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HomeArchivesAdani Challenges China In Sri Lanka; Western Media Loses Sleep

Adani Challenges China In Sri Lanka; Western Media Loses Sleep

This piece takes assertions from a malicious Bloomberg article and adds facts to counter the media house’s view of the Adani group’s investments in Sri Lanka

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The Adani story in Sri Lanka must be seen from the angle of the “String of Pearls” theory proposed by political researchers in the US in 2004, referring to the network of Chinese military and commercial facilities and relationships along its sea lines of communication, which extend from the Chinese mainland to Port Sudan in the Horn of Africa. The sea lines run through several major maritime choke points such as the Strait of Mandeb, the Strait of Malacca, the Strait of Hormuz and the Lombok Strait as well as other strategic maritime centres in Pakistan, Sri Lanka, Bangladesh, the Maldives, and Somalia. This plan, together with the China–Pakistan Economic Corridor and other parts of China’s Belt and Road Initiative under Chinese Communist Party general secretary and President Xi Jinping, is a threat to India’s national security.

Now, Gautam Adani, the Indian billionaire who is also Asia’s richest man — richer than Jeff Bezos and Mukesh Ambani — plans to build renewable power plants in or near Pooneryn in northern Sri Lanka, a remote and impoverished area at a striking distance from India’s southern peninsular angle. For Prime Minister Narendra Modi, registering India’s presence in Colombo’s new port is seen as particularly important, as China is constructing the Colombo Port City nearby, which is a Dubai-like financial hub, and operating the Colombo International Container Terminals Ltd.

But while Adani was dealing with the Rajapaksa regime, Sri Lanka ran into its worst economic crisis since its independence from Britain in 1948, paying the price for trusting leftist economists like Amartya Sen and activists like Vandana Shiva. India, which struggled to normalise relations with Sri Lanka since the Rajiv Gandhi government’s IPKF misadventure, is once again trying to tilt the balance in a strategic tussle with China on the island. The location of Sri Lanka is crucial, situated as it is on key global shipping lanes and too close for comfort for New Delhi if Colombo is under the influence of Beijing.

Adani important in Modi’s vision of countering China in Indian Ocean countries

The Modi government is not doing it via its PSUs though. Private major Adani is pushing it. The businessman is perceived by the left as a long-time supporter of Prime Minister Modi — never mind his rise under the Congress regime of Chimanbhai Patel in Gujarat who gave away the Mundra port in the early 1990s to a rookie who is now an unassailable industrialist.

With wealth worth $ 137 billion as his primary resource, Adani now leads a business empire covering ports, coal plants, power generation and distribution. While he earns mostly from India, Adani has, in a phased manner, struck several overseas deals. This July, he told shareholders that he was seeking a “broader expansion” beyond India’s borders with “several” foreign governments approaching his conglomerate to develop their infrastructure.

India wants to see a company of its own build a port terminal close to China’s own port project, said Samantha Custer, director of policy analysis at AidData, a research unit at William & Mary University in Virginia. Indian companies are often disadvantaged due to Beijing tying project finance to implementation by state-subsidized Chinese firms, she said.

“One of the motivations for moving forward is geostrategic in order for a politically connected Indian company to be willing to accept delayed or uncertain economic returns,” said Custer. “That said, an uncertain economic return on investment is not the same thing as no return on investment, and the Adani Group likely recognises that this is a long-term play with a high risk and high reward proposition.”

Comfortable doing business with Rajapaksa regime even where China failed

In October last year, Adani stressed the “strong bonds” between the two nations when he met with then Sri Lankan President Gotabaya Rajapaksa, just months after entering a $ 750 million Colombo port deal. It was a rare example of Indian infrastructure investment in Sri Lanka, after Colombo in previous years pivoted to Beijing — which has funded everything from highways to ports through Belt and Road — and splurged on debt-fuelled projects.

