Thursday, December 10, 2009

China makes economic inroads into Sri Lanka

Swati Chaturvedi - It is clearly not a case of Chinese Whisper anymore. The Finance Ministry has raised a red flag over “overwhelming” economic control China now exercises over Sri Lanka.

In a report to the mandarins of the Prime Minister’s Office (PMO) and Reserve Bank Of India (RBI) sent recently, the Finance Ministry has “warned that if timely steps were not taken, it would create an untenable situation for the country.”

The report - contents of which have been accessed by The Tribune - states that the Chinese have upped their presence in all vital Sri Lankan financial institutions - including the stock market - by almost 40 per cent in the past two years.

The Sri Lanka Government is more than happy to play ball with the Chinese as these economic incursions come with the attached sop of cheap arms, says a senior Finance Ministry official. “The Chinese are not exactly overcome by scruples when it comes to even kickbacks and payouts, especially when it comes to winning friends and influencing India’s other neighbours,” he says.

Unlike the United States that holds companies paying bribes overseas to get business liable to be punished, the Chinese have no such constraints to hold them back.

For the past two years, the Chinese have taken a quantum jump in increasing their presence in Sri Lanka. From investments in private companies to takeovers of financial institutions, strategic aid and investment, it has been a calculated project to put itself at the heart of the Sri Lankan economy.

The Chinese presence has caused “deep consternation” in the highest echelons as
it comes amidst a deliberately ratcheted up design to rattle India.

This seems to involve using all instruments available to the state, such as protesting a World Bank loan, Prime Minister Manmohan Singh’s visit to Arunachal Pradesh, the Dalai Lama’s visit to Tawang Monastery, stamping Kashmiris’ visas passport on a loose sheet and stopping road construction in Jammu and Kashmir.

Says former national security advisor Brijesh Mishra, “The Chinese don’t do anything by accident. There is a deliberate plan to get together with Pakistan and encircle India. We have faced them separately alone but now they are working in sync. I hope we do have the strategic depth to take them on because this is vital in the national interest.’’

© The Tribune

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