the port on its own, but it has confronted the difficulty of making the port profitable. Thus, in late 2016, Colombo announced a potential deal to trade an 85 percent stake in the project, which would include a 99-year lease on land there, to China Merchants Port Holdings in exchange for $1.1 billion in debt relief. Sri Lanka is $8 billion in debt to China, and over one-third of its government revenue goes to servicing that debt.
India's worry over this arrangement is that Hambantota and China's other port projects in Sri Lanka could serve as future bases for Chinese military vessels, and New Delhi has publicly expressed this concern. There have also been domestic protests against the Hambantota port, such as those in January 2017, which involved Sri Lankan activists calling the project a potential "Chinese colony." As with other formerly colonized countries, Sri Lankan public sentiment against interference from foreign powers has long been a hallmark of domestic politics.
In May, Indian Prime Minister Narendra Modi visited Sri Lanka in an attempt to ease some concerns, working out a compromise on Hambantota meant to mollify India and domestic protesters while maintaining Chinese financial support. The unreleased agreement, which still needs to be approved by Sri Lanka's Parliament, would divide the management of Hambantota into a business side and a security side. China Merchants Port Holdings would retain its 85 percent share of the entity overseeing the daily operations of the port, and this share would decrease to 65 percent over a decade. Another entity would handle all security functions, with a 50.7 percent controlling share held by the state-owned Sri Lanka Port Authority and the remainder held by China. The agreement also reportedly states that foreign military vessels will not dock at the port. This measure is meant to comfort India, which condemned the docking of a Chinese submarine at Colombo in 2014. (In May 2017, Colombo reportedly rejected a similar submarine docking.) This deal may quell some of India's anxieties about China's influence in Sri Lanka for now. But it does not preclude a future security or military role for Beijing in the country. And in terms of domestic unrest, the reported details of the agreement do not limit China's 99-year lease of land — a major concern for local activists.
In some ways, Indian pressure on Sri Lanka is convenient; it gives the tiny nation leverage to negotiate with China, just as Chinese interest gave Sri Lanka leverage to negotiate with India. And the country's strategic deep harbor at Trincomalee in the east has already offered one such influencing opportunity. In the month leading up to Modi's May visit, India and Sri Lanka hammered out a series of tentative deals for increased Indian involvement and investment in energy, container and industrial infrastructure at Trincomalee. As with the Chinese deal, these plans have faced headwinds. A move to hand over 84 oil storage tanks to the Indian Oil Corp. brought a backlash from Ceylon Petroleum Corp. workers, who charged that the deal would grant the Indian company undue influence over Sri Lankan fuel prices. The deal is now suspended until Aug. 1, after a one-day strike broke out July 24 over the government's refusal to formally rescind the offer. Despite its short duration, the strike disrupted nationwide fuel supplies, prompting Colombo to send military reinforcements to the Trincomalee port.
Domestic tensions over India's involvement in Trincomalee will only continue. And ultimately, the revised deal with China over Hambantota will not end competition over Sri Lanka and its ports. After the tumultuous conclusion of the Sri Lankan civil war in 2009, the country was left internationally isolated and at odds with India. New Delhi notably did not offer Colombo substantial assistance in defeating the Tamil Tigers, and Sri Lanka instead relied on Chinese, Pakistani and Iranian involvement. In the wake of these events, restoring a balance between patronage from India and other nations does not mean Colombo will be making a full tilt toward New Delhi. Moreover, India simply does not have the economic heft or state control of businesses needed to assist Sri Lanka in the way that China does.
On a broader scale, the regional rivalry between China and India grows ever stronger, as the two nations push for dominance over their shared border and India's various neighbors. But direct military confrontation between Beijing and New Delhi is extremely unlikely, and the tensions will instead play out in nearby countries. Bhutan, for example, has already been caught up in this rivalry with the ongoing Doklam Plateau crisis. East Africa, too, has become the target of an early stage Indo-Japanese attempt to counterbalance China's infrastructure initiatives. For its part, Sri Lanka appears to have used its political savvy to square the circle for now, but the country will no doubt remain involved in the affairs of India and China in the future. And while being sandwiched between two great powers can be a precarious position for a small nation like Sri Lanka, the country has proved itself adept at playing these powers off one another for its own benefit.