Following the meeting, a team from Adani Group, eyeing a $ 70 billion move toward green energy, toured Sri Lanka’s north. The region has been devoid of investment since the end of the country’s 26-year civil war in 2009. The visit seemed a turning point, as not long after the Rajapaksa administration terminated Chinese solar projects on islands in the Palk Strait between India and Sri Lanka because of security concerns from New Delhi, according to multiple people with direct knowledge of the matter. China’s embassy in Colombo later confirmed the end of the solar projects on social media.

In early 2022, Adani signed memoranda of understanding to build 500 MW of renewable energy projects in Pooneryn and Mannar, other northern districts close to India, according to local media reports confirmed months later by a tweet from Sri Lanka’s power minister, Kanchana Wijesekera.

Hostile media commentary

This makes leftists, who perceive Adani to be close to the Modi dispensation, seriously speculate that the tycoon could be the resource for India’s pushback against China, the Belt and Road Initiative of which is intended to increase Beijing’s clout in strategic countries and on the global stage. “In countries that the Indian government has better relations than the Chinese government, Adani could find success,” said Akhil Ramesh, a resident fellow at the Pacific Forum research institute in Honolulu, to Bloomberg. India may lag China financially, but Adani’s investments in countries such as Israel and Sri Lanka compete with Chinese state-owned firms.

Looking at this scenario, Western media hostile to the Modi-led ‘Hindu nationalist’ India claims that multiple Indian and Sri Lankan officials described Adani’s investments in that country as advancing New Delhi’s objectives on the island country, in much the same way that his businesses in ports, power and cement “coincide with the government’s economic priorities at home”. Adani has repeatedly denied that his firms receive special treatment from Modi’s government — rightly so, not only as the aforementioned Patel episode suggests but also because he now has a contract for the entire solar power needs of the INC-ruled Rajasthan, the administration of which is led by Chief Minister Ashok Gehlot. Besides, Adani has promised West Bengal Chief Minister Mamata Banerjee massive investments in her state.

While India and Adani saw a setback in Sri Lanka when Rajapaksa cancelled a project to develop the East Container Terminal at the new port after protests by unions, the billionaire recovered lost ground last year. Adani Ports struck new deals and Special Economic Zone Ltd was awarded the right to develop, build and operate the West Container Terminal, holding a 51% stake in a joint venture with local conglomerate John Keells Holdings Plc. But at a cabinet meeting in March 2021, Sri Lankan ministers said New Delhi had nominated Adani for the project, a claim that later that month an Indian foreign ministry spokesperson said was “factually incorrect”.

Then the senior Sri Lankan official who had claimed that Prime Minister Modi had exerted pressure on Gotabaya Rajapaksa to award the 500 MW power project to the Adani Group retracted his statement as the office of the Sri Lankan president “vehemently” refuted the allegations too. The official had spoken about the 500 MW renewable energy project in the island nation’s northern Mannar district. This retraction part the hostile media does not want to remember today, as is clear from the omission in the Bloomberg article.

The Sri Lankan authority did not tender the West Container Terminal project, the section of the global media hostile to any BJP government in India alleged. India would have found it difficult to outbid China in an open process, pro-Beijing officials told reporters. In November, the Sri Lankan government had picked China Harbour Engineering Co Ltd to help the island country construct the East Container Terminal, the global media said.

But are Sri Lankans wary of Adani too?

Some Sri Lankan lawmakers accused Adani of signing opaque port and energy deals closely tied to New Delhi’s interests, something his group has always denied, saying the investments meet Sri Lanka’s needs.

Even so, Adani’s global ambitions face challenges. As the billionaire boosted his influence in Sri Lanka, local media and opposition politicians claimed that his companies circumvented rules. Soon after Sri Lankan media reported that Adani signed the northern power agreements in March, Ajith Perera, the chief executive of the Samagi Jana Balawegaya — the country’s largest opposition party — opposed what he called Adani’s “backdoor” entry into the country’s energy industry. Perera said on Facebook that Rajapaksa’s administration was “pampering” Modi’s “notorious friends.”

“It must be transparent and it must be bidded (sic) out,” Eran Wickramaratne, a prominent SJB lawmaker, said in interviews, adding that parliament has not been allowed to scrutinize the contracts. “The colour of the investment does not matter to us, but investment must be transparent, it must be an equal playing field,” he said, adding “we ca not fault the foreign investor, we have to fault our own government and our system.”

