Midweek Review

Some thoughts on green financing options for Sri Lanka

Published

4 years ago

2022/07/13

By Prof. Nimal Gunatilleke

This is a sequel to my earlier article, titled ‘The Sri Lankan Debt Crisis: A Layman’s Review’, which appeared in two parts on the 01^st and 02^nd June in The Island Midweek Review and also in the Daily Financial Times on the 06^th and 07^th June 2022. In the second part of that article, I highlighted some of the emerging global investment opportunities, such as Green Bonds that are being made available for restructuring sovereign debts in this green economic era.

In this article, I would like to draw attention to the additional green financing options that are currently available for prospective investors, based on recent successful examples from other countries. These green financing opportunities will only be available once the debts have been brought to a sustainable level, as dictated by the IMF. However, Sri Lanka is currently wrestling desperately with the task of securing bridging finance, either as donations or loans to meet her day-to-day needs spilled over to the streets, day in, day out.

Among the loans received in the form of fuel, food, and medical supplies, the USD 500 million loan through the Indian Credit line (more credit under negotiation) and more recently pledged loan of USD 120 million (and perhaps, additional grants) from the US stand out prominently. It is a relief to learn that several other countries and international agencies too have come forward to help Sri Lanka in her critical stage of the balance of payment crisis. All these loans being given in the name of bridge financing during this interim period will also be added on to the existing debt burden during the restructuring process. In the meantime, Sri Lanka needs to restructure its foreign debt or make substantial progress towards that goal before the IMF agrees to lend money.

Still being categorized as a Middle-Income Country, Sri Lanka is not entitled to interventions focused on providing debt relief to the Low-Income Countries, usually given on greater concessionary terms. The IMF intervention in this instance, as it happened 16 occasions earlier, since our independence, may once again recommend, among other solutions, outright sale, lease, or pawn of our family silver – the valuable real estate assets – as a stopgap fix to the debt problem. Consequently, IMF intervention alone is least likely to be a sustainable solution for our chronic trade deficit problem because Sri Lanka has been consistently spending more forex than it earns over the past decades. In all probability, this trend may continue further since the economically sound options for bridging the trade deficit are socially more painful and therefore politically inauspicious. The current mayhem that the country is going through and led by deceitful political forces would only lead to worsening the situation, further.

As we all are now well aware, we had been borrowing forex from the international capital markets to meet the deficit to balance the national budget each year over the past several decades, which obviously cannot keep going forever. If we continue to have this ‘business as usual’ attitude, the country will simply pile up bigger and bigger debts to pay back in the future despite IMF interventions. This is where the selling of family silver stealthily sneaks in.

Fortunately, however, there are new green financing opportunities emerging as a unified global response to the climate change mitigation and adaptation in transforming International Sovereign Bonds into more climate-friendly investments such as green bonds, climate bonds, sustainability bonds, payment for ecosystem services, debt for climate swaps, etc., under Paris agreement on climate change.

Green bonds

Although Sri Lanka has been quite late to enter the globally booming green bond market, our nearest neighbour, India has been expanding its green bond market vigorously over the recent years. This includes several projects they have supported in Sri Lanka as well, under the green bond label since 2015. Amongst them, the EXIM Bank of India, the closest proxy to the Sovereign in International Debt Markets in India, had supported three projects in Sri Lanka for the purpose of laying railway tracks from i) Omanthai to Pallai, ii) Pallai to Kankasanturai, and iii) Madhu church -Talaimannar sectors under eligibility in the mass transportation sector, since 2015 ().

The recently inked Sampur Solar Energy project by the National Thermal Power Corporation of India, and even the proposed Mannar and Pooneryn wind and solar energy projects to be funded by the Indian investors may be coming under similar green or other such bond schemes. On the other hand, the only Sri Lankan green finance venture that I came across so far in literature is the one in which the Seylan Bank PLC has arranged a Green Bond for financing several renewable energy projects in Sri Lanka. The global and regional appetite for green bond issuance is on the increase and it is high time that Sri Lankan investors too, evoke greater attention towards it.

Sri Lanka Road Map for Green Financing

The Sri Lankan Road Map for sustainable/green financing has been prepared by the Central Bank of Sri Lanka with technical assistance from the International Finance Corporation through a consultative process for the purpose of promoting sustainable/green finance options in Sri Lanka. In addition, the Central Bank of Sri Lanka has already prepared a Biodiversity Finance Plan (BIOFIN 2018 – 2024) to move towards sustainable financing solutions with an aggregate resource mobilization target ranging from LKR 20 billion – 46.7 billion.

The BIOFIN Plan has prioritized 13 finance solutions and issuing Green Bonds is one amongst them. The generic description of Green Bonds in this plan states that issuing green bonds is a new source of financing that can mobilize a large amount of financial resources by the public sector as per the financial regulatory mechanism, subject to the country’s debt servicing capacity. Sri Lankan investors too, now have an enviable opportunity to join this lobby as partners during the restructuring process especially, in transforming the Sri Lankan Sovereign Bond debts.

Payment for Ecosystem Services (PES)

Payment for Ecosystem Services is yet another financial solution that the BIOFIN 2018-2022 Plan has put forward which it claims to be another new financing source for paying directly or indirectly for ecosystem services and negative externalities either with private or public involvement in Sri Lanka. The BIOFIN plan considers that an introduction of PES in the energy sector is important because the current modes of power generation have significant negative implications on the country’s biodiversity and ecosystem services whilst the condition of watersheds also influences power generation efficiencies, especially in hydropower. The BIOFIN plan details out the information needed for developing three different business models under the PES system (pages 28-37). They are (i) Payment for watershed management in lands above mini-hydro power plants, (ii) Payment for watershed management for hydropower generation at Moragahakanda, and, (iii) Payment for negative externalities of coal power generation.

PES for Watershed management in the Central Highlands

Management of watersheds has been recognized as a national priority for sustainable development in Sri Lanka in the most recent National Physical Planning Policy and the Plan for Sri Lanka 2017-2050 and its immediate predecessor – NPP – 2030. Both these plans have recognized the Central Highlands and the Coast Conservation Zone as fragile regions (see the figures) that need urgent conservation interventions for the sustainable development of practically the entire country.

