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2. China and Sri Lanka’s Debt Crisis: Belt and Road Initiative Blowback
- Author:
- Sudha Ramachandran
- Publication Date:
- 05-2022
- Content Type:
- Journal Article
- Journal:
- China Brief
- Institution:
- The Jamestown Foundation
- Abstract:
- Sri Lanka is in the grip of an unprecedented crisis. For several months, the country has been reeling under a severe foreign exchange crisis. In early May, Foreign Minister Ali Sabry said that its usable forex reserves were just $50 million (Daily News, May 5). As a result, Sri Lanka has been forced to suspend repayment of $51 billion worth of debt owed to China, Japan and other foreign creditors (The Hindu, April 12; The Island, April 13). The country has also been unable to pay for imports of essential commodities, and has experienced serious shortages of food, fuel and medicine (The Island, January 15). The economic crisis has in turn triggered a political crisis. Public anger has boiled over onto the streets. Angry protesters have been calling for the resignation of President Gotabaya Rajapaksa and his brother, Prime Minister Mahinda Rajapaksa (Colombo Telegraph, April 7). The Rajapaksa family has dominated Sri Lankan politics for decades and several members of the family are in positions of power as ministers, legislators or heads of corporations and departments. Sri Lankans want the entire clan out. Some of them, including Mahinda, resigned under public pressure in recent months (Island, April 17). Although Gotabaya remains president and under the country’s executive presidential system, continues to wield enormous power, it is evident that the influence of the Rajapaksas has declined. The unfolding crises in Sri Lanka have implications beyond the island. China is among Sri Lanka’s largest bilateral lenders and has played a big role in the island’s infrastructure development. Sri Lanka is a part of China’s Belt and Road Initiative (BRI). Despite China’s pledges that BRI would boost Sri Lanka’s economic and social development by transforming it into “the hub of the Indian Ocean”, Chinese loans are widely believed to have pushed the country into a ‘debt trap’ (Embassy of the People’s Republic of China in Sri Lanka, June 16, 2017). How have the crises impacted China’s image in Sri Lanka and will the decline of the Rajapaksas, widely regarded as ‘pro-China,’ impact Sino-Sri Lankan relations? Finally, will the Sri Lankan crises affect the fate of BRI?
- Topic:
- Debt, Development, Politics, Infrastructure, Economy, and Belt and Road Initiative (BRI)
- Political Geography:
- China, South Asia, Asia, and Sri Lanka
3. China’s Influence in South Asia: Vulnerabilities and Resilience in Four Countries
- Author:
- Deep Pal
- Publication Date:
- 10-2021
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- China’s economic and political footprint has expanded so quickly that many countries, even those with relatively strong state and civil society institutions, have struggled to grapple with the implications. There has been growing attention to this issue in the United States and the advanced industrial democracies of Japan and Western Europe. But “vulnerable” countries—those where the gap is greatest between the scope and intensity of Chinese activism, on the one hand, and, on the other, local capacity to manage and mitigate political and economic risks—face special challenges. In these countries, the tools and tactics of China’s activism and influence activities remain poorly understood among local experts and elites. Both within and beyond these countries, meanwhile, policy too often transposes Western solutions and is not well adapted to local realities. This is especially notable in two strategic regions: Southeastern, Central, and Eastern Europe; and South Asia. China’s economic and political profile has expanded unusually quickly in these two regions, but many countries lack a deep bench of local experts who can match analysis of the domestic implications of Chinese activism to policy recommendations that reflect domestic political and economic ground truth. To address this gap, the Carnegie Endowment initiated a global project to better understand Chinese activities in eight “pivot” countries in these two strategic regions. The project’s first objective was to enhance local awareness of the scope and nature of Chinese activism in states with (1) weak state institutions, (2) fragile civil societies, or (3) countries where “elite capture” is a feature of the political landscape. Second, the project aimed to strengthen capacity by facilitating a sharing of experiences and best practices across national boundaries. Third, the project sought to develop policy prescriptions for the governments of these countries, as well as the United States and its strategic partners, to mitigate and respond to activities inimical to political independence or well-balanced economic growth and development. To establish a comprehensive picture of China’s activities and their impact, this project dug deeply into Chinese activism in four case countries in each region—eight countries in total. We began by holding workshops, so that influencers across countries could share experiences and compare notes. Invited participants included policymakers, experts, journalists, and others—all with deep local knowledge, steeped in their countries’ politics, economies, and civil societies. In Europe, the four countries were Georgia, Greece, Hungary, and Romania, and in South Asia, Bangladesh, Maldives, Nepal, and Sri Lanka. Cross-national discussions among these regional participants aimed to raise awareness, discuss the implications of China’s growing activism in their countries, and compare notes on the diverse ways in which these various countries had managed the rapid influx of Chinese capital, programs, people, technology, and other sources of influence.