In June, the Ceylon Electricity Board Engineer’s Union threatened to go on strike for a law that removed public competition from the allocation of wind and solar projects, pointing an accusatory finger at Adani’s plans in northern Sri Lanka.

Later that month, the chairman of the state-run utility submitted before a parliamentary committee that Modi’s government had pressured Sri Lanka to accept Adani’s energy proposals. He resigned days later, claiming he was “emotional” when making the statement, and after Rajapaksa “categorically” denied the allegations. “We are clearly disappointed by the detraction that seems to have come about,” the Adani Group said at the time, according to a report by an Indian television channel. “The fact is that the issue has already been addressed by and within the Sri Lankan Government.”

Foreign-funded NGOs began protesting in Colombo. The crowds predictably held signs reading “Stop Adani” and “Modi, do not exploit our crisis”. This when Chinese debt has only stripped Sri Lanka of its assets one by one!

Taking on China

India “is worried about Chinese access to the Indian Ocean, and being encircled by Chinese friendly regimes in Pakistan, Sri Lanka and Bangladesh,” said Katharine Adeney, a professor of South Asian politics at the University of Nottingham. Adani’s supplanting of China’s solar power projects represents “a strategic move and one that we are likely to see more of,” she said.

The Indian billionaire has even started to publicly criticise China, saying in September at a conference in Singapore, that China was “increasingly isolated” with Belt and Road facing “resistance”.

A spokesperson for Rajapaksa did not respond to a request for comment. In a statement on the protests to the news agency PTI, the Adani Group said its intent in investing in Sri Lanka was “to address the needs of a valued neighbour. As a responsible corporate, we see this as a necessary part of the partnership that our two nations have always shared.”

Adani, like Prime Minister Modi, hails from Gujarat. He built his fortune over the past decade partly by focusing on business areas that were central to Modi’s national priorities. In 2002, months after Modi became chief minister of Gujarat, more than 1,000 people, most of them Muslims, were killed in the state in one of India’s worst periods of sectarian rioting. Modi, a Hindu nationalist was accused by human rights groups of doing little to stop the violence, allegations he has denied and were subsequently dismissed by the nation’s Supreme Court.

Adani, whose businesses had yet to expand across the breadth of India, was among local Gujarati businessmen who helped create a biannual investment summit in the state that gave Modi a platform to promote his pro-business image. Adani’s fortune has grown exponentially since Modi was elected prime minister in 2014.

In recent years, China’s Belt and Road Initiative has funnelled billions of dollars into South Asia, but Sri Lanka’s grinding economic crisis, coupled with food, fuel, medical and power shortages, presented India with a window to push its influence with its smaller, strategic neighbour. New Delhi has sent Sri Lanka $ 4 billion of aid and credit lines this year as it also attempts to both stem a humanitarian catastrophe on its doorstep and further its geopolitical objectives.

Rajapaksa fled the country in July, handing the reins to Ranil Wickremesinghe following a bout of violent unrest. Since then, Wickremesinghe has sought to dial back anti-Chinese sentiment as his administration initiates debt restructuring talks with both Beijing and New Delhi.

“Ranil’s very much a pragmatic leader in that he realizes every international actor is needed at this moment, he’s not going to take sides,” said Bhavani Fonseka, a senior researcher and lawyer at the Colombo-based Centre for Policy Alternatives. At the same time, Adani’s renewable moves “did not get the attention it should have” amid Sri Lanka’s wider unrest and now there’s relative calm there might be an opportunity for re-examination, she said.

Throughout its article, Bloomberg kept issuing disclaimers that the Adani Group, the Ministry of External Affairs, China’s ambassador in Colombo and a representative for Sri Lanka’s president and Power Minister Wijesekera, the CEB etc did not respond to requests for comment, suggesting the piece is wholly armchair commentary. Bloomberg, by the way, has by now acquired a dubious distinction of its reports being rubbished by the government as partly or wholly false time and again.

The writer is a former diplomat


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