The ‘Central Fragile Area’ is the geographic entity that consists of lands with sensitive natural ecosystems, highly vulnerable to landslides, and plays a crucial role in sustaining water resources. A major portion of these areas are located above 300 meters from mean sea level and cover the upper catchments of all major rivers on the island. Almost all major economic enterprises in Sri Lanka, including downstream irrigated agriculture and associated livelihood sustenance, hydro-power generation, and inland and coastal tourism are very much dependent upon the ecological health of this fragile region.

Therefore, the prioritization of watershed management in at least a few selected areas as a priority area under the Payment for Ecosystem Services by the BIOFIN project of the Central Bank of Sri Lanka as a start is praiseworthy. The National REDD+ Investment Framework and Action Plan (NRIFAP) 2017 and its subsequent updates including that of the Forestry Sector Master Plan for Sri Lanka 2021-2030 (still in draft) would be able to provide a strong foundation for developing investment models in this vital sphere of sustainable development.

Conversion of exotic monoculture plantations in critical watersheds into native and naturalized species mixes in these central highlands according to proven scientific guidelines would be yet another green financial proposition for both public and private sector engagement for which intriguing business models can be developed under PES schemes. We have developed two ecologically sustainable Pinus conversion models, one in the NW buffer zone of the Sinharaja World Heritage Site and the other in Peradeniya University Lower Hantana campus land. These can be scaled up into other Pinus plantations in critical watersheds of the island with public-private collaboration as Corporate Social Responsibility projects, especially in the plantation sector.

Similarly, the World Bank-funded Landscape Management Plan for Sinharaja Forest Range prepared recently is yet another superlative green financing option for such investors. (See maps)

PES for Coastal Zone Management

On the other hand, the ‘Coast Conservation Zone’, the second fragile region identified by the NPP includes the area for which boundaries have been delineated by the Coast Conservation Department under the provisions of the Coast Conservation Act No. 57 of 1981. Even though a large quantum of physical developments in Sri Lanka has been taking place in this zone, conservation of the lagoons, estuaries, swamps, riverine, and other sensitive environments, is important because of the eco-services that they provide, the attractions they have, and the ever-expanding economic activities associated with them.

The ‘Sri Lanka Coastal Zone and Coastal Resource Management Plan – 2018’ prepared by the Coast Conservation and Coastal Resource Management Department would be an ideal foundation document for developing investment and business models in this critical coastal belt that covers a circum-island coastline of 1,620 km. Due to its abundant natural resources and consequent social and economic benefits supporting millions of livelihoods, the coastal zone has experienced immense development and urbanization over the decades. This calls for the sustainable management of the coastal zone to ensure that resources are not exploited beyond their regeneration capacity and that the remaining habitats are not further degraded or destroyed.

Similar projects with appropriate business models have been developed in other regions/countries that Sri Lanka could take a cue from. They are the following:

i.) Mangrove Restoration in Senegal – The mangrove restoration project in Senegal, coordinated by the Livelihoods Carbon Fund (LCF) since 2011, aims at restoring an ecosystem that protects arable land from salinization and produces fish resources (fish, shellfish, crustaceans) and wood. With the support of the Livelihoods Carbon Fund, the mangrove restoration project in Casamance and Sine Saloum estuaries of Senegal has helped 450 local villages replant 10,415 out of the existing 185,000 hectares of mangrove, between 2009 and 2012. It stands like a rampart against climate change impacts and at the same time a nourishing ecosystem for the inhabitants. Carbon finance has enabled vulnerable communities to restore their mangroves through the commitment of private companies that have committed to investing in sustainable projects. In return for their investment in the Livelihoods-Senegal project, the companies that are supporting the Livelihoods Carbon Fund receive carbon credits with high social and environmental value to offset their CO2 emissions.

Investors in the Carbon Livelihoods Fund have provided Océanium – the local NGO with the necessary funding for replanting (population awareness, validation of scientific models, intervention logistics, etc.) and are going to continue to finance its monitoring and evaluation until 2029, for a total duration of 20 years.

The project was validated by the United Nations Framework Convention on Climate Change (UNFCCC) Board. The Project Detailed Document made by Carbon Decisions in December 2010 was audited by Ernst & Young and the Dept. of Environment in May 2011. The approval of the Senegalese authorities was obtained in March 2011 and was subject to a tripartite Memorandum of Understanding of 10 years between Livelihoods, OCEANIUM, and the Senegalese government (Ministry of Environment). The long-term impacts of the project is being measured using the ‘Sustainable Livelihoods Approach’ since 2017. ().

Lessons learned from this project would be beneficial for Sri Lanka to design her own mangrove restoration and coastal and marine conservation initiatives with a public-private partnership. These projects are already being done in an uncoordinated ad hoc manner, especially after the Tsunami event in 2004

. The Sri Lanka Coastal Zone and Coastal Resource Management Plan – 2018 prepared by the Coast Conservation and Coastal Resource Management Department would provide the necessary underpinning for the development of investment and business models for our fragile coastal zone extending over a circum-island coastline of 1,620 km.

ii.) Blue Bond Initiative of Seychelles: Seychelles is a Small Island Developing State dependent on its marine natural resources to derive its economic prosperity. In recent years there have been a decline in the fish stocks and marine resources linked to i) overexploitation of fisheries resources and subjected to environmental pollution. The benefits expected from the blue bond initiative. A blue bond was issued in 2018 for US$ 15 million over a maturity period of 10 years. Among the benefits expected were the development of a Blue Economy through sustainable use of marine resources securing private sector participation, raising awareness of the critical role of the ocean and marine resources, and the overall global need for environmental protection. (). The early indications are claimed to be very positive and there are several lessons that Sri Lanka can learn from this in designing her own blue bond initiatives.

iii.) Grain for Green Programme of China: China initiated its “Grain for Green” programme in 1999 as an ambitious conservation programme designed to mitigate and prevent flooding and soil erosion. It is an example of Payment for Ecosystem Services (PES) which is helping to solve Environmental issues in China. The programme is designed to retire farmland that is susceptible to soil erosion, although some farmers may go back to farming the land after the program ends. China started the Grain for Green program in the western parts of the country for example Shanxi Province. These areas were known for their rather poorly performing economy that was affiliated with an endangered ecological environment. The environment was being further damaged by soil erosion which was a result of cultivation on sloping land as people were changing forests into farmland. By 2010, around 15 million hectares of farmland and 17 million hectares of barren mountainous wasteland were converted back to natural vegetation (From Wikipedia, the free encyclopedia).

