Sri Lanka- LOCATION, LOCATION, LOCATION

Sri Lanka is a country in a major transition and confusion trying to figure what it wants to big when it grows up. So much so that we discovered that “shaking your head side-to-side in Sri Lanka actually means YES”. The good news is that it owns THE location, it has always been a key place for trade and therefore having the “power” in the Indian Ocean. Sri Lanka is also the world's 4th largest tea producer and 2nd largest exporter. And they are a major producer of spices: cinnamon cardamom, curry leaves, coconut milk, and chili. Sri Lanka supplies 90% of the world's “true cinnamon”(Ceylon cinnamon).

Sri Lanka was originally colonized by the Portuguese from 1505 to 1658 (owning the World’s cinnamon monopoly at the time and having the goal to convert the Country to Catholic) but the Dutch threw them out and the Dutch East India Company then controlled the spice trade and were credited with putting in the legal system there. Britain took it over in 1796, unifying the island for the first time, enhancing agriculture, organizing the tea plantations as well as building railways and the roads infrastructure. Indian Tamil labor imported from South India had become the main reason for the ethnic class system (that somewhat still exists today) a way of life here. Then they gained Independence in 1948.

Sri Lanka was a founding member of the Non-Aligned Movement (NAM), an international forum of developing nations established in 1961 to maintain political and diplomatic independence from the US and Soviet power blocs during the Cold War. NAM still exists today. As the 2nd largest group of nations in the world, right after the United Nations with 121 member states (half of the world's population) and meet regularly to discuss global issues, specifically affect developing nations.

The 26-year civil war (1983-2009) between the Sinhalese-Buddhist majority government and Tamil Tiger separatists was regarding fighting to establish an independent Tamil state following decades of alleged ethnic discrimination and violence. The government won after 150,000 deaths and an estimated $200 billion in economic damage and true ethnic equality remains one of Sri Lanka's biggest challenges today.

Whoever controls the ports controls the sea lanes! With 200 billion tons of cargo and 70% of all of world trade shipping passing through here, it is a “strategic location”. The island of 22 million NOW matters to China, India Japan and the USA! Every container ship between Europe and East Asia passes nearby 20 miles from India at its closest point, controls the approach to the Strait of Malacca, through which 80% of China's oil imports pass. Since it is equidistant between the Persian Gulf and the South China Sea, whoever controls Sri Lanka's ports influences resupply, surveillance and control across the entire Indian Ocean. Sri Lanka also sits above critical undersea cable routes between
Europe, India and Asia.

Because of 2019 tax cuts, fuel shortage and often power cuts, inflation hitting 70%, a ban on organic farming in 2021, and COVID and the loss of tourism (10% of their GDP), in 2022 Sri Lanka was the first Asia-Pacific nation in many decades to default on its sovereign debt. In July 2022, protesters stormed and occupied the Presidential Palace in Sri Lanka because of this massive economic crisis that left millions of people without food, medicine, and fuel.

With Sri Lanka needing investment, every major power offered, with strings attached. China offered capital very quickly but with high interest rates and their requirements of control. Unfortunately, the IMF, World Bank, Japan and India offered with too many restrictions and moved to slow. Eventually India provided $4B in aid. With China building ports and facilities at Gwadar (Pakistan), Chittagong (Bangladesh), Kyaukyu (Myanmar), and Hambantota, all places surrounding
India, India’s counter-move was to provide a $500M line of credit for Sri Lanka's northern development, and in 2022 provide $4 billion in emergency credit lines, food and fuel. India now also has a joint energy agreement with Sri Lanka (in conflict with what China is doing there … making it very complicated).

The various ports are controlled by China (and somewhat India) with the US and Japan having continually seeking some influence. China's has strong initiatives in the Indian Ocean Region so the USA established Diego Garcia (a British Indian Ocean Territory) as its primary Indian Ocean naval hub in the 1970s.

Sri Lanka maintains “Independence” but their infrastructure, digital systems and financial debt of $70B (in 2022) makes them very dependent on China. Sadly, they “sold” the main port in a 99-year lease to China. Fiscal, energy, digital, and food production autonomy is difficult for Sri Lanka with this Chinese control. Chinese expansion and control continues to trigger diplomatic protests from both India and USA (i.e., submarine visits to Colombo port have occurred). USA has sought a Status of Forces Agreement, for military access rights but Sri Lanka refused.

China has created jurisdiction without formally owning the area by creating 1square mile of reclaimed land off Colombo's coast built with Chinese capital and engineering as a Special Economic Zone with its own legal system, tax regime and regulatory framework. China's “Belt and Road Initiative (2013)” is the largest infrastructure investment program in human history with over $1 trillion across 150 countries.

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