Washington, DC – The Embassy of Sri Lanka in Moscow announced today (October 17) progress in securing a long-term credit line from Russia in order to import fuel to Sri Lanka. “This Embassy is of the view that this credit line facility will play an important role to make adequate fuel supplies available to Sri Lanka at a competitive price in the months to come,” said the embassy in a statement posted on their website.
In response to a question from Global Strat View on Sri Lanka’s announcement, a State Department spokesperson said, “We recognize the pressure Sri Lanka’s government is facing to secure affordable fuel supplies. While the United States was able to ban for itself oil, LNG, and coal imports from Russia, given our position as an energy producer, other countries will have to make their own choices regarding energy imports, based on their own circumstances.”
Interestingly, when this was announced, Assistant Secretary of State for South and Central Asian Affairs Donald Lu was visiting Sri Lanka (October 17-19) to discuss US -Sri Lanka relations and Sri Lanka’s economic situation. Assistant Secretary Lu met with senior Sri Lankan officials to discuss ways in which the United States and Sri Lanka could work together to promote economic stability, regional security, human rights, and responsive, transparent, and inclusive governance.
Senior journalist Rajesh Sundaram, who has covered Sri Lanka extensively for two decades, said, “Nothing comes without strings attached when you are a financial basket case. All the aid Sri Lanka is getting, even from India and China, comes with some strings and expectations of business/ geostrategic/diplomatic concessions. Sri Lanka would be expected to oppose adverse resolutions at multilateral fora against Russia. And for Russia throwing a credit line to a tiny island nation is not a big price to pay. It will also ensure imports of tea and spices and a sanctuary for Russian tourists.”
Sri Lanka’s President, Gotabaya Rajapaksa, had spoken to Russian President Vladimir Putin in July of this year to request credit support for fuel imports to Sri Lanka. The island nation has seen a massive jump in prices of essential commodities, leading to shortages and empty supermarket shelves.
Had a very productive telecon with the #Russia President, Vladimir Putin. While thanking him for all the support extended by his gvt to overcome the challenges of the past, I requested an offer of credit support to import fuel to #lka in defeating the current econ challenges.
— Gotabaya Rajapaksa (@GotabayaR) July 6, 2022
Sri Lanka’s leadership has been lured in the past by the easy availability of cash from China to finance ambitious infrastructure projects that give the impression of rapid economic development. Political expediency has led Sri Lanka’s leadership to ignore conditions that later come back to haunt them. The credit support from Russia is another example.