by Gomi Senadhira

Sri Lanka’s former ambassador to the United States Mahinda Samarasinghe is back in Sri Lanka lobbying for speedier finalisation of a new tariff deal with the United States. According to news reports, delivering the keynote address at the Sri Lanka Institute of Directors’ Annual Meeting last week, he stated, “I have recommended very strongly to the government that we need to conclude the agreement so that we can lock in the very favourable tariff rate that Sri Lanka has got up to now“.

I do not understand why the former ambassador is urging the government to expedite the finalisation of a new tariff deal or what is “the very favourable tariff rate” he refers to in his speech. However, given the ongoing terrible tariff turbulence in the United States and the fragile economic situation in Sri Lanka, I believe, this is not the right time to rush into finalising any trade agreement with the United States. I am also of the opinion that at this juncture Sri Lanka should maintain strategic patience and explore all available options.

Lessons from the countries that rushed for trade deals

To better comprehend this, let’s look at experiences of the countries that rushed to conclude tariff deals with the United States after President Donald Trump declared his “reciprocal tariffs” under the International Emergency Economic Powers Act (IEEPA) in April 2025. As Samarasinghe stated in his keynote, “The bottom line on all these negotiations was that every country that finally agreed to sign the agreement had to give either complete duty-free access for American exports into those markets, or near complete duty-free access.” In exchange for these tariff concessions and other market access commitments these countries managed to get the newly introduced country specific “reciprocal tariffs” reduced.

However, in February 2026, the Supreme Court of the United States (SCOTUS) struck down these “reciprocal tariffs” under the IEEPA. With that, the market access gains these countries received in exchange for complete duty-free access for American exports into their markets evaporated under U.S. domestic law. By moving too fast to conclude bilateral tariff agreements with the United States these countries are now bound to strict obligations whereas the benefits they bargained from the U.S. administration are not worth the paper those were written on.

Sri Lanka’s experience

In April 2025, President Trump declared his “reciprocal tariffs” and labelled Sri Lanka as the worst offender, imposing one of the highest additional duties at 44%. Since then, Ambassador Samarasinghe and other negotiators have managed to negotiate this down to 20%. I do not know what the deal was through which Sri Lanka managed to reduce the 44% tariff to 20% or what we gave in return for this “concession.” However, what we received in return has absolutely no value after the decision by the SCOTUS.

Current state of US tariffs

After the decision by SCOTUS, the U.S. administration introduced a temporary 10% additional tariff on all countries for 150 days. At the end of that period, this 10% tariff was replaced by a new “forced labor tariff ” of 10% to 12.5% on all trading partners under Section 301 of U.S. trade law. Twenty-five U.S. states and several small businesses have already filed lawsuits against these tariffs in U.S. courts. This new “forced labour tariff ” on Sri Lanka was first fixed at 12.5%. Later, after President Anura Kumara Dissanayake issued a gazette notice prohibiting the importation of goods produced using forced labour, it was reduced to 10%. That means Sri Lanka has already made a substantial commitment to receive this “tariff concession,” and I presume our negotiators understand the implications of this commitment.

Make haste slowly

After President Trump imposed 44% “reciprocal tariffs” on Sri Lanka, through an article published in The Island on 25th April 2026 (), I urged the government to engage immediately with the US administration on these tariffs. However, I also emphasised that the best way to move forward was to make haste slowly.

Two millennia ago, Augustus Caesar, the first emperor of Rome, frequently used the phrase, “make haste slowly”, because he detested rashness and haste in his military commanders. It was the recurring guiding maxim that he emphasised throughout his 40-year imperial rule. After 2000 years, this classical oxymoron remains a definitive golden rule for professional trade negotiators. More importantly it is the exact blueprint required when navigating turbulence in trade negotiations with the Trump administration.

The endgame – The most dangerous moment in trade negotiation

Samarasinghe has also stated the agreement is 90% complete. Any experienced trade negotiator should know that the final 10% contains high-stakes provisions and is the most dangerous moment in a trade negotiation. A single misplaced comma or ambiguous product description in a tariff schedule can cost millions through unintended loopholes. Rushing this last stretch to secure a deal can permanently expose Sri Lanka to sudden shifts in American trade policy, heavy compliance costs, or strict enforcement under Section 301 regarding supply-chain labour standards. Hence, this is the time for strategic patience.

