Features
A citizen’s understanding of the current economic crisis and the IMF programme
by Dhammike Amarasinghe
Synopsis
The current economic crisis is not something brought about solely by corruption in high places or some recent policy mistakes of the Gotabaya administration. While those matters certainly did exacerbate the situation, the crisis itself has been long coming.
Two features of our economic situation that needs to be noted are: 1. Government expenditure has been persistently in excess of its revenue, 2. Imports have also been persistently above exports. Both together indicate that persistently we have been living beyond our means. It is time to make corrections.
The immediate problem was the drying up of foreign exchange reserves resulting in our having to default our foreign debts and not being able to import essentials. The IMF programme is only a helping hand to get out of that crisis. We need to put our house in order by implementing the various action points we have agreed with the IMF to execute, while using the IMF money (and other donor assistance it might trigger)to meet part of our external fund needs as well as some part of domestic fund requirements, until we can again stand on our feet.
However, this ‘firefighting exercise’ will have to be followed up with a longer term reform agenda, if we are to set ourselves on the path to prosperity. Two items of the IMF programme that are not often highlighted are 1. the Social Safety Net for the impoverished and the anti-corruption agenda.
It is essential for all citizens to have a correct understanding of the current economic crisis and the programme of action agreed to with the IMF, because in the unprecedented crisis that we are steeped in, the solution of the problem or problems depends very much on citizen support – support, NOT for any individual or party, but for a course of action that is likely to lead to a solution. It is no time for political games. Emotional rhetoric has to be ignored. What is at stake is – without exaggeration – the future of our people including generations to come. And not whether some individual (that one may happen to dislike) will get credit or whether some party wins the next election. That would be an extremely foolish attitude. This is a make or break situation.
Educating the public on such issues is actually the responsibility of the expert. However I have not seen yet a comprehensive all-embracing survey of the current situation – from its beginnings, intended for the layman, written by any expert, What we have seen are expert analyses of particular aspects of the situation, not always fully understandable by the ordinary person. I am no expert. However, I shall try to set down my understanding of these matters, acquired from reading the relevant documents and the analyses of experts. (I intend to do this in Sinhala later) Some knowledge of the basics of economics acquired many years ago at the university did help. Assisting ones compatriots as best as one can, to understand the crisis and what needs doing to overcome it, is I think a civic duty. Experts are welcome to make any corrections necessary.
At the outset itself, I must say that the first point in my understanding of the current situation is that it has been long in coming, only accelerated by some incorrect policy decisions made by the Gotabaya administration. My understanding is also that although corruption in high places has exacerbated matters, it is not the root cause of the present malaise. I shall also try to show that corruption may not be limited to the stealing, misappropriation or misuse of public funds in various ways by the high-ups and others but also includes, according to some people, a certain feature of day to day normal commercial practice. I shall elaborate on this in due course.
The Immediate Problem
To take the immediate problem first, before going on to the root cause: that problem is our inability to repay our public debt (i.e the debt of the government and government entities) to various creditors, owing to the fact that we do not have the foreign exchange to make those payments. Apart from our inability to settle our foreign debt, the inadequacy of foreign exchange also resulted in our inability to import many essentials like medicine, some food items, fuel, and cooking gas – although the situation has now eased somewhat. We have survived so far only because of the helping hand given by our friendly neighbours. Why we came to such a pass is the root cause of the crisis that we need to explore at the end
The foreign debts are owed by us to (a) various muti-lateral agencies like the IMF, World Bank and ADB (b) various foreign governments such as those of India, China, Japan, Iran, Hungary and (c) to holders of bonds ( meaning acknowledgments of our borrowings) issued by the government and referred to as International Sovereign Bonds or ISBs). These are borrowings made in the international bond market. While the vast majority of these bond holders are foreign investors, there are some locals like local banks and funds like the EPF and ETF who also hold them. In addition, these locals have also lent to the government in local currency by way of Treasury Bills and Treasury Bonds. The Central Bank itself is a large holder of these Treasury Bills and Treasury Bonds. This matter of local creditors has complicated matters, as will be clarified later. Our total debts are in excess of US $ 50 billion (different figures are given from time to time based on differing definitions and categorizations but it is safe to say that it is over $ 50 billion, just to indicate its huge proportions).
