“trade friction [were] started by the US, if the US wants to talk we will keep the door open. If they want to fight, we will fight until the end…Bully us? No way,”
~General Wei Fenghe, Chinese Defence Minister at Shangri-La Dialogue 2019
Geography can provide safety and prosperity. It can also leave a country’s citizens exposed and struggling. Sri Lanka is located at the busy center of East West Sea Lines of Communications (SLOCs) in the Indian Ocean. It is a strategic maritime hub. Her people have become prisoners of location, increasingly defined by external spheres of influence from powerful nations.
Trade wars between US and China have heightened hurting global trade. Chinese companies are accused of cyber espionage and labelled as a direct national security threat to the US. Singapore will need to take a different perspective on their 5G network if Chinese telecommunication products are seen with suspicion. Quoting his father Lee Kuan Yew, the Prime Minister of Singapore said at the Shangri La Dialogue,
“When elephants fight, the grass suffers, but when they make love, the grass suffers also.”
The US-China rivalry has caused multiple effects and many nations are already paying the price.
Donald Trump’s thirst for a trade war with China is wholly misguided. It will likely hurt American consumers just as much as it does the Chinese, explains Peter Frankopan, Professor of Global History at Oxford University in his book entitled The Silk Roads: A New History of the World. The USA has extended the trade war from China to the Middle East through sanctions on Iran. A recent statement by President Trump declared, “US air force was cocked and loaded to attack three Iranian targets...but called off the strike with 10 minutes to spare after being told that the airstrike might kill as many as 150 people in Iran.” A direct military confrontation will take much more than a hundred and fifty lives. An asymmetric confrontation is already in place between US and Iran. It is carried out by proxies who destabilize the region and its surrounds.
A destabilized Middle East region has sent multiple waves of security and economic threats. It echoes and enters across seas into islands such as Sri Lanka. The Middle East origin of ISIS and effects of trade sanctions on Iran have hit Sri Lankan tea exports, a primary export commodity.
The Trump administration has tightened the noose on Iran, with her ability to export oil directly affected. Ships are advised to avoid Iranian territorial waters. Located between Oman and Iran, the Strait of Hormuz, is vital for transporting over one-sixth of global oil production and one-third of the world’s liquified natural gas (LNG). A total of 40% of the world’s seaborne oil and roughly 60 percent of crude oil pass through the 39km long Strait and goes to China, Japan, South Korea, and India. The tensions at the strategic choke point have escalated after multiple attacks to oil tankers. President Donald Trump has directly accused Iran for the attacks, while the US 5th fleet is securing the sea lanes. Strangling Iran is seen as the only strategy to stabilize the Middle East region. The escalation of tensions and resentment at the social and political levels will lead to a further unstable region. The geopolitical effects will ripple the world over.
Global energy security requires a stable Middle East region. Nations cannot be expected to downgrade their profile in the region and coerced into stopping concessional oil imports from Iran. Heavy-handed US tactics have led to a sharp rise in the oil import bill. US attempts to undercut many nation’s strategic ties with Iran are going to pose serious challenges for their internal foreign policy. Short-term US unilateralism will bring instability to the entire Middle East region and surrounding nations. It is inevitable that many nations including Sri Lanka will have to face the indirect economic consequences. The impact to Sri Lankan tea exports is already felt due to sanctions on dollar transactions with Iran by the US. Iran is one of the top five markets for Sri Lankan tea. In 2018, Sri Lanka sold 23,914 metric tonnes (MT) of tea to Iran compared to previous year which was much higher at 27,418 MT.
In the backdrop of US trade sanctions to Iran and trade war with China, then-US Acting Secretary of Defence Patrick Shanahan released the first comprehensive strategic document on the Indo-Pacific at the Shangri-La Dialogue.The Indo-Pacific Strategy Report (IPSR) opens to identify the Indo Pacific—the massive geographic construct—as the Department of Defence’s “priority theater”. Sri Lanka is referenced 13 times in the IPSR, from the importance of her strategic location, to building military partnerships, political instability and the Chinese debt repayments.
The IPSR highlights the People’s Republic of China, under the leadership of the Chinese Communist Party, as seeking to reorder the region to its advantage by leveraging military modernization, influence operations and predatory economics to coerce other nations. The report identifies China as a ‘revisionist power’ accusing China for undermining the ‘International System by exploiting its benefits while simultaneously eroding the values and principles of the rules-based order’. On Chinese investments, the IPSR points out its one-sided and opaque deals are inconsistent with the principles of a free and open Indo-Pacific and are causing concern in the region. IPSR references three nations, Bangladesh, Maldives and Sri Lanka in this regard.
India’s Prime Minister at the 2018 Shangri-La dialogue refers to Indo-Pacific eleven times in his keynote address. While his previous tenure witnessed a series of defense-related agreements including the Logistics Exchange Memorandum of Agreement (LEMOA) allowing the Indian and US forces to use each other’s facilities signed in 2016., the next agreement to follow was Communications Compatibility and Security Agreement (COMCASA), allowing the US to transfer communication equipment to India for the secure transmission of data and real-time information, which was signed in 2018. Finally, the Basic Exchange and Cooperation Agreement (BESA), the last of the three agreements which is likely to be signed soon.
In a similar manner, the USA has put forward renewal of several defence-related agreements to Sri Lanka the ACSA(Acquisition and Cross-Servicing Agreement) and SOFA (Status of Forces arrangement) which is at the center of discussion in the Sri Lanka at many levels due to the dual position taken from Prime Minister and the President from the Government. The ACSA was concluded in 2017 without considering the inputs provided by the national security think tank under Ministry of Defence, and SOFA is now on the table. These agreements need to be discussed and amended according to the Sri Lankan regulations and laws. The narratives from certain critics are highly politicized and would stain the relationship between the two countries if such observations are believed to be accurate. SOFA has been signed in many countries after careful consultation with their respective legislatures. Sri Lanka should do the same and amend accordingly and proceed. President Sirisena has taken a strong position rejecting the SOFA in its present state pointing out as a threat “I will not allow the SOFA that seeks to betray the nation. Some foreign forces want to make Sri Lanka one of their bases. I will not allow them to come into the country and challenge our sovereignty,” said while Prime Minister denied the SOFA would lead to a permanent US presence on the island.
In the midst of US military agreements and the cancellation of the recent visit by the US Secretary State Mike Pompeo to Sri Lanka, the Chinese built P-625 vessel with fire power was donated by China to enhance patrolling capabilities of the Sri Lankan navy and arrived at the Port of Colombo on the 8th July. A month before General Wei Fenghe, Chinese Defence Minister at the Shangri-La Defence Dialogue in Singapore made his remarks clear to the entire audience that China will not be bullied. After Sri Lanka signed the ACSA a Chinese officer was also clear to articulate his position to this author that don’t be surprised if China also sends a similar agreement to the Sri Lankan Government in the future.
Each year the Chinese footprint expands in Sri Lanka and its Indian Ocean vicinity. The US, witnessing the Chinese influence as a strategic threat will invest in Sri Lanka and enhance the regional maritime security and collaborations to secure bilateral military agreements. The great power struggle between US-China has affected the Sri Lanka’s security, economy and foreign policy. While US administration is vocally concerned about 150 Iranian lives, it is also essential to understand the global effects of unilateral sanctions to China and Iran, and their clear effects on other nations.
Asanga Abeyagoonasekera is the director general of the National Security Think Tank of Sri Lanka (INSSSL) under the Sri Lankan Ministry of Defense. The views expressed here are his own.