https://foreignpolicy.com/2022/07/13...ly-corruption/
China Made a Failed Bet on Sri Lanka’s Rajapaksa Family
Beijing’s investments in the island look shaky after protests topple the government.
Michael RowandJuly 13, 2022, 1:27 PM
As Sri Lankan protesters stormed the presidential residence in Colombo, the Chinese Embassy released no statements and did not tweet. The Chinese Ministry of Foreign Affairs offered no comment until Monday afternoon, well behind others such as India, the European Union, and the United States. The French Embassy even retweeted a tweet comparing the events in Sri Lanka to the French Revolution. Yet the silence from Beijing that immediately followed the collapse of the Rajapaksa regime (and the word salad from the Ministry of Foreign Affairs that finally emerged) should not be confused for a lack of interest. The fall of the Rajapaksa government in Sri Lanka will have considerable long-term implications for Chinese international politics—if the family doesn’t claw its way back into power.
Members of the Rajapaksa family have held public offices in Sri Lanka for more than half a century. The current generation that includes Mahinda Rajapaksa and Gotabaya Rajapaksa, both of whom have been president, are the grandchildren of Don David Rajapaksa, who held a powerful colonial post when Sri Lanka was controlled by the British Empire. Their father was a deputy speaker of the Sri Lankan Parliament after the country’s independence. Many other family members have held government positions. The family has nearly cornered political power in Sri Lanka for much of this century, and its power has come with conspicuous corruption.
China has a long relationship with Sri Lanka generally and the Rajapaksa family specifically. Sri Lanka was among the first noncommunist countries to recognize China after the Chinese Civil War concluded. When Gotabaya Rajapaksa, then the defense minister to his brother Mahinda Rajapaksa, was planning the campaign that would defeat the Tamil Tigers in the 2000s with Field Marshal Sarath Fonseka, it was China that provided the arms.
When word reached the United Nations of heavy weapons use and atrocities by the Sri Lankan military in its campaign against the Tamil Tigers, China blocked efforts to even pass a statement of warning against attacks on civilians. When Mexico attempted to have Sri Lanka placed on the formal discussion agenda of the United Nations, China kept it off. When the campaign concluded in victory, then-President Mahinda Rajapaksa publicly thanked China for its assistance in the war.
China’s investment wasn’t just in Sri Lanka; it was specifically in the Rajapaksa family. This is not uncommon in Chinese diplomacy. Chinese leaders often seek to develop relations directly with elites and their families, ignoring opportunities for engagement with civil society or the broader public. Entreaties to the leaders of Papua New Guinea and the warm reception that Chinese President Xi Jinping received led to domestic perceptions of elite capture. Relationships where the size and structure of the respective economies are deeply asymmetric present particularly inviting opportunities.
The economic fragility of the smaller country offers leverage in negotiations. Chinese leaders have also sought to promote autocratic norms in their relationships with international partners. The Chinese government cultivated relations with the Rajapaksa family by offering expensive vanity projects, such as Mattala Rajapaksa International Airport in southern Sri Lanka, which was principally funded by a high interest loan from a Chinese bank and has operated at a loss since it opened.
Many of these projects predated the commencement of the Belt and Road Initiative (BRI) in 2013. But Chinese investment in the Rajapaksa family grew during the BRI era. During Mahinda Rajapaksa’s 2015 campaign, at least $7.6 million went directly from a majority state-owned Chinese corporation to Rajapaksa’s campaign expenditures. Hundreds of thousands of dollars went to pay for “gifts” to supporters of Rajapaksa. The Chinese ambassador to Sri Lanka even openly lobbied for voters to pick Rajapaksa.
When Rajapaksa still lost and a new government came to power, the bitter fruit of this corrupt arrangement became clear. The state was charged with paying massive loans from Chinese banks for infrastructure projects bearing the name of Rajapaksa. And when it could not pay, it was induced to offer a 99-year lease on a port near the hometown of the Rajapaksa family. These maneuvers were not merely commercial ones. When Sri Lankan officials discussed the terms of the port agreement with their Chinese counterparts, Chinese officials were frank that they saw intelligence and strategic value in the possession of the port.
As the Rajapaksas prepared to return to power in multiple government offices, they remained linked to Chinese funding. In 2018, a Chinese-Sri Lankan joint venture that specialized in container shipping was forced to admit it had donated more than $55,000 to a charity controlled by the sister-in-law of Mahinda Rajapaksa. The inability of the Rajapaksas to manage the country’s spiraling economic crisis only exacerbated these embarrassments.
The port, with its proximity to major global shipping routes and the military base at Diego Garcia, is strategically important. Whether the so-called string of pearls strategy (a strategy of port acquisition to increase Chinese military and economic reach, which was posited by a Washington consulting firm nearly two decades ago and has been very influential) is real or not, the port has expanded options for Chinese power projection. The events in Sri Lanka pose considerable risk to Chinese ambitions in the country and the region. Considering how ardently protesters loath the Rajapaksa family, it is likely that any new government will seek to position itself in opposition to the family and its positions.
While Chinese ties with other Sri Lankan figures are not nearly as deep, China’s position looks potentially frail. In the midst of the worst financial crisis in the country’s living memory, foreign debt accumulated by corrupt leaders offers an easy target for political actors seeking new followers. By engaging almost solely at the elite level of the Rajapaksas, Chinese assets in Sri Lanka are now at risk. The issue of Chinese assets is well known by Sri Lankans and has prompted serious protests before.
Sri Lanka is unlikely to be the only country where entrenched leaders are confronted by an angry populace this year. The island’s economic crisis was intensified by the transnational issue of inflation and supply chain disruptions from the global pandemic and Russia’s invasion of Ukraine. It became an uber-crisis, each individual failure building on the others. There is even a paper shortage in Sri Lanka that caused commentators to ponder whether there would be enough ballots to hold an election. Given the disproportionate way that mounting global economic tensions may be felt over the next year, leadership in other developing countries will be under pressure.
In the immediate term, Beijing is unlikely to make any sudden moves. The Sri Lankan revolution, the assassination of former Japanese Prime Minister Shinzo Abe amid Japan’s election season, and the continued threat of COVID-19 and economic turmoil have all created an unsettled mood ahead of the Chinese Communist Party’s critical National Congress this fall. With some key decisions likely waiting for the leadership retreat at Beidaihe along China’s northeast coast late in the summer, Beijing is likely to maneuver cautiously while rhetorically denouncing the successful popular movement that overthrew the Rajapaksas. China and Russia frequently denounce popular politics and protest movements that are unfriendly to authoritarian regimes as “color revolutions.”
The positions of any new Sri Lankan government cannot be known at this point. Sri Lanka’s first priority will necessarily be the economic crisis—and it may turn to China for help there regardless of its ties to the Rajapaksas. But the upheaval presents a challenge to Beijing’s effort to change the balance of power in the Indo-Pacific in its favor—and of the strategy of elite cultivation it prefers. Whatever the returns China gained for the time and money spent cultivating the Rajapaksas and their associates though, the payoff may be much worse than expected.
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