ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Colombo-Centric New Silk Road

Since the end of the 25-year-old Eelam civil war, Sri Lanka has entered into another increasingly treacherous conflict - an as-yet subtle but emerging one between the United States and China to secure the fl ow of Persian Gulf energy resources and free trade in the Indian Ocean. The 21st century forces of global realities are not purely geopolitics but surely geoeconomics. When Sri Lanka drifted towards Beijing as China's "string of pearls" naval strategy gained momentum, challenges to American hegemony in south Asia escalated as if Washington and Beijing were in direct competition with each other under the shadow of New Delhi. The new American "re-charting" strategy tries to prevent further deterioration of US security interests in the island and to secure the balance of power in south Asia.

Like the old Silk Road that stretched from the ancient Chinese capital of Xian all the way to ancient Rome, modern China’s strategic and commercial supply line extends over the Indian Ocean and the South China Sea to include the focal transit port of Sri Lanka at the southern tip of India. With rapidly growing military, diplomatic, and economic ties with China since the brutal 25-year civil war between the Government of Sri Lanka and the Liberation T­igers of Tamil Eelam (LTTE) ended in May 2009, the war-shattered island nation desperately needed foreign assistance to support post-conflict reconstruction, protect war refugees, avoid further crises, and guarantee overall economic development for its highly literate and industrious people.1

To finance rebuilding efforts, Sri Lanka returned to Washington and borrowed $2.6 billion from the International Monetary Fund (IMF) in July 2009.2 Sri Lanka has been under the guidance of the World Bank and IMF (both undergirded by the influence of United States (US) foreign policy) over the past three decades, which has included the austerity measures and conditionality of these two Bretton Woods Institutions’ (BWIs) structural adjustment programmes. It has been a painful experience for islanders whose social welfare in education, health, and agriculture was reduced by structural changes and budget reductions. The conditionality of Washington’s policy prescription has primarily been influenced by American-style trade liberalisation and economic growth stra­tegy, as well as democratic system of governance and transparency.

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