By April last year (2022) the authorities belatedly recognized officially that we do not have sufficient foreign exchange to repay the loan installments and interest payments that were falling due. Realization of this dire situation should have dawned on those concerned much earlier, but for some unknown reason the authorities at the time fought shy of recognizing it. Anyway, in April last year, we officially declared to the world that we are unable to repay our external debt as it falls due and that we need to re-structure it. However, our repayments due to the multilateral organizations like the World Bank were exempted since the international practice is that such repayments are normally exempted from default declarations. Our debt repayments to foreign governments and ISB holders stand suspended at present.
IMF loan and IMF programme
We then applied to the IMF for a loan to enable us to get out of this situation, that is, to re-instate ourselves to a position that will enable us to again start repaying our debts ( referred to technically as ‘ regaining debt sustainability’) It is essential to understand this point well. The IMF facility was NOT meant to be a loan to develop the country. It was solely for the purpose of getting out of the hole that we had stupidly dug for ourselves, So people who are now shouting from public platforms ” We can’t develop the country through IMF loans” are simply talking through their non-existent hats! It was never meant to be so.
The strategy to be adapted is to request our creditors to agree to ‘re-structure’ our loans (to be explained) and for the IMF to lend us funds, partly to make essential external payments and partly to support the local budget, to tide over the period that it takes us to put our house in order. In order to lend funds to us, IMF insists on our following a mutually agreed course of action (usually referred to as ‘conditionalities’), to ensure that we will not again go and dig ourselves a pit and fall therein. Isn’t that reasonable?
To explain the ‘re-structuring of loans’: It can take one of three forms or some combination of them. 1. To allow the loan to be repaid over a longer period after an initial postponement 2. To reduce the rate of interest 3. To reduce the amount owed (referred to generally as a ‘hair cut’)
The IMF will give us this loan (roughly equivalent to US $ three billion) over a period of four years, in installments, depending on our implementing the agreed course of action. One of the key elements of this course of action is our undertaking to pursue negotiations with our creditors to re-structure our debt. We have to do that and not the IMF. Assurances have already been given by our creditors that they will co-operate with us in that process (India, China, Japan and some other countries and an ad-hoc organization of some of our International Sovereign Bond holders have been good enough to give those assurance to the IMF and to us. It must also be noted that our involvement with the IMF also gives these creditors an assurance about our conduct and our future capacity to re-pay them. In other words, our agreement with the IMF has given us some degree of respectability in the international financial scene.
IMF Conditionalities
It is necessary now to consider what the other IMF conditionalities are (We should remind ourselves that these conditionalities are what we have agreed to, in a lengthy process of negotiations that our authorities had with an IMF team. There would have been give and take during that process. For instance it transpired recently that at one point the IMF suggested that the tax free level of personal income be fixed at Rs. 43,000 per month, before the present Rs, 100,000 was finally agreed to. Admittedly of course our bargaining position was weak because of the mess we had created for ourselves.
As a background to the consideration of the conditionalities, it is necessary to first take note of a certain feature of our government’s budget. In the 2023 Budget (before the new tax proposals came into effect) the total government revenue was estimated at Rs. 3,456 billion while the total expenditure was to be Rs. 7,879 billion. So, there was a deficit of Rs. 4,422 billion (more than even the revenue itself). Even if we take out the capital expenditure in the budget estimates and take the recurrent expenditure only (salaries, pensions, other office expenditure, social welfare expenditure and debt servicing – i.e. without providing for building new hospitals, schools, roads etc.) it amounted to Rs.4,634 billion, still Rs,1,178 billion in excess of revenue. The payment of salaries, other administrative expenditure, pensions, and servicing of past debt alone accounted for 142% of the revenue. We must wonder how a country can run like that. Is it any wonder that we are in this mess and in debt?
At this point we need also to realize that there is not much scope for reduction of recurrent expenditure because the bulk of it consists of salaries, pensions, social welfare expenditure, repayment of debt to the banking system etc. (The World Bank in its latest ‘Sri Lanka Development Update 2023’ says: “At less than 20% of GDP, Sri Lanka’s expenditures are not high by international standards” thus underlining further the point that the solution to the budgetary problem lies more in the direction of revenue enhancement rather than in expenditure reduction, contrary to popular perceptions. However it is true that in a correct ordering of priorities we must refrain from completely ludicrous expenditures such as those on grandiose Independence celebrations, with tanks and all (!), in a country steeped in debt.