(The writer can be reached at senadhiragomi@gmail.com)

by Usvatte

My friend, Sena Thoradeniya, has summoned up energy to raise two questions about my observations in your newspaper on 14 September, 2026. They both referred to comments I made about President Dissanayake and Prime Minister Amarasuriya.

I observed that President Dissanayake, having graduated in physics at Kelaniya, would be familiar with elementary calculus: differentiation and integration. It is a misapprehension to believe that one needs any knowledge of theoretical physics to be familiar with elementary calculus. Nor is it necessary that one needs to have published research for the same purpose. Those were the first lessons in calculus that our Mathematics Master and Principal, Mr. D. A. Devendra taught five of us in the first term 1952 at Hikkaduva Central School. Of the five, two still live and recall those lessons vividly. Dissanayake would surely have learnt them at his school in Anuradhapura. At Kelaniya his teachers probably included Dr. H. Somadasa, two years my junior at Hikkaduva, with a Ph.D. in number theory at Aberytswyth, Wales and Professor (physics) Charles Dahanayke, a renowned teacher of physics and my neighbour in Colombo. Dissanayake is unlikely to have been admitted to Physics at Kelaniya unless he had scored well in mathematics and physics with other subjects. Those elements of calculus have been learnt by millions of young men (and later women) since Isaac Newton and Gottfried Leibnitz. That Dissanayake from a school in Anuradhapura scored high enough to gain admission to Kelaniya to study physics is commendation enough for his intellectual capacity.

All of us know, some personally, the barriers to learning in places like Anuradhapura and Kuliyapitiya, compared to the facilities in Colombo, Galle. Jaffna and Kandy. I used that information to press the point that he was, in learning, entirely different from his predecessors and present competitors. One does not need to research in theoretical physics to know something as simple as the first lesson in calculus. Dirac made his momentous discovery sometime in the 1930s and by 1950 it must have been solidly in the teaching material in schools and universities. Dissanayake graduated in 1995 and, at least, must have heard of Dirac and the ‘God Particle’.

Paul Dirac was a legendary figure among graduate students when I was at Cambridge. He had written the shortest Fellowship and Ph.D. theses. He had had an interesting relationship with his father who was a French speaking Swiss and had insisted that he speaks French at table. Amrtya Sen, who was in 1965 a young Fellow of Trinity College and a teacher in the Economics and Politics Faculty at that time, had also written very short theses and not several volumes as many do.

I read about Higgs Boson in a wonderful book Inward Bound written by physicist Abraham Pais and, in The Science Times (Tuesdays) edited by Gina Kolata of the New York Times, and occasionally in Nature and other popular writings.

I was on the editorial board of Samskrti for some time. Amaradasa Virasinghe and Gananath Obeysekera had started that literary review in 1953 when I was in school and many of us read it avidly. Together with Susil Sirivardana, we decided to expand the scope of the journal to include social studies and science, which effort Sena knew well. The probable readership had increased manifold. In order to help prospective writers to pick up themes to write on, we held a popular lecture, one Saturday a month. I invited Dr. Harini Amarasuriya, then teaching at the Open University, Nawala, to speak to us on the scope and nature of sociology. She made a short fine introduction. That is where I learnt of August Compte. She was invited to a Seminar in Britain on the sociology of education, where I had strayed into from 1971. I did not read her paper, although she had promised to let me have it. I had good reason to respect her scholarship. It would be shocking had she not read Le`vy-Strauss. Many besides anthropologists read Le`vy-Strauss.

Sena stressed the obvious when he said that in public speeches made by these two politicians, there was no evidence of their expertise in physics and sociology. It would have been completely out of place to speak about elementary particles to a crowd in Beruvala or Anuradhapura. But one’s education, in subtle ways, informs the material and the ways that the material is presented in public speeches. Simply listen to Members of Parliament speak and you can guess roughly the level of education each had achieved: grade 2 in primary school or Quondam Professor of Law at Oxford.

