$100 million to fight tamil tigers from India

Call it an India fund for fighting Tamil Tigers in Sri Lanka. In a step that could have political and diplomatic ramfications, New Delhi is finalising a soft loan package of $100 million (Rs 400 crore) for Sri Lankan defence department to buy arms and ammunition, sources told SundayET.

Though the island nation does not come under the category of the Least Developed Countries (LDC), India has agreed to extend the loan at a highly confessional interest rate of just 2%. India normally charges an interest at London Interbank Offered Rate (LIBOR) plus 1- 2% for extending term loans to a country of Sri Lanka’s stature.

Sri Lanka may get another term loan of $100 million for building railway projects, sources added. Significantly, soft loans worth $200 million for Sri Lanka is quite high when compared with India’s total bilateral disbursement of $500-million soft loans for the entire FY08.

The investment and trade promotion (ITP) division of the ministry of external affairs has been handling the matter so far. No official was willing to comment on this politically-sensitive matter.

As Sri Lanka will use the resources mainly to combat the Liberation Tigers of Tamil Eelam (LTTE), India’s move has been seen as yet another attempt to eliminate the Tamil Tigers in an indirect manner. It is expected that the UPA’s powerful ally DMK may not like the idea of India helping Sri Lankan army in such a big way.

Country’s leading defence analyst C Uday Bhaskar said he was in favour of such a move. “In principle, I support such a move. If Sri Lanka, and for that matter Nepal, need any military help, we should always be the first mover. Otherwise, China, the US or any other country will come and fill up the gap. And in that case, it will be strategically disadvantageous for us,” he said.

Source: indiatimes