This project has a strong appeal for the restoration of the Central Fragile Area of Sri Lanka as recommended in the NPP 2017 – 2050. The unproductive tea lands, areas under unsustainable vegetable cultivation susceptible to excessive soil erosion and degradation, and monoculture exotic tree plantations in critical watersheds are prime candidates to be sustainably developed under appropriate PES-type business models. It is hoped that the Chinese experience and expertise in the above example would be taken on board in restructuring some of our outstanding Chinese debts.

iv.) Great Green Wall Initiative – An ambitious project partnered by the European Union and the UNCCD and implemented across 22 African countries in 2007 to restore 100 million ha of currently degraded land; sequester 250 million tons of carbon and create 10 million green jobs by 2030. More than USD 8 billion has been raised and pledged to support this game-changing initiative in the Sahel region in Africa to provide fertile land, food security, and economic opportunities for the millions and climate resilience in a region where temperatures are rising faster than anywhere else on earth ().

If the world renowned ‘ellanga’ irrigated agricultural systems (small tank cascade systems) spread across the dry zone of Sri Lanka, can be further enriched through a similar program, not only the sustainability of the agricultural heritage system but the chronic health issues currently afflicted with the farming communities could be successfully addressed. Prototype business models well supported by socio-ecological research are already available for these regions for rebuilding agricultural resilience in the Dry Zone of Sri Lanka.

Debt-for-Climate Swaps

Debt-for Climate Swaps are also emerging as yet another viable option that can generate the much-needed fiscal space for Middle-Income Countries like Sri Lanka to focus on climate ambitions and economic recovery while reducing their overall debt burdens.

A debt for climate swap is an agreement between a sovereign debtor and one or more of its international creditors by which the latter forgives all or a portion of the debtor’s external debt in exchange for a commitment by the debtor to invest, in domestic currency, in specific climate projects during a commonly agreed period. The rationale of debt swaps is that debt can be acquired at a discount. When creditors do not expect to recover the full nominal value of debts, they may be willing to accept less. In exchange for (partial) cancellation of the debt, the debtor government is prepared to mobilize the equivalent of the reduced amount in local currency for agreed purposes on agreed terms. The Debt for Climate swaps help countries struggling to service their debts to reduce the debt and free up fiscal space (cash flow) for climate-friendly investments.

Debt swaps provide opportunities for raising capital especially in low-income countries to address environmental and other policy challenges and support green growth. For the debt for climate swaps, the debtor government commits to invest the accrued savings from debt forgiveness in climate adaptation or mitigation. Debt-for-climate swaps have the potential to transform daunting debt into opportunities to reduce climate vulnerability and implement much-needed adaptation. These swaps would thus contribute to the Paris Agreement, which stipulates that developed countries should mobilize climate finance from a wide variety of sources through a variety of actions.

The potential for using debt-for-climate swaps as an innovative financial solution to the twin crises of climate change and debt distress is very high. Such debt swaps provide opportunities for raising capital in debt-stridden low-income countries to address environmental and other policy challenges and support green growth. However, only when the debt has been made sustainable, the swaps can transfer resources for climate purposes.

A number of developing countries are engaging in debt-for-climate swaps since Seychelles secured the world’s first debt-for-climate swap deal for protecting the world’s oceans with the Paris Club group of developed country creditors in 2016, aimed at ocean conservation and climate resiliency. Since then, several Small Island Developing States (SIDS), especially those in the Caribbean region too have joined this program. These countries are facing situations similar to those that we in Sri Lanka, are currently undergoing. They too are heavily indebted countries with tourism-dependent economies more recently worsened by COVID -19 pandemic and subjected to serious climate vulnerabilities.

Activities that can be funded through this debt structuring, include management of marine reserves, coral and mangrove restoration, improving marine, fisheries, and coastal policies, economic diversification, and climate resiliency of coastal communities.

Debt for Climate Swaps provide excellent opportunities for promoting climate change mitigation projects such as the accelerated phasing-out of coal power projects. Quite fortuitously, 40 countries including Sri Lanka pledged at the COP 26 meeting of the UNFCCC held in Glasgow in 2021 and also agreed not to build/fund any new coal power plants. In the light of these recent developments in relation to the UN Convention on Climate Change and the internationally binding Paris Agreement, the Long-term Generation Expansion Plan (LTGEP) for Sri Lanka may need to be reworked. This plan envisages the retirement of several thermal power plants that are likely to be taken off from operation due to their age-related mal-functioning and more importantly, the construction of two more coal-fired power plants totaling 1500MW in the late 2020s. Debt for Climate Swaps are strong candidates for facilitating the early retirement of coal/thermal power plants and investing in energy-efficient clean energy projects in Sri Lanka.

Debts for Climate Swaps are also eligible for climate change adaptation which include Nature- based Solutions that include conservation and enhancing diversity by restoration of degraded lands including wetlands. The rationale for undertaking such projects, which are often not commercially viable business models, is that their benefits, such as enhanced biodiversity, higher water tables, carbon capture, improved well-being of citizens, green jobs created, etc. far outweigh the costs involved. Their socio-economic benefits being intangible are often not captured or are externalized in standard benefit/cost analyses. However, in this Decade of Forest Restoration declared by the United Nations, such ventures partnered with developed countries are being used to reduce the debt burden of developing countries.

Conclusions

In summary, Sri Lanka has in place most of her key development strategies and plans for the next several years in conformity with major global conventions on biodiversity, climate change, and combating land degradation. They are the following:

 National Biodiversity Action plan (NBSAP 2016-2022),

 National REDD+ Investment Framework and Action Plan (NRIFAP 2018-2022),

 National Action Program for Combating Land Degradation in Sri Lanka (NAP-CLD 2015 -2024),

 National Adaptation Plan for Climate Change Impacts in Sri Lanka (2016 – 2025).

Using the information provided by these strategic action plans, the Central Bank of Sri Lanka together with Ministry of Environment has prepared a Biodiversity Finance Plan (BFP) for Sri Lanka (2018 – 2024) with 13 prioritized finance solutions some of which I have highlighted in this article. The donor agencies are also very much interested in entering into green financing partnerships with countries in need of investment capital. Therefore, every effort should be made to make this current adversity an opportunity of a lifetime.