I am sorry that Sena identified ‘an exaggerated parade of claims and sheer implausible boasts’ in what I wrote. It is entirely plausible, indeed certain, that an undergraduate in the Department of Physics in any university would be familiar with differentiation and integration.

An unprejudiced reading of my text will demonstrate that it contained no such claims and boasts. Mine was a pretty simple statement of the nature of differences between the present lot in government and the lots that were in power earlier. I related those differences to help understand the line up for and against the 22^nd Amendment to the Constitution. and not to build false images of any politician, man or woman. I am too old to set out, even in the formidable company of Sena, on the ‘long march’ to Mao.

By Chandre Dharmawardana
chandre.dharma@yahoo.ca)

The official narrative surrounding Sri Lanka’s economic recovery is optimistic and up-beat. President Anura Kumara Dissanayake has repeatedly assured the public that the nation, which faced catastrophic bankruptcy in 2022, is finally entering “safe waters.” This political optimism is backed by data from the Central Bank of Sri Lanka (CBSL [1]), which projects an annual economic growth rate of approximately 5%, bolstered by the country’s recent structural upgrade to “middle-income” status. On paper, the macroeconomic indicators suggest a remarkable turnaround.

However, this statistics-based triumph masks a much darker, systemic reality. Below the surface of stabilised foreign reserves and GDP growth lie at least three dystopian structural fault lines: massive capital flight, an unprecedented brain drain, and a severe demographic inversion. Together, these factors form a quiet crisis that threatens to rapidly destabilise Sri Lanka, rendering its current economic recovery fragile and potentially unsustainable. In addition, we must factor in the devastating effects of climate change and sea-level rise that will play out unabated.

Independent economists note that “safe waters” at the state level have yet to translate to ordinary citizens. The 5% growth and upgraded income status have been achieved through aggressive taxation (VAT hikes) and high energy costs, meaning that while the state’s coffers are recovering, real household poverty remains painfully high and becoming worse, while the rich-poor gap is widening.

Fault Line 1: Corporate betrayal and unchecked capital flight

While the government actively pursues high-profile political figures for historical financial crimes, the most devastating drainage of Sri Lanka’s wealth is happening legally and semi-legally through the corporate elite. Capital flight has severely hollowed out the state’s financial foundation.

Research from global watchdogs like Global Financial Integrity (GFI) reveals that trade mis-invoicing, i.e., the practice of under-invoicing exports and over-invoicing imports to illicitly park profits in offshore accounts, has stripped Sri Lanka of billions of dollars annually (GFI, 2024, [2]).

This is compounded by massive migration within the garment and manufacturing sectors. Facing exorbitant domestic energy tariffs and steep Value Added Tax (VAT) hikes, major conglomerates have steadily relocated production capacities or established vital subsidiaries in more cost-effective hubs, including Kenya, Jordan, and Oman (National Chamber of Exporters, 2025, [3]).

The state’s recent investigation into over $1 billion in “phantom imports”, where advance payments were sent abroad via Telegraphic Transfers without any goods ever entering the country, demonstrates that the private sector continues to drain the country of the very foreign exchange required to sustain its recovery.

While big capital has systematically flown out of the country, exploiting critical financial loopholes intentionally created during the Yahapalanaya (Maithripala-Ranil) era, successive administrations have persistently attempted to deflect blame for Sri Lanka’s financial collapse onto external or secondary factors. A glaring example of this misdirection occurred when major international media outlets, most notably The New York Times, claimed that Chinese infrastructure loans and “debt-trap diplomacy” were primarily responsible for the country’s economic insolvency—a narrative that independent economic data has since thoroughly debunked. Similarly, a favourite rhetorical theme among all political leaders is that bribery and state-level corruption by their rivals were the singular drivers of the crisis.

