What Does Sri Lanka’s Hedging Behaviour Mean for India?

Ashmita Rana
19th September 2021

Picture Courtesy: Reuters

For a long time, there has been increasing acceptance of the need to move beyond the balancing-bandwagoning dichotomy when observing the behaviour of secondary states in response to rising powers. The concept of ‘hedging’ gained greater currency as a viable strategy for secondary states as it offered a better explanation for their behaviour amid great power competition. The concept of hedging has itself evolved in its meaning and scope over the years. Simply put, hedging is seen as an alignment choice, which involves the “signaling of ambiguity over the extent of shared security interests with great powers.” Thus, when a small state feels the effects of rivalry between two major powers, it can choose to hedge between the two as aligning exclusively with one power can be counterproductive. Though most scholarly literature has studied hedging with reference to the behaviour of East Asian states in the face of US-China rivalry, more recent works have focused on hedging in the context of India-China competition in South Asia. The recent developments in Sri Lanka are reminiscent of a hedging behaviour and are significant as China’s footprint in South Asia is increasing by the day. In light of these developments, what does Sri Lanka’s hedging behaviour mean for India?

It has been argued that hedging behaviour across South Asia, including Sri Lanka has been quite consistent. Many times in the past, terms like “omni-directional” and “middle-path” foreign policy have been used by leaders of this island nation to suggest its commitment to maintaining friendly relations with all, without antagonizing anyone. Lately, Sri Lanka has made efforts in pivoting its foreign policy away from a “West-oriented diplomacy” and has attempted to focus more on its neighbourhood with a broader “Asia-first” approach in mind. While Sri Lanka’s efforts aimed at strengthening bilateral ties with India continue, the former’s engagement with China has also been growing deeper. In the contemporary scenario which is marked with China’s rising influence in South Asia, this attempt to hedge between the two is being seen as a pragmatic foreign policy choice from a Sri Lankan perspective. Being of strategic importance for Chinese interests in the Indian Ocean Region, Sri Lanka has been receiving China’s attention in terms of forging stronger military and economic ties, in the past decade.

Earlier in 2011, China had surpassed India to become the largest source of FDI (Foreign Direct Investment) in Sri Lanka. From there on, China has continued expanding its investments in Sri Lanka till date. China has not only invested in developing strategic ports and extending huge loans to the latter, it has also sought stronger ties via signing of security protocols and deals for related technology etc. More recently, news about China’s increased activities in North Sri Lanka, close to the Indian coast, have made rounds. China has been involved in many major infrastructure projects in Sri Lanka. This year also marked the commencement of another key infrastructure project- the China Harbor Engineering Company’s (CHEC) deal for a highway project in Colombo. The terms of the deal dictate that the CHEC will own the highway, earn associated profits, and hand it to Sri Lanka’s government after 18 years. Though Chinese terms and conditions are stringent, Sri Lanka has mostly complied in search of advantages of the emerging commercial opportunities. It is often argued that China’s deep pockets are too enticing to be turned down by secondary states, which are aspiring to uplift their economies.

Despite recent developments, which signal Sri Lanka’s hedge towards China, the latter has not disregarded its balancing act at the expense of India’s friendship. Sri Lanka realises that India is a stronger partner vis à vis China in other sectors like education, healthcare and tourism. India has had a remarkable record of being a valuable development partner for Sri Lanka in the community, social and human resources sectors and the two share common cultural ties too. Further it is noteworthy that the latest “integrated country strategy” document of the government of Sri Lanka, inter alia, focuses on enhancing defence ties with India. The document calls for measures like frequent military exercises, high-level military exchanges and useful utilisation of India’s Line of Credit worth USD 50 million for counter-terrorism activities. Observers see this attempt as Sri Lanka’s response to ameliorate China’s tightening grip over it. This is a classic case of hedging- preserving policy autonomy by using signals that generate ambiguity over the extent of shared security interests with China and India.

Though India cannot match China economically in terms of what it has to offer Sri Lanka, it does not mean that rhetoric like ‘India has completely lost Sri Lanka to China’ is the gospel truth. Latest developments reinforce that Sri Lanka is not bandwagoning with China, rather it is hedging between India and China. There have been rising apprehensions in Sri Lanka regarding falling into a Chinese “debt trap.” The controversial Hambantota port, which a heavily indebted Sri Lanka had to give to the Chinese on lease for a period of 99 years, has also not been forgotten. Moreover, domestic factors have also played a role in this regard as there has been a political backlash in Sri Lanka by people who fear that deep engagement with China will eventually lead to the “colonization” of their country. Therefore, to avoid over-dependence on China, Sri Lanka is not likely to give the cold-shoulder to the regional power- India.

Sri Lanka’s hedging behaviour has many meanings for India. The primary one is that proactive engagement with Sri Lanka is more important than ever. New Delhi has continued to strengthen this bilaterally, however, cooperation via regional fora such as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) will also be vital. Sri Lanka, who will be chairing the upcoming BIMSTEC summit this year, has an opportunity to set the agenda for deeper sub-regional cooperation. India also has an opportunity to strengthen its links with Colombo, especially as the pandemic has led to the birth of more avenues for cooperation like low-cost innovations in technology, diversification of manufacturing locations, etc. Moreover, Sri Lanka has greater incentives to strengthen ties with India now that China’s inroads into its sovereign territory are generating scepticism. Finally, though soft power is subordinate to material power, it is not futile. It remains to be seen how India is able to use elements of its soft power with its culturally similar neighbour. Sri Lanka’s hedging has resulted in a delicate balancing act between India and China. India’s engagement with it in the near future is bound to bring new changes to this equation and to the larger picture of Sino-Indian competition in South Asia.

*The Author is a Research Intern at the Kalinga Institute of Indo-Pacific Studies


Disclaimer: The Views in the Article are of the Author