The Prime Minister informed the parliament on 06^th July 2022 that Sri Lanka is participating in the bailout negotiations with the IMF as a bankrupt country and is going into a deep recession this year and have to face current difficulties extending into 2023, as well. As such, the country needs to submit a plan on Sri Lanka’s debt sustainability separately to the IMF for which a strong political leadership to take visionary decisions is the order of the day.

At this critical juncture of our nation, it may be well worth reminding ourselves of the historic words of John F. Kennedy at his inaugural address as the 35^th president of the United States in 1961‘My fellow Americans, ask not what your country can do for you – ask what you can do for your country’ which challenged every American to contribute some way to the public good. Also, what a one-time prime minister of Sri Lanka SWRD Bandaranaika wrote in his son -Anura’s album which later became a more public proclamation ‘the main duty of man is to serve man’ are words that we need to convert to deeds at this moment of despair.

This is in stark contrast to protesting with the stereotypic slogans ‘Diyaw, diyaw, diyaw’ by the politically indoctrinated trade unions and the misguided young intelligentsia at every turn during this period of despondency with much inconvenience and annoyance, in particular, to the already suffering working class people. We are in need of a socially astute political leader with a vision who can stand tall and adapt the words of JFK as ‘My fellow Sri Lankans, ask not what your country can do for you – ask what you can do for your country’ in this hour of deep political and socio-economic crisis and turmoil to steady the ship and steer it safely to calmer waters. Finding a national figure with such qualities at this moment is the Quadrillion Rupee (inflation accounted for) problem!

All News Advertisement

Midweek Review

Dr. Jaishankar drags H’tota port to reverberating IRIS Dena affair

Published

7 days ago

2026/03/11

Sahan Weerasooriya

Sri Lanka reached an agreement with China to build the Hambantota port after India declined the then President Mahinda Rajapaksa’s request to take charge of the high profile project. The Indian decision may have been influenced by the war raging in the northern region at that time.

Indian Foreign Minister Dr. S. Jaishankar recognised Hambantota harbour as a Chinese military facility that underlined intimidating foreign military presence in the Indian Ocean. Jaishankar was responding to queries regarding India’s widely mentioned status as the region’s net security provider against the backdrop of a US submarine blowing up an Iranian frigate IRIS Dena, off Galle, within Sri Lanka’s Exclusive Economic Zone.

This happened at the Raisina Dialogue 2026 (March 5 to 7) in New Delhi. Raisina Dialogue was launched in 2016, three years after Narendra Modi became the Prime Minister.

The query obviously rattled the Indian Foreign Minister. Urging the moderator, Ms. Pakli Sharma Ipadhyay, to understand, what he called, the reality of the Indian Ocean, Dr. Jaishankar pointed out the joint US-British presence at Diego Garcia over the past five decades. Then he referred to the Chinese presence at Djibouti in East Africa, the first overseas Chinese military base, established in 2017, and Chinese takeover of Hambantota port, also during the same time. China secured the strategically located port on a 99-year lease for USD 1.2 bn, under controversial circumstances. China succeeded in spite of Indian efforts to halt Chinese projects here, including Colombo port city.

The submarine involved is widely believed to be Virginia-class USS Minnesota. The crew, included three Australian Navy personnel, according to international news agencies. However, others named the US Navy fast-attack submarine, involved in the incident, as USS Charlotte.

Diego Garcia is responsible for military operations in the Middle East, Africa and the Indo-Pacific. Dr. Jaishankar didn’t acknowledge that India, a key US ally and member of the Quad alliance, operated P8A maritime patrol and reconnaissance flights out of Diego Garcia last October. The US-India-Israel relationship is growing along with the US-Sri Lanka partnership.

The Indian Foreign Minister emphasised the deployment of the US Fifth Fleet in Bahrain, one of the countries that had been attacked by Iran, following the US-Israeli assassination of Iranian Supreme Leader, and key government functionaries, in a massive surprise attack, aiming at a regime change there. The Indian Minister briefly explained how they and Sri Lanka addressed the threat on three Indian navy vessels following the unprovoked US-Israeli attacks on Iran. Whatever the excuses, the undeniable truth is, as Sharma pointed out, that the US attack on the Iranian frigate took place in India’s backyard.

Sri Lankan Foreign Minister Vijitha Herath who faced Sharma before Dr. Jaishankar, struggled to explain the country’s position. Dr. Jaishankar made the audience laugh at Minister Herath’s expense who repeatedly said that Sri Lanka would deal with the situation in terms of the UN Convention on the Law of the Sea (UNCLOS) and international laws. Herath should have pointed out that Hambantota was not a military base and couldn’t be compared, under any circumstances, with the Chinese base in Djibouti.

Typical of the arrogant Western power dynamics, the US never cared for international laws and President Donald Trump quite clearly stated their position.

Israel is on record as having declared that the decision to launch attacks on Iran had been made months ago. Therefore, the sinking of the fully domestically built vessel that was launched in 2021 should be examined in the context of overall US-Israeli strategy meant to break the back of the incumbent Islamic revolutionary government and replace it with a pro-Western regime there as had been the case after the toppling of the democratically elected government there, led by Prime Minister Mossadegh, in August, 1953.

US Defence Secretary Pete Hegseth declared that IRIS Dena “thought it was safe in international waters’ but died a quiet death.” A US submarine torpedoed the vessel on the morning of March 4, off Galle, within Sri Lanka’s exclusive economic zone and that decision must have been made before the IRIS Dena joined International Fleet Review (IFR) and Exercise Milan 2026, at Visakhapatnam, from February 15 to 25.

The sinking of the Iranian vessel, a Moudge –class frigate attached to Iran’s southern fleet deployed in the Gulf of Oman and Strait of Hormuz, had been calculated to cause mayhem in the Indian Ocean. Obviously, and pathetically, Iran failed to comprehend the US-Israeli mindset after having already been fooled with devastating attacks, jointly launched by Washington and Tel Aviv against the country’s nuclear research facilities, while holding talks with it on the issue last June. Had they comprehended the situation they probably would have pulled out of the IFR and Milan 2026. Perhaps, Iran was lulled into a false sense of security because they felt the US wouldn’t hit ships invited by India. The US Navy did not participate though the US Air Force did.

