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!

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Midweek Review

Opp. caught up in CIABOC offensive

Published

17 hours ago

2026/06/24

Sahan Weerasooriya

Mahinda Rajapaksa leaving CIABOC on 12 June, 2026

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) on 12 June questioned former President Mahinda Rajapaksa regarding the USD 2 Mn bribe allegation directed at the late SriLankan CEO Kapila Chandrasena, whose body was found on 8 May in a close relative’s home in Kollupitiya. Chandrasena’s alleged suicide sent shock waves through political circles and interested parties questioned the circumstances leading to him being granted bail on 6 May on cash bail of Rs. 500,000 with three sureties of Rs. 10 million each. The Colombo Magistrate court also imposed a travel ban. The issue at hand is as to how Mohamed Riswan and Mohamed Irshan stood as sureties for Chandrasekera. Of all the investigations undertaken by the CIABOC, the USD 2 Mn bribe case is the most politically charged probe.

Of the Rajapaksas, former State Minister Shasheendra Rajapaksa is so far the last to be indicted. CIABOC on 19 June filed indictments before the Colombo High Court against him and two others Sepalika Saman Kumari and Keerthi Bandara Kotagama. According to the charges, the accused are alleged to have committed the offence of corruption and aided and abetted the commission of the offence by using official influence to pressure certain government officials, attached to the Office for Reparations, to obtain compensation amounting to Rs. 8.85 million for a property built on a state land by Shasheendra and destroyed by marauding Aragalaya mobs.

By Shamindra Ferdinando

The ruling National People’s Power (NPP) government last week emphasised, in no uncertain terms, that it wouldn’t tolerate the growing Opposition challenge.

Amidst the growing controversy over the continuing detention of retired Maj. Gen. Suresh Sallay. in terms of the draconian Prevention of Terrorism Act (PTA), under humiliating conditions, in connection with the ongoing investigations into the 2019 Easter Sunday carnage, police arrested Sugeeshwara Bandara, leader of the New People’s Front (NPF). The Central Crime Investigation Bureau (CCIB) apprehended him on 18 June and the Fort Magistrate’s Court remended him till 1 July..

The CCIB also apprehended Binoy Hettiarachchi who was accompanying Bandara. Hettiarachchi served as a media coordinator at the former President Ranil Wickremesinghe’s Flower Road Office. Police intercepted their vehicle at Kollupitiya where the arrests were made like in an action-packed movie. Hettiarachchi was freed four hours later.

But, it would be better to identify Bandara as the former private secretary to President Gotabaya Rajapaksa as well as the Director General of Special Projects at the Presidential Secretariat in the wake of Ranil Wickremesinghe taking over the presidency.

Accused of receiving two salaries simultaneously, under the President’s Expenditure Head, Bandara who managed the media for Gotabaya Rajapaksa, in the run-up to the 2019 presidential election, is under investigation for abuse of government vehicles and employing government workers for political work.

Having launched his political career as the Colombo District organiser of the alliance New People’s Front, a breakaway faction of the UPFA, in February, 2024, Bandara contested the November, 2024, parliamentary polls on the New Democratic Front (NDF) ticket. But, of late, Bandara, as the leader of NPF, became one of the most active opposition activists, aligned with the political grouping, dubbed People’s United Opposition, operating from Ranil Wickremesinghe’s Flower Road Office.

Bandara drew the wrath of the government when he launched a noisy protest outside Finance Secretary Dr. Harshana Suriyapperuma’s residence at Akuregoda, Pelawatta, on 26 April, where he and his protesting supporters were given a shower of excreta. The group, led by Bandara, demanded the Finance Secretary’s resignation over the theft of USD 2.5 mn from the Treasury. No less a person than President Anura Kumara Dissanayake reacted angrily to Bandara’s actions.

Acknowledging the right for legitimate protests, the President warned against protests directed at residences of officials. On 18 April, Bandara led a protest outside Agriculture Minister K.D. Lal Kantha’s recently built luxury residence at Weliwita, Kaduwela, where he questioned how the JVPer managed to build such a home as he was on record as having repeatedly said that he lived a difficult life.

The police apprehended Bandara as he was returning from a meeting between senior representatives of the People’s United Opposition and the IMF Colombo at the Tiki Bar, Shangri-La. In spite of negligible parliamentary presence, with those elected on the NDF ticket at the last parliamentary election not really speaking in one voice, the Flower Road project has become a headache for the government.

In fact, the Flower Road operation has been causing continuous harassment to the NPP, while the Samagi Jana Balawegaya (SJB) struggled to play its anticipated role as the main Opposition. Instead of conducting a cohesive campaign against the cocky NPP government, members of the SJB seem to be pulling in different directions at the expense of the common opposition front.

Regardless of the Wickremesinghe-led grouping vowing to press ahead with its campaign, the arrest of Bandara is obviously meant to have a detrimental impact on the activities of the Opposition.

