In Geopolitics Today - Monday, July 12th
India Losing Out to Chinese Influence in Sri Lanka and Global Defence Revenues Rise Despite Pandemic
India Losing Out to Chinese Influence in Sri Lanka
The island nation of Sri Lanka sits in the Indian Ocean, just southwest of the Bay of Bengal, and southeast of the Arabian Sea and the country occupies a strategic position which overlooks important trade routes between the Bay of Bengal and the Arabian Sea. Given the increasingly competitive international landscape in Southeast Asia, this geostrategic value is drawing the country into the simmering regional competition between India and China.
As India harbours genuine concern about the implications of China’s economic ascendence, the country is increasingly making overtures toward the United States in a bid to balance against China. While Beijing, for its part, is stretching forth across the region through multiple proposed economic corridors, using its newfound wealth to build on its recent development achievements. In particular, Sri Lanka’s membership of China’s Belt and Road Initiative (BRI) has caused alarm in New Delhi, where policymakers, having refused participation in China’s BRI, view the ambitious infrastructure plans with suspicion. And India’s suspicions seemed to have been validated when, in 2017, the Sri Lankan government was forced to hand over the Hambantota Port project to a Chinese company on a 99-year lease in order to cover its spiralling debt.
Since then, ties between Sri Lanka and China have only deepened. In January of this year, the Sri Lankan government approved a Chinese energy project on islands in close proximity to the Indian coastline, no doubt unnerving policymakers in New Delhi. And in February, the Sri Lankan Foreign Secretary, Admiral Jayanath Colombage, let it be known that he considered BRI a “great prospect” for Sri Lanka.
For India, which is still grappling with the pandemic, the present geopolitical landscape does not look favourable. Another BRI member, Pakistan — an ally of China and an archenemy of India — has also sought to boost trade and investment relations with Sri Lanka during a visit this February. India’s reluctance (or inability) to invest in domestic port networks which would boost trade and investment across the Gulf of Mannar and the Palk Strait have given China an opportunity to step in. To balance against this threat, New Delhi is likely turn to the United States.
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Global Defence Revenues Rise Despite Pandemic
The global economy is estimated to have contracted roughly 3.3 percent in 2020, according to figures provided by the International Monetary Fund. The scale and speed of this economic downturn — mostly brought about by responses to the outbreak of Covid-19 — has been unprecedented, and the crisis has had the effect of undermining global financial stability, with many industries remaining at a standstill in many parts of the world.
But the ongoing Covid-19 pandemic doesn’t seem to have affected the revenues of the global defence industry as it has commercial industries. While the pandemic has been especially tough on the commercial aerospace and tourism industries — largely as a result of travel restrictions imposed by governments worldwide — the same could not be said about the productivity of the global defence industry. Particularly surprising has been the ability of defence companies to adapt to the production slump of commercial aircraft.
That the defence industry appears largely unaffected by the pandemic is derived from a new report published by Defence News, compiling together a list which ranks one hundred of the largest defence firms in the world. The report finds that revenues in the world’s largest defence firms in 2020 was $551 billion, up roughly 5 percent from $524 billion in 2019. US defence firms were found to be most lucrative, making up six of the top 10, and eleven of the top 25 in the ranking.
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