The three countries must contend with a number of common threats in regard to their bilateral and trilateral relationships as well as finding ways to enhance those relationships. Sitting astride busy sea lines of communication, the Maldives and Sri Lanka are vulnerable to oil pollution. Through capacity building, India should equip them in managing such emergencies, while officers who have undergone military training in India and now hold senior positions in the Maldivian military and the Sri Lankan Government can further facilitate useful links with India.

Key Points

- Sitting astride busy sea lines of communication, the Maldives and Sri Lanka are vulnerable to oil pollution. Through capacity building, India should equip them in managing such emergencies.

- Sri Lanka’s geographic advantage, coupled with India’s and its own pool of maritime professionals, could enable them to service the international maritime community.

- India should try to win over the politically-powerful Buddhist clergy with its strong connections to Buddhism.

- Officers who have undergone military training in India and now hold senior positions in the Maldivian military and the Sri Lankan Government can further facilitate links with India.

Sri Lanka's government bonds jumped to their highest level since September on Monday, on reports that the government had sealed a long-awaited $500 million loan deal with the China Development Bank.

Sri Lankan bonds due to mature on July 22 climbed 2 cents to above 82 cents on the dollar having been as low as 65 cents early last month on worries that the island's deteriorating finances could lead to a default.

"The $500 million loan which will be disbursed this week, should provide a further boost to Sri Lanka’s FX reserves which the central bank recently estimated at $4.1bn in end March, excluding the $1.5bn PBOC FX swap line," analysts at JPMorgan said in a research note.