Neither geopolitical debt nor political corruption has been as structurally catastrophic as the quiet, massive flight of private investment capital. This exodus was critically accelerated when the Yahapalanaya administration, under Finance Minister Ravi Karunanayake, systematically dismantled the nation’s regulatory guardrails by repealing the robust Exchange Control Act No. 24 of 1953 and replacing it with the highly liberalised Foreign Exchange Act No. 12 of 2017. This legislative shift effectively decriminalised unauthorised foreign currency retention, removed stringent tracking mechanisms on export proceeds, and opened the floodgates for legal and semi-legal capital flight in the critical years leading up to the Gotabaya Rajapaksa administration and its financial collapse. By prioritising the convenience of the corporate elite over national reserve security, these policy manoeuvers permanently starved Sri Lanka of vital foreign liquidity at the exact moment it was in dire need of retaining and attracting stable investment capital.

The removal of these Exchange control and Foreign exchange acts would seem entirely destructive to Sri Lanka in hindsight today. However, both Ranil Wickremesinghe and Ravi Karunanayake are avowed neo-liberal ideologues who would have viewed the removal of those legislations as part of their idea of full free trade and over-arching globalisation. However, perhaps unknown to them, globalisation had hollowed out the Western manufacturing base; nationalist populism and tea-party politics had already raised its head in the West. Finally, the Covid epidemic drew the curtain on the era of neoliberalism, with even the more ardent “Ayn Randyan” opponent of state intervention conceding to massive state intervention to face Covid.

To evaluate which factor has a greater structural impact on Sri Lanka’s economic stability, we must look at data from international watchdog groups like Global Financial Integrity (GFI) alongside localized corruption cases since the beginning of the Sirisena-Wickremesinghe administration (2015) up to 2026. We do this in Table 1.

MetricEstimated Amount (2015 – 2026)Primary Mechanics / Key Scandals

Total Outward Capital Flight (Corporate/Trade)US$20 Billion – $35 Billion+Systemic trade misinvoicing (averaging $1.5B to $4B annually); value gap representing 20.51% of total trade; and recent $715M to $1B “phantom import” telegraphic transfer loops.Speculated Political Corruption (State/Graft)US$1.5 Billion – $3 Billion total accumulated valueCentral Bank Bond Scam (~$11M+ direct loss, though disrupted billions in credit market impacts); Airbus Bribery scandal ($16.84M agreed bribes); state enterprise losses (e.g., SriLankan Airlines accumulated political mismanagement losses reaching over $2B equivalent).Table 1: Comparison of Capital flight versus corruption loss

The data reveals that corporate capital flight dwarfs political corruption by an order of magnitude, making it the far more critical structural threat to the country’s economic baseline. Ultimately, while the media and politicians focus on the theatre of political arrests, the quiet, systemic white-collar flight of capital by the country’s “Big Tycoons” acts as a far more lethal haemorrhage dragging Sri Lanka back down into financial collapse.

Fault Line 2: The catastrophic brain drain

An economy cannot expand at a sustained 5% rate without human capital. Yet, Sri Lanka is currently experiencing an unprecedented exodus of its professional class. The economic collapse of 2022, followed by the subsequent imposition of heavy income taxes, soaring inflation, and a diminished quality of life, triggered a massive wave of migration.

Unlike the labour migration of previous decades, which consisted primarily of low-skilled workers sending back remittances, the current “brain drain” consists of the nation’s intellectual bedrock: doctors, software engineers, university professors, accountants, and aviation technicians. According to data from the Sri Lanka Bureau of Foreign Employment (SLBFE, [4]), record numbers of professionals have left the island for Europe, the Middle East, and Australia. The impact on critical infrastructure is already dystopian. Government hospitals frequently report a severe shortage of specialized consultants and anesthetists, while the domestic tech sector faces a crippling deficit of senior developers. Sri Lanka is effectively funding the free education of its youth, only for foreign economies to reap the productivity and tax revenues of those graduates.

The articles by (i) Hasini Lecamwasam entitled “The emptying university: why are academics leaving? (Island, 15th September 2026) [5], and Prof. Amarasiri de Silva’s article entitled Sri Lanka’s university crisis: Brain drain and union action demand urgent reform (Island, 14th September 2026) [6], specifically expose the dire situation faced by the existing 17 Sri Lankan Universities today, even though President AKD hopes to open 50 more universities shortly. Realistically, the available resources completely rule out the President’s proposal. Sri Lanka spends roughly 1.5% to 2% of its Gross Domestic Product on public education, one of the lowest in the world. Meanwhile many degree-certificate granting institutions (“private universities”) that have commodified higher education have sprung up to fill the need.