There was therefore a need for increasing government revenue. That is the rationale for increasing taxes. In addition to the income tax already imposed there will be a property tax and a gift and inheritance tax to be introduced by 2025, a tax that will fall on the top bracket of the really wealthy and not likely on wage earners and the majority of professionals. True enough, the new taxes are quite burdensome in the context of the general increase in the cost of living. It is hoped that the authorities will consider adjustments. However any such adjustments will be feasible only within the framework of various financial targets that the IMF programme has set, in order to achieve financial solvency within a reasonable time period.
For instance, it is required that the government Budget upgrades itself from its eternal deficit position (i.e expenditure exceeding revenue year after year resulting in the government getting more and more into debt) and attains a surplus of 0.8 % of GDP in 2024. increasing it to 2.3% in 2025 and beyond (this is what is called a primary surplus which does not take debt repayments into account) Any deviation from these carefully set down targets will only prolong the agony and condemn us to continue suffering in the long term.
Although as pointed out earlier there is not much scope for reducing government expenditure, the government is obliged under the IMF programme, at least to keep to the present level of expenditure. Thus it has some space only to make less than full compensation for inflation in respect of salaries and pensions. Anyway, in respect of other aspects of government administration most citizen are well aware that there is much scope for reducing inefficiencies, wastage and acts of corruption, leading not only to reductions in expenditure but to increased efficiency in delivery of services. In this connection one hopes that the government will embark on a full scale modernization and rationalization of its institutions and systems and procedures. In this endeavour it needs to allow for the introduction of digitization in a big way.
(To be continued)
(After a long public service career the writer retired in 1998 as Additional Secretary to President Chandrika Kumaratunga. He has served post-retirement as Chairman of the Sri Lanka Insurance Corporation and was an Advisor to President Mahinda Rajapaksa from 2005 to 2015)
Features
Your six-year-old needs a tablet like a fish needs a smartphone
THE GREAT DIGITAL RETHINK — PART II
Nordic countries handed tablets to toddlers and called it early childhood education. Now they’re taking the tablets back, handing out pencils, and hoping nobody noticed. Meanwhile, the Global South is still signing the tablet contracts. Someone should probably warn them.
The Tablet Arrives in Preschool
It is 2013, a government minister stands in a preschool in Stockholm, handing a shiny tablet to a four-year-old. Press cameras click. A press release announces that Sweden is building the digital classrooms of the future. The child, who until recently had been learning to hold a crayon, now swipes confidently at a screen. Innovation! Progress! The future!
Fast forward to 2023, the same Swedish government, or at least its successors, announces that preschools were wrong to make digital devices mandatory. Children’s reading comprehension is declining. Books are going back on the shelves. Pencils are making a comeback. The preschool tablets are being quietly wheeled into storage, and nobody wants to talk about the press release.
What Finland Actually Did — And Is Now Undoing
Finland has long held a special place in the global education imagination. When PISA scores are published and Finland sits at or near the top, education ministers from Seoul to São Paulo take note and wonder what they are doing wrong. Finland is the benchmark. Finland is the proof that good education is possible.
Which makes it all the more significant that Finland, in 2025, passed legislation banning mobile phones from classrooms. Not just recommending restraint. Not just issuing guidelines. Banning them, with teachers empowered to confiscate devices that disrupt learning. The law covers both primary and secondary schools. It came after years of evidence that children were distracted, and that Finland’s own PISA scores had been falling.
But the phone ban is only part of the story. The deeper shift in Finnish primary education has been a quiet reassertion of analogue fundamentals. Early literacy is being treated again as a craft that requires time, patience, practice and, crucially, a pencil.
Sweden gave tablets to toddlers. Then took them back. The pencils were in a drawer the whole time.
Sweden’s Spectacular U-Turn
Sweden’s reversal is arguably the most dramatic in recent educational history, because Sweden had gone further than most in embracing early-years digitalisation. The country had not merely allowed devices in preschool, it had in places mandated them, treating digital interaction as a developmental right alongside physical play and social learning. There was a logic to it, however misplaced: if the future is digital, surely children should encounter that future as early as possible.
