US, India and China vie to help as South Asian nations grapple with economic woes
- Governments from Nepal to Sri Lanka and Pakistan are facing separate challenges, giving the major powers an opportunity to extend aid in return for further influence, analysts say
- While China has backed development and aid across the region, its resurgent Covid-19 battle could boost India’s bid to support Washington’s Indo-Pacific Strategy
In recent weeks, countries across South Asia have witnessed multiple changes. Sri Lanka’s new prime minister said earlier this week that the country’s economic crisis that has brought misery and unrest would “get worse before it gets better”. Further up north, Nepal is said to be heading towards a full-blown economic crisis.
Pakistan, too, is said to be heading towards bankruptcy amid a highly-charged political atmosphere and threats by ousted leader Imran Khan to launch a protest rally if fresh elections are not held.
These economies have also been reeling from the slowdown due to the pandemic, rising national debt, galloping inflation, depleting foreign exchange reserves, the ongoing war in Ukraine, and even economic mismanagement.
The concurrent economic crises across South Asia are separate and do not appear to be linked, with hardest-hit Sri Lanka having almost no more petrol left, and Nepal struggling with power outages.
Nonetheless, these developments are not lost on the three major powers in the region: India, China and the United States, who have stepped up diplomatic outreach or economic assistance to the region.
Analysts say while the hardships faced by the South Asian nations have given major powers opportunities to extend a helping hand in return for further influence, regional countries also need to re-evaluate their dependence on Beijing and ensure a more balanced diplomacy especially between India and China.
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The economic crises have also highlighted India’s indispensable role in the region, especially when China is still reeling from the economic fallout of the Covid-19 pandemic, experts say.