In any case, as we explain in the next section, the population is Sri Lanka has peaked, and its population pyramid has inverted, with fewer youth than older adults. There will be closure of schools as rural areas become hollowed out, and decreased enrolment in regional universities.

Fault Line 3: Demographic Inversion and the Aging Crisis

Perhaps, the most irreversible threat to Sri Lanka’s long-term stability is its rapidly changing demographic profile. Sri Lanka is currently undergoing a severe population inversion, transitioning into an aging society at a much faster rate than its regional peers.

Due to a combination of declining fertility rates, increased life expectancy, and the mass migration of reproductive-age young professionals, the demographic pyramid has flipped. For the first time in modern history, the population of elderly citizens (aged 60 and above) is growing faster than the younger demographic required to support them. According to United Nations and World Bank demographic assessments, Sri Lanka is projected to have one of the oldest populations in South Asia within the coming decade (World Bank, 2025 [7]).

This inversion creates a devastating double-bind for the state:

· Shrinking Tax Base: As young people leave or age out of the workforce, the pool of taxable income contracts.

· Exploding Welfare Costs:

The state faces ballooning expenditure requirements for geriatric healthcare, social safety nets, and pensions.

· The flight of businesses seeking cheap labour:

As the young workforce shrinks, manufacturing and businesses leave the country to relocate in other countries where labour is cheap. This flight of capital was discussed by us as “fault line number 1”.

Unlike Western nations that grew wealthy before they grew old, Sri Lanka is facing a demographic crisis while still trying to climb out of bankruptcy. According to recent data from the Sri Lankan Census and demographic researchers (De Silva 2025 [8]), Sri Lanka’s population peaked at 22.1 million in 2022 and has already entered a structural contraction. Sri Lanka’s total Fertility Rate (TFR) has collapsed to an ultra-low 1.3 children per woman—a rate lower than many highly developed Western nations, and well below the 2.1 needed for sustaining the population from extinction.

Sri Lanka had a rapid population increase after WWII, thanks to its adoption of modern agriculture (Green Revolution), control of infectious diseases such as malaria. However, Sri Lanka could not profit from the potential of its demographic bulge as a labour force. It moved towards a sluggish Marxist economy that sought state control and dismantled its plantation sector, placed draconian control over foreign exchange and investments.

Right after Independence, Sri Lanka prioritised universal free education and extensive reproductive health literacy. Meanwhile, free education led to exceptionally high female literacy rates early on. Historically, whenever female education rises, birth rates plummet—even if the nation’s GDP per capita remains relatively low.

From 1956 to 1977, Sri Lanka implemented economic policies directed towards increasing state control every aspect of the economy with foreign exchange controls. A stagnant economy led to youth uprisings that took the form of intra- and inter-ethnic conflicts that took a toll of youth populations. While an open economy was heralded in 1977 youth uprisings had already established themselves. Even children were mercilessly recruited as child soldiers by the LTTE and forced into an unwinnable conflict where about 7% of the population in the North and East (Tamils) were pitted against the government that drew strength from some 80% (Sinhalese and Muslims) of the remaining population.

Furthermore, many in the local work pool found it more lucrative to go to the Gulf countries as migrant workers, depleting the local availability of labour.

When Sri Lanka opened its economy in 1977 it succeeded in using its cheap labour pool to establish a world-class industrial base in clothes and similar industries. However, the rate of population growth slackened with increased literacy and today the population pyramid has completely inverted, with its labour pool shrinking and implying a demographic nightmare of ethnic extinction for Sri Lankans.

Countries such as Sri Lanka that do not have the financial power of countries such as South Korea or Japan (which are able to resort to robotics and AI agents) may have to turn to sperm and ova banks, in-vitro fertilisation, as well as state sponsored group parenting to sustain its population or simply face extinction. The need for such technologies was anticipated by scientists such as J. B. S. Haldane in 1924 [9], with corresponding themes were built into fictional works such as Aldous Huxley’s “Brave New World”. (To be concluded)