Jaishankar may visit Lanka, focus likely to be on resetting of ties

The visit, if it goes ahead, will be an opportunity to reset bilateral relations after they were hit by the visit of the Chinese surveillance vessel Yuan Wang 5 to Sri Lanka’s Hambantota port last August and to take forward discussions on restructuring the island country’s debt amid an unprecedented economic crisis.

External affairs minister S Jaishankar is likely to visit Sri Lanka though the dates for the trip are yet to be finalised by the two sides, people familiar with the matter said on Friday.

External affairs minister S Jaishankar (ANI)

The visit, if it goes ahead, will be an opportunity to reset bilateral relations after they were hit by the visit of the Chinese surveillance vessel Yuan Wang 5 to Sri Lanka’s Hambantota port last August and to take forward discussions on restructuring the island country’s debt amid an unprecedented economic crisis.

The Indian side’s packed diplomatic calendar, including several incoming trips, and the upcoming budget session of Parliament have come in the way of scheduling a visit, the people quoted above said. There was no official word from both countries on the matter.

The Sri Lankan side has been looking to restore bilateral relations to an even keel following the trust deficit caused by the visit of the Yuan Wang 5, equipped with sophisticated gear to track satellites and ballistic missiles, to the Chinese-controlled Hambantota port, the people said.

India and the US had opposed the Yuan Wang 5 ‘s visit. The Sri Lankan government initially asked the Chinese side to defer the ship’s visit but subsequently made a U-turn and allowed the vessel to call at Hambantota for replenishment.

The Sri Lankan side has also been looking to India to help with the country’s debt restructuring negotiations, the people said. India provided aid worth nearly $4 billion last year to help Sri Lanka cope with the economic crisis, which resulted in the country defaulting on its dollar debt to preserve foreign currency to pay for food and fuel.

China tops the list of Sri Lanka’s creditors, holding about 10% of the total international debt at $7.3 billion, while Japan holds $2.7 billion and India $1.7 billion. The concurrence of China and India, which are not members of the Paris Club, for debt restructuring is essential for Sri Lanka to meet conditions for a $2.9-billion bailout package from the International Monetary Fund.

With China dragging its feet, the Sri Lankan side is mulling the option of invoking the “Most Favored Creditor” clause to address doubts among Paris Club members about China being offered better terms at a later stage. The people said the IMF bailout could be delayed if a deal is not reached with China. Debt restructuring deals with members of the Paris Club and India will also increase pressure on China to finalise an arrangement, the people said.