Growing China Ties Let Sri Lanka Rebuff U.S. War Inquiry Push

Photographer: Lakruwan Wanniarachchi/AFP/Getty Images

Chinese workers cycle in front of a coal-powered electricity generating plant in Norochcholai, Sri Lanka. Close

Chinese workers cycle in front of a coal-powered electricity generating plant in Norochcholai, Sri Lanka.

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Photographer: Lakruwan Wanniarachchi/AFP/Getty Images

Chinese workers cycle in front of a coal-powered electricity generating plant in Norochcholai, Sri Lanka.

Sri Lanka’s deepening economic ties with China offer it a cushion from any measures aimed at pressuring the South Asian country into cooperating with investigations into alleged crimes during its civil war.

The U.S. introduced a resolution this week calling on the United Nations to investigate Sri Lanka’s past abuses and more recent attacks on human-rights advocates, Sarah Sewall, an undersecretary of state, said March 4. Sri Lanka has denounced the measure, and received China’s support last month when Foreign Minister G.L. Peiris visited Beijing.

“China has been a strong supporter of Sri Lanka both politically and economically,” said Bimanee Meepagala, an analyst at NDB Aviva Wealth Management Ltd. in Colombo, the island’s largest private fund. “Given China’s backing, Sri Lanka’s economic growth momentum won’t be affected.”

The case shows China’s increasing diplomatic impact abroad as it pursues influence and resources with investments across the globe, regardless of whether a country faces criticism for human-rights abuses. Chinese President Xi Jinping last year pledged financial aid in visits to South America and Africa shortly after taking office.

China has an “all-weather partnership” with Sri Lanka, it said in a statement last month during Peiris’s visit.

“We believe that people in Sri Lanka have the wisdom and capacity to manage their internal affairs, and oppose some countries’ interference in Sri Lanka’s domestic affairs under the pretext of the human rights issue,” China Foreign Ministry spokeswoman Hua Chunying said on Feb. 12. “We oppose politicizing and imposing double standards on the issue of human rights.”

Trade Increases

Since Sri Lanka’s three-decade war ended in 2009 with an offensive that the UN says killed as many as 40,000 civilians, China has overtaken the U.S. as the island’s biggest trading partner.

China accounted for 9.6 percent of Sri Lanka’s total trade in 2012, up from 5.2 percent in 2008, a year before the conflict ended, according to the island’s central bank. The U.S. contribution to the country’s trade dropped to 8.2 percent from 9.7 percent in that time.

Chinese government lending to Sri Lanka increased 50-fold over the past decade to $490 million in 2012, according to Sri Lanka’s external resources department, compared with $211 million combined from Western countries and lending agencies. Sri Lanka’s first four-lane expressway, second international airport and a port in the southern Hambantota city are among projects financed by the Export-Import Bank of China.

Sanctions Challenge

Sri Lankan President Mahinda Rajapaksa hailed the backing of China and Russia in a press briefing last week to denounce the UN proceedings.

“If any country wants to put sanctions, they can do it,” he told reporters.

In a visit to Colombo on Feb. 1, State Department official Nisha Desai Biswal said the U.S. wasn’t considering sanctions “at this point.” The European Union, Sri Lanka’s biggest export bloc, withdrew concessions on exports in 2010 because of the country’s human rights record,

Even so, the island’s $59 billion economy, roughly the size of the U.S. state of Delaware, grew at least 7.2 percent in 2013, compared with 6.4 percent a year earlier, Central Bank of Sri Lanka Governor Ajith Nivard Cabraal said in January. Gross domestic product will expand 7.8 percent in 2014, and average 8.3 percent over the next three years, he said.

A UN panel in April 2011 accused Sri Lanka’s military and Tamil Tiger rebels of committing serious violations of international law in the final stages of the conflict. Sri Lanka denies the charges and says the calls for a probe amount to interference that will polarize the country.

‘Substantial Progress’

“These initiatives disregard the substantial progress made by the government during the five years which have elapsed since the end of the 30-year war against terrorism,” Peiris told the UN yesterday.

Although the U.S. remains Sri Lanka’s single biggest export market and largest holder of its sovereign bonds, closer ties with China provide the island more room to push back, according to said Dushni Weerakoon, deputy director at the Institute of Policy Studies in Colombo. Last month, the U.S. Embassy in Colombo said Sri Lanka refused a visa for Catherine Russell, the U.S. ambassador-at-large for global women’s issues.

“Having China’s increasing backing on credit, foreign direct investment, trade and tourism -- and playing such a major role in the economy -- puts Sri Lanka in a better position,” Weerakoon said. “The U.S. could try to scale back development assistance, but that is not significant.”

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

To contact the editor responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net

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