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Global Insider: India-Sri Lanka Relations
Kari Lipschutz
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27 Jul 2010
India's chief of naval staff called for increased bilateral cooperation with Sri Lanka during a visit to the country late last month. In an e-mail interview, Eurasia Group's Asia analyst, Maria Kuusisto, discusses evolving relations between India and Sri Lanka.
WPR: What is the historical context of India-Sri Lanka relations?
Maria Kuusisto: India-Sri Lanka relations have been marked by both tension and cooperation. The relationship has been historically driven by the shared Tamil ethnic community: India has a Tamil community of 60 million and Sri Lanka has a Tamil community of three million. When the Tamil ethnic insurgency in Sri Lanka arose in the 1980s, it spread to southern India. Anti-Tamil violence in Colombo in 1983 thus prompted New Delhi to mediate a peace agreement and send a peacekeeping mission to enforce it. The accord gradually broke down, but during that time, the Indian peacekeeping force became part of the conflict, triggering calls for India to disengage. The Indian intervention -- which culminated in the 1991 assassination of former Indian Prime Minister Rajiv Gandhi by suspected Tamil militants -- dampened New Delhi's interest in the internal matters of Sri Lanka and furthermore limited the scope of their cooperation.
WPR: What is the current status of bilateral relations, including priorities, opportunities and challenges?
Kuusisto: Since the 1980s, the India-Sri Lanka relationship has gradually improved, driven by the 1998 Free Trade Agreement (FTA) between the two countries. The agreement brought a rapid expansion in India-Sri Lanka trade, which totaled $2.02 billion in 2009, and particularly benefitted the Sri Lankan economy. Prior to the agreement, India was a key source of Sri Lanka's imports, accounting for 8.5 percent of total imports in 1999, but only fourteenth on the list of export destinations. India is now fourth in the list of export destinations (behind the U.S., U.K. and Italy), accounting for 5 percent of all Sri Lankan exports. India is also now the fourth-largest investor in Sri Lanka (after Singapore, the U.K., and Australia). India and Sri Lanka are in the process of negotiating a new, more extensive Comprehensive Economic Partnership Agreement (CEPA), which will abolish the remaining non-tariff barriers.
WPR: How does this relationship fit into the larger context of India-China rivalry?
Kuusisto: Indian threat perceptions have grown as China has become more active in South Asia. Sri Lanka is no exception. Chinese investment has expanded rapidly, including the strategically situated commercial deep-sea port in Hambantota -- which is President Mahinda Rajapakse's home constituency -- and the two-phase coal power plant in Norochcholai. During the civil war in Sri Lanka, Beijing provided unconditional diplomatic, economic and military support to the Sri Lankan government, winning significant goodwill in Colombo. And China is now offering to provide financing and technical expertise to the Sri Lankan government, which is pursuing an aggressive, multi-million dollar reconstruction program. New Delhi sees this Chinese maneuvering as an incursion into its historic sphere of influence, and is consequently trying to outbid the Chinese for strategically important infrastructure projects.