In Sri Lanka, a brutal civil war based in ethnic conflict between the country’s Sinhalese majority and its Tamil minority lasted nearly three decades and killed more than 70,000. In 2009, the Sinhalese claimed victory to maintain their authority, and they continue to assert their sovereignty through the country’s post-war rehabilitation process.
The civil war attracted foreign aid money to the country, but an analysis of the dynamics of these funds by the nonprofit peace-building organization International Alert found that the government has taken a rather hardline approach in dictating the terms of the foreign aid it accepts. Instead of traditional donors like Europe and multilateral agencies that have strict aid guidelines of their own, Sri Lanka instead favors “nontraditional” donors that are newer global financial powers and more willing to accommodate looser terms and conditions with funding. Here is a breakdown of a few key countries that have contributed to Sri Lanka’s development.
India
India, considered an emerging market itself, has contributed more than $1.1 billion in aid to Sri Lanka since 2008, according to the Sri Lankan government’s Department of External Resources 2015 Performance Report. The two countries are closely linked; Sri Lanka is often referred to as the teardrop of India, and many Tamils also live in India. Despite a decades-long development partnership, an exponential increase in aid from India in recent years furthers what International Alert considers India’s “desire to consolidate its place as a regional power.” About half of the country’s overall investment in South Asian countries is concentrated in Sri Lanka, where the majority of funds disbursed have been utilized for railroad development and restoration, key to strengthening supply chain and other trade resources.
China
China is another “crucial” nontraditional donor, according to International Alert, and the “global and regional strategic reasoning behind Chinese development assistance [to Sri Lanka] is oftentimes undeniable.” Possible strategic motivations presented by the nonprofit organization include a “tit-for-tat strategy” in response to India’s engagement in the region and a “String of Pearls” strategy that would afford China a network of naval bases in key countries across the region. The Chinese government and national banks committed nearly $5 billion to Sri Lanka between 2011 and 2015, effectively doubling total Chinese aid to the country since the 1970s. About a third of those funds have been disbursed to programs to build and rehabilitate roadways, according to the 2015 Sri Lankan government report. Often, Chinese loan terms stipulate that priority be given to Chinese contractors and materials necessary to complete the projects.
Japan
Japan has extended annual loan packages to Sri Lanka since 1965 but outpaced China as the top aid contributor in 2011. Relations between Sri Lanka and Japan have been friendly historically and have particularly strengthened since both countries ushered in new governments in 2015. According to the Daily FT, Sri Lanka’s national daily business paper, maritime security may be a key factor in the bilateral relationship, as “China might use Sri Lanka (its natural harbor) for its domination in the Indian Ocean” and “Japan may possibly try to get Sri Lanka’s support to mitigate China’s security threat in the Asian region.” Japan committed nearly $400 million to the development of Sri Lanka’s Bandaranaike International Airport after a diplomatic meeting in which Sri Lanka expressed continued support of Japan’s bid for a permanent seat in the United Nations Security Council. Investments in aviation to promote tourism to Sri Lanka and the development of power and energy supply programs have been the principal recipients of Japanese aid to Sri Lanka.
United States
One of the top “traditional” Western donors, the U.S. has funneled more than $2 billion in investment to Sri Lanka since the country’s independence. In 2015, U.S. Secretary of State John Kerry announced $40 million in aid — compared to $10 million in 2010 — and in 2016, the two countries held the inaugural U.S.-Sri Lanka Partnership dialogue. Unlike most “non-traditional” donors in the region, U.S. aid focuses on meeting both democracy and social development goals, as well as trade and economic goals. On its website, the United States Agency for International Development is actively seeking applications for programs aimed at improving democratic governance through an empowered news media in Sri Lanka. However, according to International Alert, “Western-based” processes of aid disbursement — that emphasize transparency and accountability — are seen as “out of sync with ground realities and (Asian) cultural norms” by Sri Lankan officials, putting them at odds with the overarching socioeconomic and development policy of the Sri Lankan government.
Europe
Much of the funding Sri Lanka receives from nontraditional donors has been in the form of loans, which has dramatically increased the country’s external debt, particularly to China. In the years following the end of the war, countries in Europe, like the Netherlands, France and Spain, and other traditional donors were more prone to offering aid in the form of grants that do not require repayment. But when Sri Lanka gained status as a middle-income country, grants became much less common. In 2015, Germany was the only European country to offer a loan to Sri Lanka. Rising debt has led Sri Lanka to explore aid options with less conditions than those usually enacted by traditional donors. Most commercial borrowings from the West, according to Sri Lanka’s Department of External Resources, are utilized for top priority projects in transportation infrastructure and social infrastructure, like health care facilities and technology.
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Disentangling Sri Lanka’s Foreign Aid originally appeared on usnews.com