The US action dramatically boosted Raisina Dialogue 2026, but at India’s expense. Prime Minister Modi’s two-day visit to Tel Aviv, just before the US-Israel launched the war to effect a regime change in Teheran, made the situation far worse. BJP seems to have decided on whose side India is on. But, the US action has, invariably, humiliated India. That cannot be denied. The Indian Navy posted a cheery message on X on February 17, the day before President Droupadi Murmu presided over IFR off the Visakhapatnam coast. “Welcome!” the Indian Navy wrote, greeting the Iranian warship IRIS Dena as it steamed into the port of Visakhapatnam to join an international naval gathering. Photographs showed Iranian sailors and a grey frigate gliding into the Indian harbour on a clear day. The hashtags spoke of “Bridges of Friendship” and “United Through Oceans.”

US alert

Dr. Jaishankar

Altogether, three Iranian vessels participated in IFR. In addition to the ill-fated IRIS Dena, the second frigate IRIS Lavan and auxiliary ships IRIS Bushehr comprised the group. Dr. Jaishankar disclosed at the Raisina Dialogue 2026 that Iran requested India to allow IRIS Lavan to enter Indian waters. India accommodated the vessel at Cochin Port (Kochi Port) on the Arabian Sea in Kerala.

At the time US torpedoed IRIS Dena, within Sri Lanka’s EEZ, IRIS Lavan was at Cochin port. Sri Lanka’s territorial waters extend 12 nautical miles (approximately 22 km) from the country’s coastline. The US hit the vessel 19 nautical miles off southern coastline.

Sri Lanka, too, participated in IFR and Milan 2026. SLN Sagara (formerly Varaha), a Vikram-class offshore patrol vessel of the Indian Coast Guard and SLN Nandimithra, A Fast Missile Vessel, acquired from Israel, participated and returned to Colombo on February 27, the day before IRIS Lavan sought protection in Indian waters.

Although many believed that Sri Lanka responded to the attack on IRIS Dena, following a distressed call from that ship, the truth is it was the Indo-Pacific Command (INDOPACOM) that alerted the Maritime Rescue Coordination centre (MRCC) after blowing it up with a single torpedo. The SLN’s Southern Command dispatched three Fast Attack Craft (FACs) while a tug from Sri Lanka Ports Authority (SLPA) joined later.

The INDOPACOM, while denying the Iranian claim that IRIS Dena had been unarmed at the time of the attack, emphasised: “US forces planned for and Sri Lanka provided life-saving support to survivors in accordance with the Law of Armed Conflict.” In the post shared on X (formerly Twitter) the US has, in no uncertain terms, said that they planned for the rescuing of survivors and the action was carried out by the Sri Lanka Navy.

IRIS Lavan and IRIS Bushehr are most likely to be held in Cochin and in Trincomalee ports, respectively, for some time with the crews accommodated on land. With the US-Israel combine vowing to go the whole hog there is no likelihood of either India or Sri Lanka allowing the ships to leave.

Much to the embarrassment of the Modi administration, former Indian Foreign Secretary Kanwal Sibal has said that IRIS Dena would not have been targeted if Iran was not invited to take part in IFR and Milan naval exercise.

“We were the hosts. As per protocol for this exercise, ships cannot carry any ammunition. It was defenseless. The Iranian naval personnel had paraded before our president,” he said in a post on X.

Sibal argued that the attack was premeditated, pointing out that the US Navy had been invited to the exercise but withdrew at the last minute, “presumably with this operation in mind.”

Sibal added that the US ignored India’s sensitivities, as the Iranian ship was present in the waters due to India’s invitation.

He stressed that India was neither politically nor militarily responsible for the US attack, but carried a moral and humanitarian responsibility.

“A word of condolence by the Indian Navy (after political clearance) at the loss of lives of those who were our invitees and saluted our president would be in order,” Sibal said.

Iran and even India appeared to have ignored the significance of USN pullout from IFR and Milan exercise at the eleventh hour. India and Sri Lanka caught up in US-Israeli strategy are facing embarrassing questions from the political opposition. Both Congress and Samagi Jana Balwegaya (SJB), as well as Sri Lanka Podujana Peramuna (SLPP), exploited the situation to undermine respective governments over an unexpected situation created by the US. Both India and Sri Lanka ended up playing an unprecedented role in the post-Milan 2026 developments that may have a lasting impact on their relations with Iran.

The regional power India and Sri Lanka also conveniently failed to condemn the February 28 assassination of Iranian Supreme Leader Ayatollah Ali Khamenei, while that country was holding talks with the US, with Oman serving as the mediator.

Condemning the unilateral attack on Iran, as well as the retaliatory strikes by Iran, Leader of the Opposition in the Lok Sabha and Congress leader Rahul Gandhi on Tuesday (March 3, 2026) questioned India’s silence on the Middle East developments.

In a post on social media platform X, Gandhi said Prime Minister Narendra Modi must speak up. “Does he support the assassination of a Head of State as a way to define the world order? Silence now diminishes India’s standing in the world,” he said.

Under heavy Opposition fire, India condoled the Iranian leader’s assassination on March 5, almost a week after the killing. Foreign Secretary Vikram Misri met the Iran Ambassador in Delhi and signed the condolence book, though much belatedly.

SL-US relations

The Opposition questioned the NPP government’s handling of the IRIS Dena affair. They quite conveniently forgot that any other government wouldn’t have been able to do anything differently than bow to the will of the US. Under President Trump, Washington has been behaving recklessly, even towards its longtime friends, demanding that Canada become its 51st state and that Denmark handover Greenland pronto.

SJB and Opposition leader Sajith Premadasa cut a sorry figure demanding in Parliament whether Sri Lanka had the capacity to detect submarines or other underwater systems. Sri Lanka should be happy that the Southern Command could swiftly deploy three FACs and call in SLPA tug, thereby saving the lives of 32 Iranians and recovering 84 bodies of their unfortunate colleagues. Therefore, of the 180-member crew of IRIS Dena, 116 had been accounted for. The number of personnel categorised as missing but presumably dead is 64.

