Wednesday, September 28, 2022

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India and China help SL to tackle the crisis without much US aid.

As Sri Lanka grapples with economic and political turmoil with some help from India and China, the lack of US presence stands out, but analysts say this may be due to Washington’s strategic convergence with New Delhi, even if it could do more to support Colombo.

The US is likely to take on a stronger role in Sri Lanka’s economy only after Colombo reaches a debt restructuring agreement with the International Monetary Fund (IMF), the experts added.

India has promised to remain supportive of President Ranil Wickremesinghe’s new administration as Sri Lanka struggles with a shortage of food, fuel and medicines.

New Delhi has provided about US$1.5 billion to Colombo for critical imports, and another US$3.8 billion in the form of currency swaps and credit lines. China rejected Sri Lanka’s debt restructuring request, but provided about US$75 million in humanitarian aid and promised to “play a positive role” in Colombo’s talks with the IMF.

The US assistance was more modest, with the US Agency for International Development (USAid) announcing US$11.75 million in economic crisis aid in June and President Joe Biden promising another US$20 million to boost food security.

Secretary of State Antony Blinken last month called on Sri Lanka’s leaders to quickly find long-term solutions to the crisis. USAid administrator Samantha Power last week hailed India’s swift move to assist Colombo, but slammed China for offering “opaque loan deals at higher interest rates than other lenders”.

Bankrupt Sri Lanka has suspended repayment on its US$51 billion foreign loans. It is also preparing a debt restructuring plan, a condition for a rescue package it is negotiating with the IMF. China, which accounts for 10 per cent of Sri Lanka’s debt, has resisted offering a debt cut.

In response to Power’s remarks, China’s foreign ministry spokesman Zhao Lijian said last Thursday that tariff barriers imposed by the US had aggravated the economic and financial situation of Sri Lanka and other developing countries.

The US should ask itself what it was doing for the sustainable development of nations like Sri Lanka, and “not use every opportunity to blame, smear other countries and engage in geopolitical games without any bottom line”, Zhao said.

Anu Anwar, a fellow at Harvard University’s Faculty of Arts and Sciences, said since the US supported India’s regional leadership, Delhi’s ongoing efforts in resolving Sri Lanka’s crisis “complement US interests

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