- Topic:
- International Relations, Foreign Policy, Development, Economy, Engagement, Regionalism, and Resilience
- Political Geography:
- Bangladesh, China, South Asia, Sri Lanka, Nepal, and Maldives
4. The Belt and Road Initiative Still Afloat in South Asia
- Author:
- Sudha Ramachandran
- Publication Date:
- 01-2019
- Content Type:
- Journal Article
- Journal:
- China Brief
- Institution:
- The Jamestown Foundation
- Abstract:
- South Asian governments are becoming increasingly discontent with Belt and Road Initiative projects. In August, Pakistan’s new government expressed interest in reviewing the CPEC contracts that they perceive to be over-priced, unnecessary, or excessively in the favor of PRC companies (Dawn, September 11). Similar sentiments have been expressed by the new Maldivian government, which is reviewing BRI contracts signed during the rule of former President Abdulla Yameen (Economic Times, November 26). Such actions raise questions as to whether South Asian states might scale down or even cancel BRI projects.
- Topic:
- Development, International Trade and Finance, Treaties and Agreements, Infrastructure, and Soft Power
- Political Geography:
- Pakistan, Afghanistan, Bangladesh, China, South Asia, India, Sri Lanka, Bhutan, and Maldives
5. Development of Sri Lanka’s East Container Terminal Port: Japan & India’s Regional Cooperation in South Asia Shaping Up
- Author:
- Monika Chansoria
- Publication Date:
- 06-2019
- Content Type:
- Policy Brief
- Institution:
- Japan Institute Of International Affairs (JIIA)
- Abstract:
- Signing the Japan-India Vision Statement in Tokyo on 29 October 2018, the Prime Ministers of Japan and India reviewed cooperation on development of connectivity via quality infrastructure and capacitybuilding carried out bilaterally, as well as, with other partners. More so, the need to do this in an open, transparent and non-exclusive manner based on international standards, responsible debt financing practices, and in alignment with local economic and development strategies and priorities was highlighted.1 The synergy finds embodiment in collaborative projects between Japan and India in the Indo-Pacific region, especially in Sri Lanka, Myanmar, Bangladesh, and Africa. In slightly over six months since this statement, Sri Lanka recently announced on 28 May 2019, its decision of entering into a trilateral partnership with India and Japan to develop a deepsea container terminal. The state-run Sri Lanka Ports Authority (SLPA) said a Memorandum of Cooperation (MOC) had been signed between the three countries to jointly develop the East Container Terminal (ECT) of the Colombo Port next to a $500-million Chineserun container jetty in Colombo harbor.
- Topic:
- Development, Regional Cooperation, Infrastructure, and Trade
- Political Geography:
- Japan, South Asia, India, and Sri Lanka
6. Factors Promoting Foreign Aid Dependence in South Asian Countries
- Author:
- Shazia Kousar and Salman Masood
- Publication Date:
- 01-2017
- Content Type:
- Journal Article
- Journal:
- South Asian Studies
- Institution:
- Department of Political Science, University of the Punjab
- Abstract:
- This study used panel data approach to investigate comprehensive set of determinant of foreign aid and extent to which these determinants, domestic saving, capital formation, human capital, government expenditure, military expenditure and trade deficit, can affect foreign aid dependence in south Asian countries like Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka. This study used Error correction model to estimate the short run association between defined variables. The results indicate that capital formation, ,trade deficit, government budget deficit and military expenditure have positive and significant association with foreign aid in the long run while these determinant have positive but insignificant relationship with foreign aid in the short run except gross domestic capital formation (GDCF). However, domestic savings, human capital formation has negative and significant relationship with foreign aid in long run. The findings of the study help foreign aid policy makers, analysts, researchers and official donor agencies.
- Topic:
- Development, Economics, Foreign Aid, and Economic Growth
- Political Geography:
- Pakistan, Afghanistan, Bangladesh, South Asia, India, Sri Lanka, Nepal, Punjab, and Bhutan
7. Learning to Target for Economic Diversification: PDIA in Sri Lanka
- Author:
- Matt Andrews and Peter Harrington
- Publication Date:
- 01-2017
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- Many countries, like Sri Lanka, are trying to diversify their economies but often lack the capabilities to lead diversification programs. One of these capabilities relates to targeting new sectors to promote and pursue through a diversification policy: countries know they are ‘doomed to choose’ sectors to target,1 but lack effective capabilities to do the targeting. This paper narrates a recent (and ongoing) initiative to establish this kind of capability in Sri Lanka. The initiative adopted a Problem Driven Iterative Adaptation (PDIA) process, where a team of Sri Lankan officials worked with Harvard Center for International Development (CID) facilitators to build capabilities. The paper tells the story of this process, providing documented evidence of the progress over time and describing the thinking behind the PDIA process. It shows how a reliable targeting mechanism can emerge in a reasonably limited period, when a committed team of public officials are effectively authorized and engaged. The paper will be of particular interest to those thinking about targeting for diversification and to those interested in processes (like PDIA) which are focused on building state capability and fostering policy implementation in public contexts.
- Topic:
- Development, Economics, Economic Growth, and Economic Policy
- Political Geography:
- South Asia and Sri Lanka