Safeguarding island interests

Wednesday, 7 March 2012 00:01 - - {{hitsCtrl.values.hits}}

OIL seems to have returned to the headlines as reports indicate that India may be pressurising Sri Lanka to allocate it blocks in the Mannar Basin. An article in The Hindu remarks that India is persuading Sri Lanka to allocate oil exploration blocks in the waters that separate them, as it considers the location too strategically important to allow companies from other nations to base themselves in.

Diplomatic sources said the two countries were trying to set up a meeting between the Petroleum Ministers this month to discuss the issue afresh, now that Cairn India has struck oil in one of the blocks. If the talks make progress, the two Ministers could meet again in October, the sources said.

After the war with the LTTE ended in 2009, Cairn, which was allocated a block two years earlier, was encouraged by New Delhi to take up exploitation in earnest. This was the first time in 25 years that a company had prospected for oil in an area whose seas were considered no-go during the heyday of the LTTE.

India plans to step up its efforts in view of the international interest in the area after the war ended. Russian, Vietnamese and Malaysian companies have held meetings on the subject with senior Sri Lankan officials, while China has also expressed its desire to get involved.

“While Russia, Vietnam and Malaysia are considered friendly countries, New Delhi would not like to court adverse publicity at home if Chinese companies are successful. It has faced flak after the Chinese took up the expansion of the Hambantota Port in southern Sri Lanka because India had passed up the opportunity,” the report said, adding that India expects a positive response from Sri Lanka given its support on power devolution and human rights issues.

Sri Lankan officials are also scrambling to find alternative oil sources after the US made it clear that the country would not be eligible for exemptions. Talks between Saudi Arabia and Abu Dhabi are happening apace and it is speculated that closer ties with Qatar may also result in an oil deal.

In the background of the International Monetary Fund downgrading Sri Lanka’s growth in 2012 to 7.5 per cent, increasing cost of living and a depreciating rupee, the Government is hard-pressed to retain economic momentum. Nonetheless, the borrowing spree continues, with China agreeing to yet another loan – this time of US$ 278 million to build a railway line.

Sri Lanka may need India in Geneva and while the latter’s stance has not been declared, the actual result of the UNHRC review will take several more weeks to become apparent. Sri Lanka now has to face ‘Big Brother’ India on a different platform and balance its interests to maintain economic growth and political stability.

Sitting as a regional superpower on Sri Lanka’s doorstep, it is impossible to ignore India. Yet, the question remains: How can its demands be dealt with? If such demands are not a present issue, it would be practical to expect them and prepare in advance. After all, in alliances between countries, there are no permanent enemies or permanent friends, but only permanent interests.