‘Swift help vs opaque loans’ — USAID chief on India & China’s ‘contrasting’ role in Lanka crisis

New Delhi: USAID administrator Samantha Power Wednesday sought to highlight the “contrasting” roles of India and China in relation to the economic crisis in Sri Lanka, calling Beijing’s “opaque loan deals” while hailing New Delhi as an “impactful development leader” and ” a friend of the poor of the world”.

US Agency for International Development or USAID is an organization charged with: directing the US government’s international development and humanitarian efforts. Power, a former US ambassador to the UN under Barack Obama’s administration, made the remarks during a speech at IIT Delhi.

She is on a three-day visit to India to further the US-India strategic partnership and “Strengthening India as a critical global development leader in addressing pressing global challenges, including food insecurity”.

In her comments to IIT, Power praised India’s efforts to help Sri Lanka overcome the current economic crisis with aid and assistance worth nearly $4 billion since January this year.

“India has responded very quickly with an absolutely critical set of measures,” said Power. “Compare this with the People’s Republic of China, which has been an increasingly eager creditor of Sri Lankan governments since the mid-2000s.”

China, she said, “became one of Sri Lanka’s largest creditors, often offering opaque loan agreements at higher interest rates than other lenders and financing a series of headline-grabbing infrastructure projects of often questionable practicality.”

Some of the other reasons Power says have contributed to Sri Lanka’s current economic crisis include economic mismanagement, corruption, ill-advised agricultural policies, self-imposed debt and a tourism industry that has been “crushed” by Covid and exacerbated by the food and fuel crisis.

There is uncertainty, she added, as to whether Beijing will provide more relief or restructure the island nation’s debt.

“As economic conditions have deteriorated, Beijing has promised credit lines and emergency loans. This is critical as it is estimated that at least 15 percent of Sri Lanka’s external debt is held by Beijing.

But calls for more significant relief have so far gone unanswered and the biggest question of all is whether Beijing will restructure debt to the same extent as other bilateral creditors,” Power said.

The USAID administrator also stressed the importance of “trading rather than aid,” saying creditors should move beyond aid and make investments to beneficiary countries that will help them achieve a position where they can trade.

She said that India has traditionally always stepped forward and helped poorer countries under South-South cooperation. “But now the stakes are even higher.”

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India is an impactful development leader

Power called India an “impactful development leader” and “a friend of the world’s poor”, saying that this role was made possible because of its democratic values.

“What has positioned India as a future development leader is not its assets, but values. It is India’s multi-ethnic, multi-party democracy that has enabled it to meet the challenges and become more resilient,” said Power.

She cited India’s support for free speech and tolerance for diversity and dissent as examples of such values.

Asked about the perception that Indian democracy has been degraded and that the US has avoided taking a strong stance on it, seeing New Delhi as an important counterweight to China, Power said: “I don’t think that’s a fair characterization is. India is an absolute critical player not only in the Indo-Pacific, but all over the world. My comments were to capture this aspect and how much potential there is in India’s leadership beyond its borders.”

Power Tuesday met, among others, the Prime Minister’s First Secretary PK Mishra, the Foreign Minister S. Jaishankar and the Foreign Minister Vinay Kwatra.

(Edited by Monami Gogoi)

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