The problem is that young children are not miniature adults navigating a digital workplace. They are human beings in the early stages of acquiring language, developing fine-motor-skills, building concentration and learning to regulate their own attention. These are not processes that are enhanced by a swipeable screen. Research on early childhood development is consistent on this point: young children learn language through conversation, storytelling, and physical manipulation of objects. They learn to write by writing, by the slow, muscular, tactile process of forming letters with a hand.
By 2023, Swedish education authorities had seen enough. Reading comprehension scores were down. Handwriting was deteriorating. Teachers were reporting that children were arriving in primary school unable to hold a pen properly. The policy reversed. Books came back. Cursive writing was reintroduced. The national curriculum was amended. And Sweden became, instead, a cautionary tale about what happens when you swap crayons for touchscreens before children have learned what crayons are for.
Australia: Banning Phones at Lunch
Australia’s approach to primary school digitalisation has been somewhat less ideologically charged than Scandinavia’s, and accordingly its reversal has been more pragmatic than philosophical. Australian states and territories arrived at phone bans largely through the accumulating pressure of parent complaints, teacher frustration and growing evidence that smartphones were damaging the social fabric of school life, not just in classrooms, but in playgrounds.
Queensland’s ‘away for the day’ policy, introduced in Term 1 of 2024, was notable precisely because it extended beyond lesson time to cover break times as well. This was a direct acknowledgement that the problem was not simply digital distraction during learning, it was the way that always-on connectivity was transforming childhood itself. Children who spend every break time on a phone are not playing, not resolving social conflicts face to face, not developing the unstructured social skills that primary school has always, if accidentally, taught.
The cyberbullying dimension added particular urgency in Australia, where research showed that many incidents of online harassment between primary-school children were occurring during school hours, facilitated by the phones sitting in their pockets. Banning the phone at the school gate did not solve the problem of online cruelty, but it did remove the school day as a venue for it.
The Science of the Pencil
The cognitive argument for handwriting in primary education is, it turns out, and far more interesting than the popular ‘screens bad, pencils good’ slogan suggests. The research on note-taking in university students, the finding that handwritten notes produce better conceptual understanding than typed notes, has a more fundamental parallel in primary education.
When a young child learns to write by hand, they are not merely practising a motor skill. They are encoding letters through physical movement, which activates memory systems that visual recognition alone does not reach. Studies in developmental psychology suggest that children who learn to write letters by hand recognise them faster and more accurately than those who learn through typing or tracing on screens. The hand, it appears, teaches the brain in ways the finger-swipe does not.
This does not mean that digital tools have no place in primary education, nobody sensible is arguing that children should graduate from primary school unable to use a keyboard. The question is sequencing and proportion. The emerging consensus, hard-won through a decade of failed experiments, is that foundational literacy and numeracy need to be established through analogue means before digital tools are introduced as supplements. Screens can follow pencils. Pencils, it turns out, cannot follow screens without catching up on what was missed.
The hand teaches the brain in ways the finger-swipe does not. And it took a decade of falling scores to rediscover this.
The Rest of the World Is Still Buying Tablets
Here is the uncomfortable part. While Finland legislates, Sweden reverses course and Australia bans phones from playgrounds, a large portion of the world’s primary schools are doing the opposite. Governments across South and Southeast Asia, Sub-Saharan Africa and Latin America are actively expanding device programmes in primary schools. Tablets are being distributed. Interactive whiteboards are being installed. AI tutoring apps are being piloted. The logic is identical to the logic Finland and Sweden followed 15 years ago: modernise, digitalise, equip children for the future.
The vendors selling these systems are not telling ministers about the Swedish U-turn. The development banks financing device programmes are not adjusting their models to reflect the OECD’s inverted-U curve. The international consultants advising education ministries are largely still working from a playbook written in 2010.
The lesson of the Nordic reversal is not that screens are evil, it is that screens at the wrong stage, in the wrong proportion, without the right pedagogical framework, undermine the very foundations they are supposed to build on. That lesson is available. The question is whether anyone is listening.
What Primary Schools Actually Need
Literacy and numeracy are not enhanced by early device saturation. They are built through reading aloud, through writing by hand, through mathematical reasoning with physical objects, and through the irreplaceable medium of a skilled teacher who knows their students.
