Why the West must Stay Engaged in Sri Lanka

15th November 2010, www.dailymirror.lk, By Sarinda Perera

For anyone living in the global south, watching Asia’s economic rise has got to be fascinating. The world was in recession but China and India trudged on. Recording 9.6 and 8.8 percent growth respectively, the two giants of Asia have led the region’s economic recovery to its present 8.2 percent. The ADB says this could carry through the rest of the year. South Asia’s own growth rate, spurred by India, is an impressive 7.8 percent. While America is just regaining its feet, Europe is still struggling to cope.

Austerity measures in Britain alone, where unemployment is already an issue, will cut back as many as 490,000 jobs over the next four years. Spending cuts in France and Greece have brought protestors to the streets. Similar measures by Germany, Europe’s strongest economy, have raised concerns the global recovery maybe set back in Europe. The Americans are worried. Their allies have always been in the West. But new interest in Africa and Asia may tell us the US is finally catching on.

In its National Security Strategy this year, the US admitted the need to build “broader cooperation on areas of mutual interest” with China, India and even Russia, all BRIC states as it adjusts to shifting tectonic plates of global power.

The US will certainly be the world’s major power for time to come and the living standards of the West at large will remain a lofty goal for the East to achieve. Still, power is slowly but surely shifting to the East. China has already surpassed the US as the world’s largest auto market and eclipsed Germany as the biggest exporter. It dislodged the US as the world’s top energy consumer and replaced Japan this year as the world’s second largest economy. It is widely expected to take the top slot from the US in around twenty years from now.

China is on the rise and is spreading its wings far and wide. Its ‘string of pearls’ strategy has financed ports in Asia and more infrastructure in Africa. Its soft loans minus rights-based conditionalities have been particularly attractive to authoritarian regimes in many developing countries that jettison loans from the West in favour of new donors from the East. Sri Lanka is a case in point.

Colombo’s love affair with its ‘bloc of Asian donors’, which presently includes China, India, Japan and Iran, has seen an avalanche of funding for post-war development. As the West, including for instance, the US, EU, Britain and Norway, channelled funds into democracy, rights and human development, the ‘alternative bloc’ splurged on more visible highways, ports, railways and power plants.

In the absence of positive engagement from the West, the vacuum created has fast been filled by the East. Of course, China leads the pack. So with a record of having unsuccessfully obstructed the IMF loan, clarion calls for an investigation of Sri Lanka’s alleged war crimes and withdrawal of tariff concessions for its lucrative garment exports to the EU, the US and their cohorts can count on ‘losing’ Sri Lanka. This approach by the West, which many would argue to be ideologically sound, is bankrupt for strategy. It neglects Sri Lanka’s importance as a bulwark to Chinese dominance of Asia and the Indian Ocean, not to mention the fact that it offers a potential slice of the Asian prosperity pie. For the US, this means, inter-alia, compromised energy security in the oil-rich Persian Gulf and Africa.

Post-war Sri Lanka’s own status as an emerging economy should not be overlooked either. With growth rates that hovered between 6 and 7 percent during the war, it expects to exceed 8 percent growth this year. International credit ratings have been raised on expectations of deficit reduction. Travel warnings have been lifted to a surge of tourist arrivals and international hotel chains have announced plans to set up. The US, perhaps realising its folly, recently pledged $25 million for business development, including $600,000 for a local garments manufacturer to set up in the north. According to the State Department, increased involvement from the American public and private sectors is to be expected. But what is to come from Europe is yet to be clear. State power dynamics and priorities in international relations are changing globally. The struggle for power, albeit a peaceful one, is unfolding on the Asian theatre, the new frontier for security and economic success. The ‘rise of Asia’ will be, or rather should be, accompanied by new strategic engagement from the West, through a fresh outlook to diplomacy, investment and foreign aid. The failure of the West to do so and its disengagement instead will be at the peril of its own waning influence and security, economic and otherwise, in the transformative world order of the ‘Asian century.’ In the context, Sri Lanka’s strategic importance cannot be dismissed.