It’s been a tough year for India’s second-richest man Gautam Adani. His Adani Group faces growing, credible accusations of corruption and stiff local opposition against its projects in places like Bangladesh, Kenya, and Sri Lanka. All of this is complicating its ambitious global push.
Sunday’s shock presidential election in Sri Lanka adds to Adani’s troubles. It brought to power a political outsider: the leftist politician Anura Kumara Dissanayake, also known as AKD, whose anti-establishment, anti-corruption campaign included opposition to a major Adani energy project in his country.
Dissanayake’s rise to power could also be a setback for Adani’s patron, Indian Prime Minister Narendra Modi, as the two men’s ambitions — and perhaps even their fates — are intertwined.
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Dissanayake and India
President Dissanayake’s Janatha Vimukthi Peramuna (JVP) is a Marxist-Leninist party that’s had a fraught history with India. That context suggests he’ll tilt toward China and against India.
In the 1980s, the JVP opposed what it has called “Indian expansionism.” It used violence against those seen as supporting the “Indian Peace Keeping Force” deployed in Sri Lanka.
But the JVP has since departed from its militant origins. Dissanayake has also tried to mend fences with New Delhi, going so far as to describe it as “our closest neighbor” and “a major political and economic center” prior to a visit to the country earlier this year.
Sri Lanka’s new president, however, still jealously guards the island country’s sovereignty — a theme the State Department astutely echoed in its statement on the elections. The defense of Sri Lanka’s sovereignty — territorial, political, and economic — will shape how Dissanayake deals with India as well as other powers, including China.
Adani in Trouble
In 2021, Dissanayake described a major port and real estate development project championed by the corrupt Rajapaksa family-led ancien régime as a potential “Chinese colony.” He’s since used similar language against the Adani Group.
Dissayanake recently pledged to cancel an Adani Group wind power project, which he says is not only overpriced but also infringes upon Sri Lanka’s “energy sovereignty.”
While Dissanayake may want to avoid a clash with India, which provided his country with an emergency $4 billion loan during the 2022 crisis, he may not be able to do so with the Adani Group. And that will have some effects on the bilateral relationship given the Adani-Modi nexus.
In 2022, a former head of Sri Lanka’s public electric utility alleged that the wind power project was awarded to the Adani Group due to Modi’s “pressure” on the then-president of Sri Lanka, Gotabaya Rajapaksa.
In 2020, Dissanayake also criticized an Adani container terminal project at the Colombo port, calling it “corrupt.” That project is being financed by the U.S. International Development Finance Corporation (DFC), as part of Washington’s bet on Adani to help it counter China’s Belt and Road Initiative.
While Dissanayake’s politics have trended toward the center, he’s pledged more people-centric economic planning and railed against crony capitalism. And that’s why he won Sri Lanka’s first direct election since the 2022 protests that brought down Rajapaksa after the country defaulted on its external debt. Sri Lankans used the opportunity to elect a man they see as a true alternative to the families who have dominated their country for decades.
Dissanayake has a tough act ahead of him as he seeks to rework the country’s international bonds and an onerous International Monetary Fund program. Canceling or renegotiating the deals with Adani may be an easier task — and one his voters would appreciate.
The Adani-Modi Model of Overseas Investment
The Adani story that’s playing out in Sri Lanka is one being seen elsewhere.
An Adani Energy electric power supply contract in Bangladesh has been criticized by those in the new government, street protestors, and independent experts as expensive and made secretly by the previous regime.
In Kenya, opposition figures and civil society have tried to block plans to outsource operations of the country’s largest airport to the Adani Group through a no-bid contract.
There’s an uncanny pattern here. Modi meets with a foreign leader. Months later, Adani gets a no-bid contract on extremely favorable if not exploitative terms. Protests by civil society and the opposition follow.
In fact, an investigation by the Indian news site Scroll found that most of the Adani Group’s foreign projects were announced shortly after Modi met with the host country’s head of state.
The Big Picture
The U.S. is partnering with India and Adani to provide an alternative to what it claims is Beijing’s exploitative, coercive model of development financing through the Belt and Road Initiative. And yet the Adani Group enters markets in the developing world through means similar to that of Chinese state-owned companies. It leverages its own government’s relative geopolitical strength to secure secretive, sweetheart deals with corrupt foreign leaders against the host country’s public interest.
For Washington, the Adani Group presents more acute reputational risks as a wave of anti-establishment sentiment grows in developing countries locked in a cycle of slow growth, rising costs of living, and high youth unemployment.
And for New Delhi, the coming months will serve as a test of whether it can recalibrate its regional strategy, pursuing a more humble and less extractive approach, or whether it’ll continue to alienate its neighbors as it’s done in Bangladesh, the Maldives, and elsewhere.
Arif Rafiq is the editor of Globely News. Rafiq has contributed commentary and analysis on global issues for publications such as Foreign Affairs, Foreign Policy, the New Republic, the New York Times, and POLITICO Magazine.
He has appeared on numerous broadcast outlets, including Al Jazeera English, the BBC World Service, CNN International, and National Public Radio.