Technology in primary education works best when it supplements a strong foundation, not when it substitutes for one that has not yet been built. Sweden and Finland did not fail because they used technology. They failed because they used it too extensively, and without asking what it was actually for. That question — what is this for? — is the one that every primary school system in the world should be asking before it signs another tablet contract.
SERIES ROADMAP Part I: From Ed-Tech Enthusiasm to De-Digitalisation | Part II: Phones, Pens & Early Literacy (this article) | Part III: Attention, Algorithms & Adolescents | Part IV: Universities, AI & the Handwritten Exam | Part V: A Critical Theory of Educational De-Digitalisation
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT, Malabe. The views and opinions expressed in this article are personal.)
Features
Government is willing to address the past
Minister Bimal Rathnayake has urged all Sri Lankan refugees in India to return to Sri Lanka, stating that provision has been made for their reintegration. He called on India to grant citizenship to those who wished to stay on in India, but added that the government would welcome them back with both hands if they chose Sri Lanka. He gave due credit to the Organisation for Eelam Refugees Rehabilitation (OfERR), an NGO led by S. C. Chandrahasan, the son of S. J. V. Chelvanayakam, widely regarded as the foremost advocate of a federal solution and a historic leader of the Federal Party. OfERR has for decades assisted refugees, particularly Sri Lankan Tamils in India, with documentation, advocacy and voluntary repatriation support. Given the slow pace of resettlement of Ditwah cyclone victims, the government will need to make adequate preparations for an influx of Indian returnees for which it will need all possible assistance. The minister’s acknowledgement indicates that the government appreciates the work of NGOs when they directly assist people.
The issue of Sri Lankan refugees in India is a legacy of the three-decade long war that induced mass migration of Tamil people to foreign countries. According to widely cited estimates, the Sri Lankan Tamil diaspora today exceeds one million and is often placed between 1 and 1.5 million globally, with large communities in Canada, the United Kingdom and Australia. India, particularly Tamil Nadu, continues to host a significant refugee population. Current figures indicate that approximately 58,000 to 60,000 Sri Lankan Tamil refugees live in camps in India, with a further 30,000 to 35,000 living outside camps, bringing the total to around 90,000. These numbers have declined over time but remain one of the most visible human legacies of the conflict.
The fact that the government has chosen to make this announcement at this time indicates that it is not attempting to gloss over the human rights issues of the past that continue into the present. Those who suffered victimisation during the war may be encouraged that their concerns remain on the national agenda and have not been forgotten. Apart from those who continue to be refugees in India, there are more than 14,000 complaints of missing persons still under investigation according to the Office on Missing Persons, which has received tens of thousands of complaints since its establishment. There are also unresolved issues of land taken over by the military as high security zones, though some land has been released, and prisoners held in long term detention under the Prevention of Terrorism Act, which the government has pledged to repeal and replace.
Sequenced Response
In addressing the issue of Sri Lankan Tamil refugees in India, the government is sending a message to the Tamil people that it is not going to gloss over the past. The indications are that the government is sequencing its responses to problems arising from the past. The government faces a range of urgent challenges, some inherited from previous governments, such as war era human rights concerns, and others that have arisen more recently after it took office. The most impactful of these crises are not of its own making. Global economic instability has affected Sri Lanka significantly. The Middle East war has contributed to a shortage of essential fuels and fertilizers worldwide. Sri Lanka is particularly vulnerable to rising fuel prices. Just months prior to these global pressures, Sri Lanka faced severe climate related shocks, including being hit by a cyclone that led to floods and landslides across multiple districts and caused loss of life and extensive damage to property and livelihoods.
From the beginning of its term, the government has been compelled to prioritise economic recovery and corruption linked to the economy, which were central to its electoral mandate. As the International Monetary Fund has emphasised, Sri Lanka must continue reforms to restore macroeconomic stability, reduce debt vulnerabilities and strengthen governance. The economic problems that the government must address are urgent and affect all communities, whether in the north or south, and across Sinhalese, Tamil and Muslim populations. These problems cannot be postponed. However, issues such as dealing with the past, holding provincial council elections and reforming the constitution are not experienced as equally urgent by the majority, even though they are of deep importance to minorities. Indeed, the provincial council system was designed to address the concerns of the minorities and a solution to their problems.
