What Sri Lanka Wants in the Indo-Pacific

U.S. Indo-Pacific strategy, a critical formulation of the “rebalancing” of Asia, holds that a “free and open” Indo-Pacific that is prosperous, secure, and resilient is of paramount importance to U.S. foreign policy. However, the recent House Indo-Pacific Subcommittee hearing on the Indian Ocean and the 2023 Indian Ocean Conference has brought to light an important gap in this strategy—the need for stronger and wider engagement with smaller states to bolster regional economic global value chains, enhance security through defensive capacity building, and build resilience to modern day threats and great power politics playing out in the region. The island nation of Sri Lanka, which sits directly at the crossroads of Indian Ocean trade, is a key country for this type of littoral engagement with the United States. Accordingly, it is also important to understand Sri Lanka’s concerns and core interests about such engagement. What Sri Lanka is seeking from the U.S. that it feels has been lacking in recent years is essentially a pragmatic strategic relationship rather than a politically charged one—that is, a relationship that expands economic partnerships to reduce dependence and increases security resilience to combat a variety of threats, both military and otherwise.

Pillars one and two of the Indo-Pacific Economic Framework for Prosperity (IPEF), emphasize fair trade and supply chain resilience as critically important to U.S. strategy and its regional economic positioning against China. Sri Lanka’s highly ranked port efficiency, proximity to some of the busiest international shipping routes, and relationships with key U.S. South Asian regional allies such as India, Thailand, and Singapore make it a viable economic partner and a key part of the South Asia global value chain. Sri Lanka is an important part of U.S. plans to bolster this regional and Indian Ocean-specific economic coordination, including USAID-assisted programs to strengthen and build up BIMSTEC, an initiative for technical and economic cooperation centered in the Bay of Bengal. However, Sri Lanka has also recently established criteria for joining the China-led Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Trans-Pacific Partnership, both of which the United States has not joined. While there are significant benefits Sri Lanka can reap from joining the U.S.-led IPEF, there has not been official interest expressed about joining, a possible indication that Sri Lanka would first like to see more done to strengthen the framework’s inclusivity and infrastructure before it considers becoming a member.

Although the full extent of Chinese naval interests in the Indian Ocean have not yet fully materialized while the Chinese navy remains focused on the Taiwan Strait and the South China Sea, China’s economic investments in Sri Lankan ports and a naval ship visit to the Hambantota port last August have raised some concerns about China’s regional security intentions. Thus, much is being made of strengthening the capacity of Sri Lanka’s naval forces to deal with external threats, including China. However, due to Sri Lanka’s non-alignment policy, an anti-China U.S. defense policy in Sri Lanka won’t necessarily receive full support on the Sri Lankan side.

U.S.-Sri Lanka defense cooperation has thus been framed as increasing coordination and capacity-building measures, namely through Cooperation Afloat Readiness and Training naval exercises the United States conducts jointly with Sri Lankan armed forces and fellow Quadrilateral Security Dialogue members such as India and Japan. Recent engagements between U.S. State Department and Sri Lankan defense officials have also emphasized the importance of increasing maritime domain awareness and focusing on “non-traditional” security issues, including combatting the modern-day threats of climate change, trafficking, piracy, and unregulated fishing.

The bilateral relationship has not been without hiccups. Since 2009, the United States and several Western states known as the “Core Group” have expressed concern about Sri Lanka’s human rights accountability and postwar reconciliation efforts through nine resolutions that have been passed in the UN Human Rights Council since the war ended. These have resulted in fractured political relations and the use of anti-western rhetoric by previous Sri Lankan administrations.

Although Sri Lanka has been sensitive to this criticism, the nation acknowledges that it must be mindful of its own geopolitical concerns. To maintain non-alignment, it believes it must hedge its relations between the geopolitical triangle of the United States, China, and India. Sri Lanka has therefore been cautiously navigating its political and diplomatic relationship with the United States, knowing that it cannot afford to completely disengage. Economically, the United States is its top export market—it earned $3.3 billion U.S. dollars from exports to the United States in 2022, 26 percent of its total export earnings. Furthermore, Sri Lanka’s current debt restructuring and economic recovery in the aftermath of the 2022 financial crisis require support from multilateral parties, including the United States, who have expressed their “readiness” to help Sri Lanka throughout the process. Sri Lanka also recognizes the role the United States has played in strengthening Indian security, which is of great benefit to Sri Lanka’s own external security and the Indian Ocean more generally.

As the United States pushes forward with its Indo-Pacific strategy, its collaboration with Sri Lanka will be critical to the larger task of building partnerships, resilience, security, and prosperity in the region. An adequate and calculated reciprocal engagement between these two countries that is aware of the sensitivities, capacities, and interests on both sides will be best for bilateral and regional prosperity in the years to come.