The “Pearl of the Indian Ocean” – Sri Lanka – may yet become a bone of contention between India and China, following the September 21 presidential election that catapulted Anura Kumara Dissanayake into the top job.

While reports before the elections suggested that a “geopolitical tug-of-war” may unfold in the near future, there is no denying that Sri Lanka will find itself strategically placed as far regional trade and regional security is concerned.

For both India and China, the Colombo and Hambantota ports will be critical points in the global shipping route and both countries will try to vie for control over major infrastructure projects.

Dissanayake declared, immediately after assuming charge, that he would not prefer to be “sandwiched” between India and China, especially when both were “valued partners.” This indicated that he aimed to remain equidistant from the two regional powers even as he said that both countries could provide financial aid while seeking to build close ties with the West, Middle East, and Africa.

There is, however, no doubt that both India and China have great capacity to influence Sri Lanka’s bilateral relations with the two regional powers.

The island nation has maintained a close-friend approach towards India for decades, based on historical, cultural, security and economic relationships. There was undoubtedly a setback to this relationship in the last decade or so, especially during the presidency of Mahinda Rajapaksa who had leaned toward China. At that time, Sri Lanka and China sought to deepen their strategic cooperative partnership.

The Rajapaksa regime’s post-civil war development initiatives had a pro-China approach. As a result, China, as Sri Lanka’s largest bilateral creditor, secured influence in the island nation through projects such as port city and infrastructure development. However, the fall of the Rajapaksa clan ensured an erosion of Chinese influence in Sri Lanka’s badly mauled economy in the last two years.

Following the 2022 economic crisis, India played a pivotal role in supporting Sri Lanka when it intervened swiftly to extend a $4 billion lifeline, which surpassed the International Monetary Fund’s 48-month bailout of $3 billion.

During the pre-election campaign of the National People’s Power – a coalition of political parties led by Dissanayake – it was vocal in opposing the sale of national assets to foreign companies, highlighting a threat to Sri Lanka’s national interests. The NPP strongly opposed the Adani Group’s acquisitions of the country’s port, renewable energy, and airport sectors. 

Five days before Sri Lanka went to the polls on September 21, Dissanayake said he would “cancel” a wind power project awarded to the Indian conglomerate earlier, if he won the election.

The Janatha Vimukthi Perumana (JVP), the extreme left party that Dissanayake leads, has been labeled as pro-Chinese in its approach to foreign policy and is often described as an outfit that continues to oppose policies involving neighboring India. Suffice it to say that the JVP was opposed to Indian military intervention in the island nation’s civil war in the late 1980s.

Compared to Dissanayaka’s opponents in the run-up to the presidential race, the NPP’s foreign policy is not being articulated clearly, creating uncertainty about how the new leadership would approach the neighbors and maintain old diplomatic relations with India and China. 

Long before the presidential election, New Delhi had tried to warm up to Dissanayake, extending an invitation in February to the NPP leader to visit the Indian capital. Dissanayake did visit New Delhi and met senior officials, including India’s National Security Advisor Ajit Doval and External Affairs Minister S. Jaishankar.

Following Dissanayake’s electoral victory, the Indian High Commissioner in Colombo was among the first foreign diplomats to meet and congratulate the president-elect.

It would perhaps have served Indian interests better had Ranil Wickremesinghe or Sajith Premadasa won the election as both are known for their pro-New Delhi stance. This would have allowed India to play a bigger role in the Sri Lankan economy and regional security, especially in the backdrop of its generous financial support to Colombo in the aftermath of the economic crisis.

For its part, New Delhi would seek to continue to engage with Colombo, primarily over the issue of the welfare of Tamils of Indian origin, greater connectivity, continuation of its energy-related projects, interests of its fishermen, and keeping China’s military from using Sri Lankan ports.

After a pro-China president assumed power in the Maldives on the crest of an “India Out” campaign, the Indian government sought to promote Sri Lanka as a tourist destination. 

There has been speculation that the JVP’s ideological position would draw it closer to China, but Dissanayake has not spelled out snapping ties with New Delhi, an indication that he may prefer continued bilateral engagement with its northern neighbor. 

It is in India’s interest to maintain friendly ties with Sri Lanka, given that its nuclear power plants, space research centers, and naval bases are in southern India and closer to Sri Lanka. 

There is hope that Sri Lanka’s ties with India could even improve under the Dissanayake dispensation as he had recently said he would not allow any other power to use his country’s sea, airspace, and land to threaten India.

As a strategically important littoral state, Sri Lanka under Dissanayake will have to carefully navigate its ties with both India and China. Sri Lankan analysts are of the opinion that Dissanayake will balance between New Delhi and Beijing, although this will be a “tightrope walk” considering both Indian and Chinese interests in the Indian Ocean Region.

The burden of Chinese loans partly caused the 2022 economic collapse, which, surprisingly, allowed India to chip in with financial and material aid. 

However, given the geopolitical outcomes in the Maldives and Bangladesh, Indian influence in Sri Lanka will depend on how adroitly it manages its diplomatic ties with the Dissanayake regime.