Unresolved grievances tend to reappear in new forms when not addressed through political processes. Therefore, they need to be addressed sooner rather than later, even if they are not the most immediate priorities for the government. It must not be forgotten that the ethnic conflict and the three decade long war it generated was the single most destructive blow to the country, greatly diminishing its prospects for rapid economic development. Prolonged conflict reduced investment, diverted public expenditure and weakened institutions. If Sri Lanka’s early leaders had been able to negotiate peacefully and resolve their differences, the country might have fulfilled predictions that it could become the “Switzerland of the East.”
Present Opportunity
The present government has a rare opportunity to address the issues of the past in a way that ensures long term peace and justice. It has a two thirds majority in parliament, giving it the constitutional space to undertake significant reforms. It has also demonstrated a more inclusive approach to ethnic and religious minorities than many earlier governments which either mobilized ethnic nationalism for its own purposes or feared it too much to take political risks to undertake necessary reforms. Public trust in the government, as noted by international observers, remains relatively strong. During her recent visit, IMF Director General Kristalina Georgieva stated that “there is a window of opportunity for Sri Lanka,” noting that public trust in the government provides a foundation for reform.
It also appears that decades of public education on democracy, human rights and coexistence have had positive effects. This education, carried out by civil society organisations over several decades, sometimes in support of government initiatives and more often in the face of government opposition, provides a foundation for political reform aimed at justice and reconciliation. Civil society initiatives, inter-ethnic dialogue and rights-based advocacy have contributed to shaping a more informed public about controversial issues such as power-sharing, federalism and accountability for war crimes. The government would do well to expand the appreciation it has deservedly given to OfERR to other NGOs that have dedicated themselves addressing the ethnic and religious mistrust in the country and creating greater social cohesion.
The challenge for the government is to engage in reconciliation without undue delay, even as other pressures continue to grow. Sequencing is necessary, but indefinite postponement carries risks. If this opportunity for conflict resolution is not taken, it may be a long time before another presents itself. Sri Lanka may then continue to underperform economically, remaining an ethnically divided polity, not in open warfare, but constrained by unresolved tensions. The government’s recent reference to Tamil refugees in India is therefore significant. It shows that even while prioritising urgent economic and global challenges, it has not forgotten the past. Sri Lanka has a government with both the mandate and the capacity to address that past in a manner that secures a more stable and just future for all its people.
By Jehan Perera
Features
Strategic diplomacy at Sea: Reading the signals from Hormuz
The unfolding tensions and diplomatic manoeuvres around the Strait of Hormuz offer more than a snapshot of regional instability. They reveal a deeper transformation in global statecraft, one where influence is exercised through calibrated engagement rather than outright confrontation. This is strategic diplomacy in its modern form: restrained, calculated, and layered with competing interests.
At first glance, the current developments may appear as routine diplomatic exchanges aimed at preventing escalation. However, beneath the surface lies a complex web of signalling among major and middle powers. The United States seeks to maintain deterrence without triggering an open conflict. Iran aims to resist pressure while avoiding isolation. Meanwhile, China and India, two rising powers with expanding global interests are navigating the situation with careful precision.
China’s position is anchored in economic pragmatism. As a major importer of Gulf energy, Beijing has a direct stake in ensuring that the Strait of Hormuz remains open and stable. Any disruption would reverberate through its industrial base and global supply chains. Consequently, China advocates de-escalation and diplomatic resolution. Yet, this is not purely altruistic. Stability serves China’s long-term strategic ambitions, including the protection of its Belt and Road investments and maritime routes. At the same time, Beijing remains alert to India’s growing diplomatic footprint in the region. Should India deepen its engagement with Iran and other Gulf actors, it could gradually reshape the strategic balance in areas traditionally influenced by China.
India’s approach, in contrast, reflects a confident and increasingly sophisticated foreign policy. By engaging Iran directly, while maintaining working relationships with Western powers, New Delhi is positioning itself as a credible intermediary. This is not merely about energy security, though that remains a key driver. It is also about strategic autonomy the ability to act independently in a multipolar world. India’s diplomacy signals that it is no longer a passive player but an active shaper of regional outcomes. Its engagement with Iran, particularly in the context of connectivity and trade routes, underscores its intent to secure long-term strategic access while countering potential encirclement.
