Speaking virtually at the 27th International Conference on the Future of Asia conference held in Tokyo, Japan, Sri Lanka’s President, Gotabaya Rajapaksa, pleaded for financial assistance but his call comes amidst a low point in Sri Lanka Japanese relations.

Speaking at the conference Gotabaya urged for “the assistance of our friends in the international community to ensure that our immediate needs in terms of importation of essential medicines, food supplies, and fuel are met. He further added that “Japan remains one of Sri Lanka’s key development partners” and expressed his hope to secure bridging funding worth an estimated 3.5 billion USD.

The request comes at a low point in Sri Lankan-Japanese relations. Following his appointment to the Presidency, Gotabaya Rajapaksa, cancelled a $1.5 billion Japanese-funded light rail project for Colombo which had been agreed upon in March 2019. Sri Lanka would similarly cancel the East Container Terminal (ECT) project at the Colombo Port which Japan, India and Sri Lanka agreed upon in 2019 worth an estimated $700 - $800 million dollars.

The unilateral cancelling of the agreement was a major blow to Sri Lankan relations with India and Japan given the importance of the sea to both countries. The ECT saw almost 70% of Sri Lanka traffic come from India and was a key outpost for New Delhi’s export economy. Similarly for Japan, an energy-dependent country, the sea lanes remain of critical importance for its economic security.

Instead, the Rajapaksa spurned Sri Lanka allies in favour of closer ties with China, agreeing to the Colombo Port City project and agreeing to lease Hambantota port to China for 99 years. China would return the favour not just financially but also by agreeing to defend Sri Lanka at “international fora including United Nations Human Rights Council” where the country stands accused of numerous war crimes.

Relations with China however have since sullied following the Rajapaksa’s imposed ban on chemical fertilisers and the country’s refusal to pay for an import of 20,000 tonnes of fertiliser. Sri Lanka refused to claim the fertiliser was substandard leading to a lawsuit and the blacklist by China of the “People's Bank”, the second-largest state-owned commercial bank in Sri Lanka.

Responding to the crisis, China has agreed to donate 2,000 tonnes of rice worth an estimated 2.5 million USD but has yet to respond to requests for debt restructuring and Sri Lanka’s plea for $2.5 billion USD in financial aid. Similarly, Japan has agreed to provide USD 1.5 million through a World Food Programme (WFP) program for essential food rations, the country remains tight-lipped on its further commitments.

Commenting on China’s perspective, Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University, told Bloomberg news:

“Beijing has for the past couple of years been rethinking its external lending because their banks realised they were carrying a lot of debt with countries whose prospects of paying back were quite limited”.

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