US fears China may use loans to Sri Lanka for coercive leverage

The United States fears China may use loans to Sri Lanka and Pakistan as leverage for coercion.

US Assistant Secretary for South and Central Asian Affairs Donald Lu said that the US is extremely worried about the possibility that Chinese loans to nations in India’s near neighbourhood will be used as leverage for coercion.

“Concerning Chinese loans to countries in India’s immediate neighborhood, we are deeply concerned that loans may be used for coercive leverage. And we are talking to India, talking to countries of the region about how we help countries to make their own decisions and not decisions that might be compelled by any outside partner, including China,” Donald Lu said in response to a question on Chinese loans to Sri Lanka and Pakistan.

President Ranil Wickremesinghe had this week revealed China’s refusal to agree to the same conditions placed by India and the Paris Club when restructuring Sri Lanka’s debt.

He said that the International Monetary Fund (INF) had proposed that all of Sri Lanka’s main creditors reach a consensus on restructuring Sri Lanka’s debt.

Wickremesinghe said that while the Paris Club agreed to India’s conditions, China refused to do so. Instead China wanted to place its own conditions. (Colombo Gazette)