Iran, for its part, views the situation through the lens of survival and strategic resilience. Years of sanctions and pressure have shaped a cautious but pragmatic diplomatic posture. Engagement with external actors, including India and China, provides Tehran with avenues to ease isolation and assert relevance. However, Iran’s trust deficit remains significant. Its diplomacy is transactional, focused on immediate gains rather than long-term alignment. The current environment offers opportunities for tactical advantage, but Iran is unlikely to make concessions that could compromise its core strategic objectives.
Even actors on the periphery, such as North Korea, are closely observing these developments. Pyongyang interprets global events through a narrow but consistent framework: regime survival through deterrence. The situation around Iran reinforces its belief that leverage, particularly military capability, is a prerequisite for meaningful negotiation. While North Korea is not directly involved, it draws lessons that may shape its own strategic calculations.
What emerges from these varied perspectives is a clear departure from traditional bloc-based geopolitics. The world is moving towards a more fluid and fragmented order, where alignments are temporary and issue-specific. States cooperate on certain matters while competing with others. This creates a dynamic but unpredictable environment, where misinterpretation and miscalculation remain constant risks.
It is within this evolving context that Sri Lanka’s strategic relevance becomes increasingly visible. The recent visit by the US Special Envoy for South and Central Asia, Sergio Gor, to the Colombo Port; is not a routine diplomatic courtesy call. It is a signal. Ports are no longer just commercial gateways; they are strategic assets embedded in global power competition. A visit of this nature underscores how Sri Lanka’s maritime infrastructure is being viewed through a geopolitical lens particularly in relation to sea lane security, logistics, and regional influence.
Such engagements reflect a broader reality: global powers are not only watching the Strait of Hormuz but are also positioning themselves along the wider Indian Ocean network that connects it. Colombo, situated along one of the busiest east–west shipping routes, becomes part of this extended strategic theatre. The presence and interest of external actors in Sri Lanka’s ports highlight an emerging pattern of influence without overt control a hallmark of modern strategic diplomacy.
For Sri Lanka, these developments are far from abstract. The island’s strategic location along major Indian Ocean shipping routes places it at the intersection of these global currents. The Strait of Hormuz is a vital artery for global energy flows, and any disruption would have immediate consequences for Sri Lanka’s economy, particularly in terms of fuel prices and supply stability.
Moreover, Sri Lanka must manage the competing interests of larger powers operating within its vicinity. India’s expanding regional role, China’s entrenched economic presence, and the growing attention from the United States all converge in the Indian Ocean. This requires a careful balancing act. Aligning too closely with any one power risks alienating others, while inaction could leave Sri Lanka vulnerable to external pressures.
The appropriate response lies in adopting a robust foreign policy that engages all major stakeholders while preserving national autonomy. This involves strengthening diplomatic channels, enhancing maritime security capabilities, and investing in strategic foresight. Sri Lanka must also recognise the growing importance of non-traditional security domains, including cyber threats and information warfare, which increasingly accompany geopolitical competition.
Equally important is the need for internal coherence. Effective diplomacy abroad must be supported by institutional strength at home. Policy consistency, professional expertise, and strategic clarity are essential if Sri Lanka is to navigate an increasingly complex international environment.
The situation in the Strait of Hormuz thus serves as both a warning and an opportunity. It highlights the fragility of global systems, but also underscores the potential for skilled diplomacy to manage tensions. For Sri Lanka, the challenge is not merely to observe these developments, but to position itself wisely within them.
In a world where power is no longer exercised solely through force, but through influence and presence, strategic diplomacy becomes not just an option, but a necessity. The nations that succeed will be those that understand this shift now and act with clarity, balance, and foresight.
Mahil Dole is a senior Sri Lankan police officer with over four decades of experience in law enforcement and intelligence. He previously served as Head of the Counter-Terrorism Division of the State Intelligence Service and has conducted extensive interviews with more than 100 suicide cadres linked to terrorist organisations. He is a graduate of the Asia-Pacific Centre for Security Studies (Hawaii).
By Mahil Dole
Senior Police Officer (Retd.), Former Head of Counter-Terrorism Division, State Intelligence Service, Sri Lanka
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