Loans infringing on sovereignty problematic: USAID chief on Sri Lanka crisis

NEW DELHI: While lauding India’s economic assistance to Sri Lanka, visiting US Agency for International Development (USAID) Administrator Samantha Power cited China’s “opaque” loan deals with the island nation at very high rates of interest as one of the reasons for the country’s current financial predicament.
Power also called upon all countries including India to ensure that Russia doesn’t renege on the UN-supported grain deal it signed with Ukraine to mitigate the global food crisis.
Power discussed the situation in Sri Lanka with her Indian interlocutors and, addressing a gathering later in the day, identified economic mismanagement and corruption, unwise agricultural policies, self-inflicted debt burdens, and a tourism sector crushed by Covid as sources of the financial crisis.
“When the process of receiving loans carries with it a profound infringement on sovereignty and independence and very high interest rates, then things will get problematic,” said Power, responding to a query by ToI about her remark that opaque loan agreements had contributed to the crisis.
Power is currently on a visit to India to “advance the US’ partnership” with the Indian government and people and reinforce India as a critical global development leader in addressing urgent global challenges, according to US authorities. She met foreign minister S Jaishankar on Monday. On Tuesday, Power also met met civil society representatives to discuss freedom of expression, speech, identity, and “the importance of protecting the rights of minority groups”.
She was said to have underscored the US’ “continued commitment” to work with civil society organizations around the globe to advance human rights and fundamental freedoms.
According to Power, the debt challenge was not unique to Sri Lanka and that many “debt distressed” countries in Africa and Asia were hoping that their calls will be answered. It is really essential that Beijing participate in debt relief transparently and on equitable terms with all other creditors, she said.
“Indeed, over the past two decades, China became one of Sri Lanka’s biggest creditors, offering often opaque loan deals at higher interest rates than other lenders, and financing a raft of headline-grabbing infrastructure projects with often questionable practical use for Sri Lankans,” said Power.
“Now that economic conditions have soured, Beijing has promised lines of credit and emergency loans—this is critical since Beijing is estimated to hold at least 15 percent of Sri Lanka’s foreign debt. But calls to provide 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,” she added.
While praising India’s tolerance for dissent and diversity, Power also said headwinds against democratic rule are strong the world over and underlined the importance, for both India and US, of protecting pluralism, democracy and individual rights.
Within the United States and India, she added, there are forces who seek to “sow division; who seek to pit ethnicities and religions against each other; who wish to bend laws, abuse institutions, and wield violence against those who stand in their way”.
“We saw this of course, on January 6 in the United States, back in 2021, just last year. How the United States and India rise to meet these injustices—how fiercely we protect our hard-won pluralism, how insistently we defend our democracy and individual rights—will determine not just our own trajectory but that of the world that we inhabit,” she said.