There is no doubt that Sri Lanka couldn’t have intervened if not for the US signal to go ahead with the humanitarian operation to pick up survivors. India, too, must have informed the US about the Iranian request for IRIS Lavan to re-enter Indian waters. Sri Lanka, too, couldn’t have brought the Iranian auxiliary vessel without US consent. President Trump is not interested in diplomatic niceties and the way he had dealt with European countries repeatedly proved his reckless approach. The irrefutable truth is that the US could have torpedoed the entire Iranian group even if they were in Sri Lankan or Indian Exclusive Economic Zone (EEZ) that extends to 200 nautical miles from its coastline.

In spite of constantly repeating Sri Lanka’s neutrality, successive governments succumbed to US pressure. In March 2007, Mahinda Rajapaksa’s government entered into Acquisition and Cross- Servicing Agreement (ACSA) with the US, a high profile bilateral legal mechanism to ensure uninterrupted support/supplies. The Rajapaksas went ahead with ACSA, in spite of strong opposition from some of its partners. In fact, they did not even bother to ask or take up the issue at Cabinet level before the then Defence Secretary Gotabaya Rajapaksa, a US citizen at the time, and US Ambassador here Robert O. Blake signed it. Close on the heels of the ACSA signing, the US provided specific intelligence that allowed the Sri Lanka Navy to hunt down four floating LTTE arsenals. Whatever critics say, that US intervention ensured the total disruption of the LTTE supply line and the collapse of their conventional fighting capacity by March 2009. The US favourably responded to the then Vice Admiral Wasantha Karannagoda’s request for help and the passing of intelligence was not in any way in line with ACSA.

That agreement covered the 2007 to 2017 period. The Yahapalana government extended it. Yahapalana partners, the SLFP and UNP, never formally discussed the decision to extend the agreement though President Maithripala Sirisena made a desperate attempt to distance himself from ACSA.

It would be pertinent to mention that the US had been pushing for ACSA during Rail Wickremesinghe’s tenure as the Premier, in the 2001-2003 period. But, he lacked the strength to finalise that agreement due to strong opposition from the then Opposition. During the time the Yahapalana government extended ACSA, the US also wanted the Status of Forces Agreement (SOFA) signed. SOFA, unlike ACSA, is a legally binding agreement that dealt with the deployment of US forces here. However, SOFA did not materialise but the possibility of the superpower taking it up cannot be ruled out.

Gotabaya Rajapaksa, who won the 2019 presidential election, earned the wrath of the US for declining to finalise MCC (Millennium Challenge Corporation) Compact on the basis of Prof. Gunaruwan Committee report that warned that the agreement contained provisions detrimental to national security, sovereignty, and the legal system. In the run up to the presidential election, UNP leader Ranil Wickremesinghe declared that he would enter into the agreement in case Sajith Premadasa won the contest.

Post-Aragalaya setup

Since the last presidential election held in September 2024, Admiral Steve Koehler, a four-star US Navy Admiral and Commander of the US Pacific Fleet visited Colombo twice in early October 2024 and February this year. Koehler’s visits marked the highest-level U.S. military engagement with Sri Lanka since 2021.

Between Koehler’s visits, the United States and Sri Lanka signed a Memorandum of Understanding (MoU) formalising the defence partnership between the Montana National Guard, the US Coast Guard District 13, and the Sri Lanka Armed Forces under the Department of War’s State Partnership Programme (SPP). The JVP-led NPP government seems sure of its policy as it delayed taking a decision on one-year moratorium on all foreign research vessels entering Sri Lankan waters though it was designed to block Chinese vessels. The government is yet to announce its decision though the ban lapsed on December 31, 2024.

The then President Ranil Wickremesinghe was compelled to announce the ban due to intense US-Indian pressure.

The incumbent dispensation’s relationship with US and India should be examined against allegations that they facilitated ‘Aragalaya’ that forced President Gotabaya Rajapaksa out of office. The Trump administration underscored the importance of its relationship with Sri Lanka by handing over ex-US Coast Guard Cutter ‘Decisive ‘to the Sri Lanka Navy. The vessel, commanded by Captain Gayan Wickramasooriya, left Baltimore US Coast Guard Yard East Wall Jetty on February 23 and is expected to reach Trincomalee in the second week of May.

Last year Sri Lanka signed seven MoUs, including one on defence and then sold controlling shares of the Colombo Dockyard Limited (CDL) to a company affiliated to the Defence Ministry as New Delhi tightened its grip.

Sri Lanka-US relations seemed on track and the IRIS Dena incident is unlikely to distract the two countries. The US continues to take extraordinary measures to facilitate war on Iran. In a bid to overcome the Iranian blockade on crude carriers the US temporarily eased sanctions to allow India to buy Russian oil.

Treasury Secretary Scott Bessent declared a 30-day waiver was a “deliberate short-term measure” to allow oil to keep flowing in the global market. The US sanctioned Russian oil following Moscow’s invasion of Ukraine, forcing buyers to seek alternatives.

The US doesn’t care about the Ukraine government that must be really upset about the unexpected development. India was forced to halt buying Russian oil and now finds itself in a position to turn towards Russia again. But that would be definitely at the expense of Iran facing unprecedented military onslaught.

By Shamindra Ferdinando

Midweek Review

A Living Legend of the Peradeniya Tradition:

Published

7 days ago

2026/03/11

Sahan Weerasooriya

Prof. H. L. Seneviratne

A Tribute to Professor H. L. Seneviratne – Part I

My earliest memories of the eminent anthropologist, Professor H. L. Seneviratne date back to my childhood, when I first encountered his name through the vivid accounts of campus life shared by my late brother, Sugathapala de Silva, then a lecturer in the Department of Sinhala at the University of Peradeniya. By the time I became a first-year sociology student in 1968/69, I had the privilege of being taught by the Professor, whose guidance truly paved the way for my own progression in sociology and anthropology. Even then, it was clear that he was a towering presence—not just as an academician, but as a central figure in the lively cultural and literary renaissance that defined that era of the university’s intellectual history.

H.L. Seneviratne stood alongside a galaxy of intellectuals who shaped and developed the literary consciousness of the Peradeniya University. His professorial research made regular appearances in journals such as Sanskriti and Mimamsa, published Sinhala and English articles, and served as channels for the dissemination of the literary consciousness of Peradeniya to the population at large. These texts were living texts of a dynamic intellectual ferment where the synthesis of classical aesthetic sensibilities with current critical intellectual thought in contemporary Sri Lanka was under way.

