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Indian Prime Minister Narendra Modi, left, and Chinese President Xi Jinping. India and China see a chance to deepen their geopolitical influence in cash-strapped and increasingly vulnerable Sri Lanka and the Maldives, both strategically located in the Indian Ocean.   © Nikkei montage/Source photos by Reuters
Asia Insight

India and China compete over Indian Ocean debt-relief diplomacy

Sri Lanka and Maldives seek bailouts as Asian giants dangle dollars to gain edge

MARWAAN MACAN-MARKAR, Asia regional correspondent | Sri Lanka

COLOMBO -- Sri Lanka's navy scours the island nation's northern waters in search of Indian smugglers hauling boatloads of turmeric, a staple spice used widely in South Asian cooking. The ultranationalist government of President Gotabaya Rajapaksa this year added the yellow seasoning to a list of banned imports in a desperate bid to prevent an outflow of precious U.S. dollars.

Meanwhile, the Maldives, to Sri Lanka's southwest, has imposed limits on the use of dollars by locals to settle their monthly debit and credit card bills. The Bank of Maldives, the largest commercial bank in the region's smallest country, in September set a monthly limit of $250 for each card, widely used by small businesses in the archipelago to pay for imports.

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