It would be pertinent to mention that Bandara had been among those who stayed with President Gotabaya Rajapaksa at the President’s House, in Colombo, as a massive protest erupted on 9 July, 2022. Bandara was among the last to flee the President’s House as the military withdrew, amidst mounting pressure on their positions.

The police arrested Bandara as former President Gotabaya Rajapaksa moved the Court of Appeal in terms of Article 140 of the Constitution to prevent him being arrested under the PTA. The wartime Defence Secretary sought the court intervention in the wake of police probing the 2019 Easter Sunday carnage and obtaining a travel ban against him.

The court heard Romesh de Silva PC’s submissions on behalf of the ex-President on 18 June. The court deferred the hearing to 24 June. The crux of the matter is that the ex-President fears that the CID is about to arrest him on the basis of a statement made by fugitive Azad Moulana, in Paris, linking Sallay directly with the Easter Sunday carnage.

NPP intensifies pressure

The NPP seems confident of its current course of action meant to pin down the Opposition. In spite of unbridled corruption being the major issue on the post-war election platform, no political party succeeded in going flat-out against the political opposition.

However, the NPP allowed the judicial process to continue. The first major sentencing was announced on 2 April, 2025, just six months after the parliamentary polls, handsomely won by the NPP. The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) moved the Colombo High Court successfully against the former Chief Minister of the North Central Province S.M. Ranjith Samarakoon.

Colombo High Court No. 01 Judge Adithya Patabendige sentenced him in terms of Section 70 of the Bribery Act. The HC declared the former CM perpetrated malpractices by ordering fuel to his personal secretary’s vehicle. The personal secretary happened to be Shanthi Chandrasena, wife of his brother S.M. Chandrasena, a former Cabinet Minister and one of the most powerful Ministers to represent the North Central province.

The ex- Chief Minister and the second accused, his personal secretary, were convicted guilty of two charges. Both were sentenced to 16 years rigorous imprisonment and were also ordered to pay a fine of Rs. 200,000/- with an additional two-year prison term in case of default.

Deputy Director General Asitha Anthoney appeared on behalf of the Commission to Investigate Allegations of Bribery or Corruption.

There had never been any really coordinated CIABOC campaign against corruption. No political party, or a particular family, felt threatened by CIABOC. Both those in and outside Parliament acted with impunity. They feared no one. There was no need to be because the powerful and the influential operated above the law.

Just a couple of weeks after sentencing of S.M. Ranjith Samarakoon and Shanthini Chandrasena, the CIABOC arrested the latter’s husband, one-time Deputy Economic Development Minister and Special Projects Minister, S.M. Chandrasena. The CIABOC took him into custody on 4 July, 2025.

The CIABOC accused the former Minister of causing loss to the government by distributing seed corn, imported at a cost of Rs 25 mn, in 2024, among the farmer community in the Anuradhapura district, at a subsidised price. The distribution had taken place ahead of the 2015 presidential election contested by Mahinda Rajapaksa and estranged former SLFP General Secretary Maithripala Sirisena. The CIABOC alleged that Chandrasena exerted undue influence on the Director (Planning) and other officers of the District Secretariat and distributed seeds through his political allies to gain an advantage in the 2015 presidential election and incurred a loss to the government.

Chandrasena was granted bail on 1 August, 2025. He was indicted on 12 June before the Colombo High Court.

Before further discussing the ongoing anti-corruption campaign, let me introduce the top leadership of CIABOC. The Commission consists of Justice W.M.N.P. Iddawela (Chairman), K.B. Rajapakse and Chethiya Goonesekera P.C, with High Court judge R.S.A. Dissanayake as its Director General.

The sentencing of the S. M. Ranjith Samarakoon didn’t really bother his side. The arrest of his brother S.M. Chandrasena, too, didn’t really upset those facing charges. But, sentencing of former Minister Mahindananda Aluthgamage and former Sathosa Chairman and former Trade Minister Nalin Fernando on 29 May, 2025, sent shock waves through the Opposition.

The Colombo High Court Trial-at-Bar sentenced Aluthgamage and Fernando for committing the offence of corruption by purchasing 14,000 carrom boards and 11,000 checkers boards through Sathosa, allegedly to distribute to schools and sports clubs selected by the Sports Ministry, and distributing them to party offices of the government, during the 2015 presidential election campaign thereby, causing a loss of over 53 million rupees to the government, stunned the Opposition.

Aluthgamage was sentenced to 20 years of rigorous imprisonment, Fernando received a sentence of 25 years of rigorous imprisonment. Additionally, a fine of Rs. 100,000 (hundred thousand) was imposed for each count.

The CIABOC’s Assistant Director General Mrs. Anuththara Jayasinghe and Assistant Director General Mrs. Thushari Dayaratne conducted the prosecution.

During the Yahapalana government Aluthgamage spearheaded a high profile anti-corruption campaign, dubbed ‘Yahapalana Top 10 kamba horu’. The then Joint Opposition (JO) group, led in Parliament by Dinesh Gunawardena, published a 750-page book, targeting the Yahapalana ministers. Mahindananda, who spearheaded that campaign, is now serving a long sentence.