The concept of a ‘Peradeniya tradition or culture’, a term which would later become legendary in Sri Lankan literary and intellectual circles, was already being formed at this time. Peradeniya culture came to represent a distinctive synthesis: cosmopolitanism entwined with well-rooted local customs, aesthetic innovation based on classical Sinhala styles, and critical interaction with modernity. Among its pre-eminent practitioners were intellectual giants such as Ediriweera Sarachchandra, Gunadasa Amarasekara, and Siri Gunasinghe. These figures and H.L. Seneviratne himself, were central to the shaping of a space of cultural and literary critique that ranged from newspapers to book-length works, public speeches to theatrical performance.

Unlimited influence

H.L. Seneviratne’s influence was not limited to the printed page, which I discuss in this article. He operated in and responded to the performative, interactive space of drama and music, situating lived artistic practice in his cultural thought. I recall with vividness the late 1950s, a period seared into my memory as one of revelation, when I as a child was fortunate enough to witness one of the first performances of Maname, the trailblazing Sinhala drama that revolutionised Sri Lankan theatre. Drawn from the Nadagam tradition and staged in the open-air theatre in Peradeniya—now known as Sarachchandra Elimahan Ranga Pitaya—or Wala as used by the campus students. Maname was not so much a play as a culturally transformative experience.

H.L. Seneviratne was not just an observer of this change. He joined the orchestra of Maname staged on November 3, 1956, lending his voice and presence to the collective heartbeat of the performance. He even contributed to the musical group by playing the esraj, a quiet but vital addition to the performance’s beauty and richness. Apart from these roles, he played an important part in the activities of Professor Sarathchandra’s Sinhala Drama Society, a talent nursery and centre for collaboration between artists and intellectuals. H.L. Seneviratne was a friend of Arthur Silva, a fellow resident of Arunachalam Hall then, and the President of the Drama Circle. H.L. Seneviratne had the good fortune to play a role, both as a member of the original cast, and an active member of the Drama Circle that prevailed on lecturer E.R. Sarathchandra to produce a play and gave him indispensable organizational support. It was through this society that Sarachchandra attracted some of the actors who brought into being Maname and later Sinhabhahu, plays which have become the cornerstone of Sri Lanka’s theatrical heritage.

The best chronicler of Maname

H.L. Seneviratne is the best chronicler of Maname. (Towards a National Art, From Home and the World, Essays in honour of Sarath Amunugama. Ramanika Unamboowe and Varuni Fernando (eds)). He chronicles the genesis of Ediriweera Sarachchandra’s seminal play Maname, framing it as a pivotal attempt to forge a sophisticated national identity by synthesizing indigenous folk traditions with Eastern theatrical aesthetics. Seneviratne details how Sarachchandra, disillusioned with the ‘artificiality’ of Western-influenced urban theatre and the limitations of both elite satires and rural folk plays, looked toward the Japanese Noh and Kabuki traditions to find a model for a ‘national’ art that could appeal across class divides. The author emphasises that the success of Maname was not merely a solo intellectual feat but a gruelling, collective effort involving a ‘gang of five’ academics and a dedicated cohort of rural, bilingual students from the University of Ceylon at Peradeniya. Through anecdotes regarding the discovery of lead actors like Edmund Wijesinghe and the assembly of a unique orchestra, Seneviratne highlights the logistical struggles—from finding authentic instruments to managing cumbersome stage sets—that ultimately birthed a transformative ‘oriental’ theatre rooted in the nadagama style yet refined for a modern, sophisticated audience.

Born in Sri Lanka in 1934, in a village in Horana, he was educated at the Horana Taxila College following which he was admitted to the Department of Sociology at the University of Peradeniya. H.L. Seneviratne’s academic journey subsequently led him to the University of Rochester for his doctoral studies. But, despite his long tenure in the United States, his research has remained firmly rooted in the soil of his homeland.

His early seminal work, Rituals of the Kandyan State, his PhD thesis turned into a book, offered a groundbreaking analysis of the Temple of the Tooth (Dalada Maligawa). By examining the ceremonies surrounding the sacred relic, H.L. Seneviratne demonstrated how religious performance served as the bedrock of political legitimacy in the Kandyan Kingdom. He argued that these rituals at the time of his fieldwork in the early 1970s were not static relics of the past, but active tools used to construct and maintain the authority of the state, the ideas that would resonate throughout his later career.

The Work of Kings

Perhaps, his most provocative contribution arrived with the publication of The Work of Kings published in 1999. In this sweeping study, H.L. Seneviratne traced the transformation of the Buddhist clergy, or Sangha, from the early 20th-century ‘social service’ monks, who focused on education and community upliftment, to the more politically charged nationalist figures of the modern era. He analysed the shift away from a universalist, humanistic Buddhism toward a more exclusionary identity, sparking intense debate within both academic and religious circles in Sri Lanka.

In The Work of Kings, H.L. Seneviratne has presented a sophisticated critique and argued that in the early 20th century, influenced by figures like Anagarika Dharmapala, there was a brief ‘monastic ideal’ centred on social service and education. This period saw monks acting as catalysts for community development and moral reform embodying a humanistic version of Buddhism that sought to modernize the country while maintaining its spiritual integrity.

However, H.L. Seneviratne contends that this situation was eventually derailed by the rise of post-independence nationalism. He describes a process where the clergy moved away from universalist goals to become the vanguard of a narrow ethno-religious identity. By aligning themselves so closely with the state and partisan politics, H.L. Seneviratne suggests that the Sangha inadvertently traded their moral authority for political influence. This shift, in his view, led to the ‘betrayal’ of the original social service movement, replacing a vision of broad social progress with one centred on political dominance.

The core of his critique lies in the disappearance of what he calls the ‘intellectual monk.’ He laments the decline of the scholarly, reflective tradition in favour of a more populist and often inflammatory rhetoric. By analysing the rhetoric of key monastic figures, H.L. Senevirathne illustrates how the language of Buddhism was repurposed to justify political ends, often at the expense of the pluralistic values that he believes are inherent to the faith’s core teachings.

