India and Japan are to help Sri Lanka develop Colombo Port prompting speculation of a challenge to Beijing’s signature infrastructure programme. Is it just a case of two countries throwing their hat into the ring or part of a deeper challenge to Chinese influence in the region?

It is hard to overstate the significance of the recent agreement between India and Japan to help Sri Lanka develop its Colombo Port.

Under the deal to develop the East Container Terminal, the Sri Lanka Ports Authority will retain 100 per cent ownership of the terminal, while Sri Lanka will hold a 51 per cent stake in the Terminal Operations Company with the India-Japan joint venture retaining the remaining 49 per cent.

Both the timing of the deal and its terms are conspicuous. After all, Sri Lanka is still smarting from its last experience of turning to a larger Asian neighbour for help in developing infrastructure when, struggling to repay its debts to Beijing, it was forced to hand over control of its Hambantota port and 15,000 acres of land to China on a 99-year lease.

That episode, which gave rise to claims China was using its Belt and Road Initiative investments as a form of debt diplomacy, wasn’t just painful for Sri Lankans, who were forced to come to terms with a loss of sovereignty.

It also gave a fright to India, which saw control of a strategically located territory just a few hundred miles from its shores be ceded into the hands of one of its greatest rivals.

So the news that India has teamed up with another of Asia’s powerhouse economies to offer Sri Lanka a deal regarding another port a deal that (unlike Hambantota) pointedly leaves overall control in Sri Lankan hands has inevitably given rise to speculation that India and Japan are motivated by a desire to push back against Chinese influence, and perhaps even to take on Chinese President Xi Jinping’s signature regional infrastructure initiative the Belt and Road Initiative.

Japan and India have both said that the project should not been seen as a counter to the Belt and Road, but some sceptics have a hard time believing this especially given China is also funding development projects at the Colombo Port. Others suggest the project is better seen as an example of Japan and India throwing their hat into the infrastructure ring, rather than an outright challenge.

After all, the port is not the only example of India-Japan collaboration on infrastructure. The two countries are also partnering in setting up a diesel power plant in the Andaman and Nicobar Islands. These islands, along with some parts of Northeast India, were the only parts of India which were under the control of the Japanese during the second world war, so there is a certain symbolism involved.

Common Interests

There are various reasons why tie-ups such as these between India and Japan make sense at this juncture.

One of them is the personal chemistry between the two leaders. In India, newly re-elected Prime Minister Narendra Modi who now has an even larger majority than before has an association with Japan that stretches back to when he was the Chief Minister of Gujarat province. He has built up a great working relationship with Japanese Prime Minister Shinzo Abe and this is likely to continue.

The Japan-India partnership has blossomed under the two leaders and in a rare honour, Abe hosted Modi at his holiday home in Yamanashi prefecture during his more recent visit to Japan in October last year for the annual bilateral summit.

Abe was among the first to congratulate Modi on his re-election and the pair will meet in Osaka this month for the G20 Summit and later this year in India for an annual bilateral summit.

They won’t be short of talking points when it comes to areas where India and Japan could help each other out. For instance, while the new Indian government sees job-creation as a big issue, Japanese investment could help set up new industries and create more and newer jobs. In return, Japan with its ageing population could make good use of India’s huge pool of trained manpower.

Sea Change

The two countries’ common interests stretch beyond the sphere of infrastructure. Both have an interest in balancing China’s growing influence in the maritime arena, and it was to this end that their forces last month took part in a joint sail-through in the South China Sea alongside US and Philippine vessels. Beijing claims the vast majority of the sea as its sovereign territory, a claim that is disputed by various neighbours.

The sail-through was seen as particularly significant for the involvement of the Philippines, given President Rodrigo Duterte has tended to favour a softly, softly approach towards Beijing.

But the presence of both Japanese and Indian vessels should also raise eyebrows, as it suggests India’s growing closeness with the United States could help it strengthen ties with Japan, Washington’s long-term ally.

The sail-through takes on added weight in light of Japan’s “Free and Open Indo-Pacific Vision” and India’s “Act-East Policy” another maritime interest the two countries share.

For Japan, India is an important part of its vision for the Indo-Pacific, where Tokyo has deployed its helicopter-carrier JS Izumo and the destroyer JS Murasame. Abe has long talked up the need for strong ties in Indo-Pacific as far back as 2007 he gave a landmark speech in the Indian Parliament titled “Confluence of the Two Seas”.

What Next?

The leaders of the two countries both have strong political backing, giving them the leeway to make bold moves. In India, Modi’s party, the BJP, has grown even more powerful since the election. It secured 303 seats in the lower house of the Indian Parliament (the Lok Sabha), improving on its performance in 2014, when it won 282 seats.

This gives Modi huge elbow room and the ability to take hard decisions, both on the internal and external fronts. In Japan, Abe enjoys strong approval ratings and there is no credible opposition to him.

They have already shown signs of strengthening defence cooperation, with the two countries working towards a logistics sharing agreement that would help foster interoperability between their defence forces. India has already signed a similar treaty with the US, known as LEMOA (Logistics Exchange Memorandum of Agreement).

Such moves are significant given New Delhi’s previous eagerness to be seen as non-aligned. Under Modi, it seems, India is becoming multi-aligned.

For his part Abe, fresh from hosting the mercurial US President Donald Trump, knows that strong ties with a Modi-led India could come in handy for Japan, especially if and when Washington or Beijing tighten the screws on Tokyo, whether on the trade or the defence front. Doubtless, there will be similar calculations going on in New Delhi.

Which brings us back to the recent joint investment in Sri Lanka. It may be too early to tell conclusively whether the move is a serious attempt to counter the Belt and Road and Chinese influence or if it is simply a case of the countries throwing their hats into the infrastructure ring.

For now, we will have to wait and see if Tokyo and New Delhi try the same formula elsewhere.