Pompeo’s visit and issues beyond MCC

US Secretary of State  Mike Pompeo’s visit to South Asia is connected with far more important geo-political and security issues, especially in the Indo-Pacific region that involve three big league players, USA, India, China (Pic AFP)

Visits from US Secretaries of State to Sri Lanka are rare. In the past seventy two years there have been only four visits - 1956, 1972, 2005 and 2015 - before Mike Pompeo’s visit last week. The Sri Lankan discourse on the visit has paid a great deal of attention to the Millennium Challenge Corporation (MCC) grant of $480m on offer. For nationalists, especially from the ranks of the Gotabaya Rajapaksa administration, it is a convenient target for criticism that also diverts public attention from other pressing problems people currently face. As Secretary Pompeo told the local media that Sri Lanka can decide between taking the grant or turning it down.  

USA vs China

Pompeo’s visit to South Asia is connected with far more important geo-political and security issues, especially in the Indo-Pacific region that involve, three big league players, USA, India, China. USA still remains the sole superpower in the world. In 2019 the GDP of US was $21.5 trillion accounting for about 24% of the total global output. In the same year the military budget was $732 billion and that was about 37% of total global military spending. The share of the emerging global superpower China in global output was 16.4% and in military spending 13.0%.

"Pompeo’s visit to South Asia is connected with far more important geo-political and security issues"

However, many, and especially China, see USA as an ageing superpower that is in relative decline.  China is fiercely competing against USA on every front, from economy and technology to military and political, not only to catch up with USA, but surpass it. In politics, it is offering a more authoritarian model of governance as an alternative to the liberal democracy model. Just now China stands out for its relative success in controlling the COVID-19 pandemic as much as USA stands out for its failure to do so. Many see it as a plus for an authoritarian form of government. However, democratic regimes such as Canada, Taiwan and New Zealand have also done well in controlling the pandemic. 

"The Chinese embassy in Colombo issued a statement last week on the eve of Pompeo’s arrival criticising some aspects of the visit"

The Donald Trump administration launched a policy to deny Chinese companies such as Huawei the latest American technologies.  China is responding by trying to achieve ‘self-sufficiency in core technologies.’
On the economic front, China is using its massive foreign reserve of about $3.0 trillion to provide loans to emerging economies, mostly under its Belt and Road Initiative (BRI). 
Most importantly, China is challenging the USA for the status of all-round global superpower. As of today, China does not have the military capability to directly challenge America. For example, USA currently has eleven aircraft carriers in service while China has only two. But China has the military power to challenge every other country.  

"However, many, and especially China, see USA as an ageing superpower that is in relative decline"

India

India experienced such a challenge last June in the Himalayan region of Ladakh where the border between the two countries is not officially demarcated. There has been no serious incident reported in the area during the past forty-five years. In June a clash occurred between the border troops of the two countries. India reported that 20 of its troops were killed in the skirmish. China has not reported its casualty figures, if any. Such incidents plus the general rivalry that prevails between the two Asian giants has motivated Delhi to look for support from USA. USA is happy to oblige because it sees India as a very valuable partner to meet the growing challenge from China; especially on the security front. US Defence Secretary Mark Esper joined Pompeo for the Delhi visit. That underlined the fact that Pompeo’s visit was not a mere diplomatic visit. It had a significant security component. 

Security Cooperation

In 2002 USA and India signed what is called a General Security of Military Information Agreement (GSOMIA). It provided a framework to sign more specific agreements for military cooperation. In 2016 the two countries signed a Military Logistics Agreement (MLA) to operationalise GSOMIA. In 2018 a second, the Communications Compatibility and Security Agreement (COMCASA), was signed to further expand military cooperation. Last week a third called the Basic Exchange and Cooperation Agreement (BECA) that allows the two countries to share geospatial intelligence was signed. 
The statement that the Chinese embassy in Colombo issued last week on the eve of Pompeo’s arrival criticising some aspects of the visit is a clear indication that China is not happy with these developments. 

Challenge for Sri Lanka

Sri Lanka has no power to control what USA and India do or China’s response to such developments.  We are also heavily dependent on all three countries in different ways. USA is Sri Lanka’s principal market for exports. In 2019 USA purchased goods worth $3.1 billion that accounted for 26.1% of our total export earnings.  India’s purchases totalled   $768m. (8.4%) and China’s $240m (2.0%). In the same year imports from the three countries were, China $4.0 billion (20.2%), India $3.9 billion (19.6%) and USA 0.5 billon (2.7%). In 2019 tourists from India accounted for nearly 20% of the total arrivals and China accounted for about 10%. Both India and China have been among the top five countries responsible for foreign direct investment (FDI) in Sri Lanka during the past several years. At the end of 2019 China’s share of Sri Lanka’s bilateral foreign debt was 12.2% and that of India 13.5%.  There are some foreign loans, especially from Chinese sources, that are not included in this calculation. USA is not a significant lender to Sri Lanka. But it has a major voice in key international economic institutions such as the IMF and World Bank that influence decisions that they make in respect of Sri Lanka. 

"On the economic front, China is using its massive foreign reserve of about $3.0 trillion to provide loans to emerging economies, mostly under its Belt and Road Initiative (BRI)"

Sri Lanka’s geographic location imposes further limits on our decision making. The best example is India’s intervention in 1987 that resulted in stopping the war against the LTTE, signing of the Indo-Lanka Accord, creation of provincial councils, and the induction of Indian Peace Keeping Forces (IPKF). 
What all the above mean is that Sri Lanka’s sovereignty is constrained by geo-political and economic constraints. 

A Biden Administration

This column is being written on the eve of the US Presidential Election.  Polls suggest that the Democratic Party candidate Joe Biden is likely to win the presidency. A Biden administration is likely to stop the “Trade War” that President Donald Trump started against China and come to some accommodation that is mutually beneficial.  It is certain that USA-India relations in the security sphere will evolve further under Biden.   In fact, the Obama-Biden administration has been criticised in some quarters for going easy on China on the assumption that an increasingly prosperous China will become politically more liberal. That has not happened. Biden is certain to bear that in mind when dealing with China. 

Parenthetically, Sri Lanka will also have to consider two other matters if a Democratic administration takes over in Washington on January 20. First, Biden has been very critical of Trump in the current election cycle for what Biden calls Trump’s “anti-democratic” views and actions. A Biden White House is likely to keep a watchful eye on how Sri Lanka’s democracy moves forward in the next several years. 

Second, Sri Lanka tried to reach a solution on transitional justice and human rights issues at UNHRC, Geneva starting in 2015 with the support of the Obama-Biden administration. The Gotabaya Rajapaksa administration officially withdrew from that process. Some of the same officials involved in that exercise under Obama or officials who have similar views will be back in office in January if Biden is elected president. That is likely to pose a new challenge for Sri Lankan diplomacy.  

US Secretary of State Mike Pompeo (left) speaks during a press conference in Colombo watched by Sri Lanka’s Foreign Minister Dinesh Gunawardene (Pic AFP)