H.L. Seneviratne’s work remains highly relevant today as it provides a framework for understanding contemporary religious tensions. His analysis serves as a warning about the consequences of merging religious institutional power with state politics. By documenting this historical shift, he challenges modern Sri Lankans—and global observers—to reconsider the role of religious institutions in a secular, democratic state, urging a return to the compassionate and socially inclusive roots of the Buddhist tradition.

Within the broader context of Sri Lankan anthropology, H.L. Seneviratne is frequently grouped with other towering figures of his generation, most notably Stanley Jeyaraja Tambiah and Gananath Obeyesekere. Together, this remarkable cohort revolutionized the study of Sri Lanka by applying structural and psychological analyses to religious and ethnic identity. While Tambiah famously interrogated the betrayal of non-violent Buddhist principles in the face of political violence, H.L. Seneviratne’s work is often seen as the essential sociological counterpart, providing the detailed historical and institutional narrative of how the monastic order itself was reshaped by these very forces.

Reation to Seneviratne’s critque

The reaction to H.L. Seneviratne’s critique has been as multifaceted as the work itself. In academic circles, particularly those influenced by post-colonial theory, he is celebrated for speaking truth in a public place. Scholars have noted that because he writes as an insider—both a Sinhalese and a Buddhist, that makes them both credible and, to some, highly objectionable. His work has paved the way for a younger generation of Sri Lankan sociologists and anthropologists to move beyond traditional functionalism towards more radical articulations of competing interests and political power.

However, his analysis has also made him a target for nationalist critics. Those aligned with ethno-religious movements often view his deconstruction of the Sangha’s political role as an attack on Sinhalese-Buddhist identity itself. These detractors argue that H.L. Seneviratne’s intellectualist or universalist view of Buddhism fails to account for the necessity of the clergy’s role in protecting the nation against neo colonial and modern pressures. This tension highlights the very descent into ideology that H.L. Seneviratne has spent his career documenting.

H.L. Seneviratne’s legacy is defined by this ongoing dialogue between scholarship and social reality. His transition from the detached scholar seen in his early work on Kandyan rituals to the socially concerned intellectual of The Work of Kings mirrors the very transformation of the Sangha and Buddha Sasana he studied. By refusing to look away from the complexities of the present, he has ensured that his work remains a cornerstone for any serious discussion on the future of religion and governance in Sri Lanka.

Focus on good governance

In his later years, H.L. Seneviratne has pivoted his focus toward the practical application of his theories, specifically examining how the concept of ‘Good Governance’ interacts with traditional religious structures. He argues that for Sri Lanka to achieve true stability, there must be a fundamental reimagining of the Sangha’s role in the public sphere—one that moves away from the ‘work of Kings’ and returns to a more ethical, advisory capacity. This shift in his recent lectures reflects a deep concern about the erosion of democratic institutions and the way religious sentiment can be harnessed to bypass the rule of law.

Building on this, contemporary scholars like Benjamin Schonthal have expanded H.L. Seneviratne’s inquiry into the legal and constitutional dimensions of Buddhism in Sri Lanka. While H.L. Seneviratne provided the anthropological groundwork for how monks gained political power, this newer generation of academics examines how that power has been codified into the very laws of the state. They explore the ‘path dependency’ created by the historical shifts H.L. Seneviratne documented, looking at how the legal privileging of Buddhism creates unique challenges for a pluralistic society.

New Sangha

Furthermore, his influence is visible in the work of local scholars who focus on ‘engaged Buddhism.’ These researchers look back at H.L. Seneviratne’s description of the early 20th-century social service monks as a blueprint for modern reform. By identifying the moment where the clergy’s mission shifted from social welfare to political nationalism, these scholars use H.L. Seneviratne’s historical milestones to advocate a ‘New Sangha’ that prioritizes reconciliation and inter-ethnic harmony over state-aligned power.

The enduring power of H.L. Seneviratne’s work lies in its refusal to offer easy answers. By mapping the transition within Buddhist practice from ritual to politics, and from social service to nationalism, he has provided an analytical framework in which the nation can see its own transformation. His legacy is not just a collection of books, but a persistent, rigorous habit of questioning that continues to inspire those who seek to understand the delicate balance between faith and the modern state.

H.L. Seneviratne continues to challenge his audience to think beyond the immediate political moment. By documenting the arc of Sri Lankan history from the sacred rituals of the Kandyan kings to the modern halls of parliament, he provides a vital sense of perspective. Whether he is being celebrated by the academic community or critiqued by nationalist voices, his work ensures that the conversation regarding the soul of the nation remains rigorous, historically grounded, and unafraid of its own complexities.

Anthropology and cinema

H.L. Seneviratne identifies the mid-1950s as the critical turning point for this cinematic shift, specifically anchoring the move to 1956 with the release of Lester James Peries’s “Rekava.” This period was a watershed moment in Sri Lankan history, coinciding with a broader nationalist resurgence that sought to reclaim a localized identity from the influence of colonial and foreign powers. H.L. Seneviratne suggests that before this era, the ‘South Indian formula’ dominated the screen, characterized by studio-bound sets, theatrical acting, and musical interludes that felt alien to the island’s actual social fabric. The pioneers of this movement, led by Lester James Peries and later followed by figures like Siri Gunasinghe in the early 1960s, deliberately moved the camera into the open air of the rural village to capture what H.L. Seneviratne describes as the ‘authentic rhythms’ of life. This transition was not merely aesthetic but deeply ideological; it replaced the mythical, exaggerated heroism of commercial cinema with a nuanced exploration of the post-colonial middle class and the crumbling feudal hierarchies. By the 1960s, through landmark works like ‘Gamperaliya,’ these filmmakers were successfully crafting a modern mythology that reflected the internal psychological tensions and the social evolution of a nation navigating its way between traditional Buddhist values and a rapidly modernizing world.

His critique of the relationship between art and the state is particularly evident in his analysis of historical epics, where he has argued that certain cinematic portrayals of ancient kings and battles serve as a form of ‘visual nationalism,’ translating the ideological shifts he documented in The Work of Kings onto the silver screen. By analysing these films, he shows how popular culture can become a powerful tool for constructing a simplified, heroic past that often ignores the multi-ethnic and pluralistic realities of the island’s history.

(To be concluded)

by Professor M. W. Amarasiri de Silva