The JO group consists of UPFA lawmakers who declined to throw their weight behind the then President Sirisena aligned with the UNP.

Let me mention the names of those against whom the accusations were made by the JO.

Yahapalana corruption

The JO dealt with 10 major cases. (1) The Treasury bond scams perpetrated in 2015 and 2016. Accusations were directed at Ranil Wickremesinghe, Ravi Karunanayake and Governor Central Bank Arjuna Mahendran. The losses were estimated at Rs 26 bn. (2) causing losses amounting to Rs 10 bn through the fraudulent import of vehicles. Ravi Karunanayake was named the chief culprit (3) Misappropriation of Mahapola funds to the tune of Rs. 1 bn. Allegations were directed at Malik Samarawickrema (4) Stealing from an insurance scheme implemented for the benefit of those going for employment in West Asia. The JO accused Thalatha Atukarale of misappropriating funds amounting Rs 1.5 bn (5) Receiving Rs 1.5 bn through the leasing of Hambantota port to China on a 99-year lease. Ranil Wickremesinghe, Malik Samarawickrema and R. Paskaralingam were named the offenders (6) Kabir Hashim was accused of causing a loss of Rs 54 bn by cancelling aircraft ordered from Airbus Industries for the national carrier (7) fraudulent activities pertaining to the release of paddy stocks held by the government. The JO estimated the losses caused to the government at Rs 10 bn. (8) Scam in vehicle parts. Ravil Karunanayake was accused of causing losses amounting to Rs. 6.5 bn, (9 A) Dr. Rajitha Senaratne was accused of leasing of the Modera fisheries harbor and procurement of eight vessels to catch fish, fraudulently, and thereby causing losses up to Rs 1 bn, (9B) The JO also found fault with Dr. Senaratne for perpetrating Rs 1.5 bn fraud in the procurement of medicine and lastly (10) Ranil Wickremesinghe, Malik Samarawickrema, R. Paskaralingam and Charitha Ratwatte were blamed for a massive fraud in the procurement of coal for the Norochcholai coal-fired power plant. That particular fraud was estimated at Rs 5 bn.

Although the JO transformed itself to Sri Lanka Podujana Peramuna (SLPP) later, to successfully contested the 2019 presidential election, none of the above-mentioned cases were investigated. As far as we know, none of those cases had been dealt with during the SLPP rule, from November, 2019, to July, 2022. Faced with an externally backed regime change operation, the SLPP invited Wickremesinghe, who had been named by them in three major corruption cases, to accept the premiership in May, 2022, and presidency in July same year.

So far, there is no indication whether the mentioned JO allegations had received the attention of the CIABOC or the Attorney General of the government. As far as we know of all the politicians and officials, Wickremesinghe is the only one facing imminent threat due to the ongoing case pertaining to him visiting the UK in September, 2023, to join his wife Prof. Maithree at the University of Wolverhampton at her graduation ceremony.

Wickremesinghe has been accused of squandering nearly 17 mn rupees at a time the country was in deep economic turmoil. The Fort Magistrate’s court is scheduled to take up the case on 8 July.

SLPP parliamentary group leader Namal Rajapaksa is also facing a major legal challenge. The former Minister has been indicted on charges of criminal misappropriation of Rs. 70 mn in connection with the controversial Krrish project. The indictments have been forwarded to the Colombo High Court by the Attorney General, alleging that Namal Rajapaksa misappropriated funds by receiving Rs. 70 million from the Indian real estate company for the development of rugby in Sri Lanka.

Yoshitha Rajapaksa, too, has been dealt with by the CIABOC. The Rajapaksas have been accused of lowering qualifications required to join the executive branch of the Navy and then sending him to the Royal Naval Academy in the United Kingdom at taxpayers’ expense. Produced before the Colombo Additional Magistrate, Yoshitha was released on three personal bail bonds of Rs. 5 million each.

Producing Yoshitha before court on 17 June, Deputy Director General of the Bribery Commission, Ruvini Wickramasinghe declared: “”Your Honour, the complaint regarding this incident was received on June 25, 2016. Accordingly, the Commission initiated investigations. The complaint states that the suspect had participated in naval training programmes held in England and Ukraine by misusing government funds, while depriving qualified applicants of such opportunities. At that time, this individual, who is a civilian in the dock today, was also a civilian in 2006 when he was deemed eligible for the Royal Navy Young Officer training at the Royal Naval Academy in the United Kingdom. The opportunities to receive this training are extremely limited. Your Honour, selection to this prestigious course is usually based on being the most outstanding cadet officer during a two-year training period or based on performance during training. However, this suspect, although a civilian in 2006, was proposed and included in the list and was sent for the course in haste.”

The Deputy Director General also stated that Yoshitha Rajapaksa had undergone medical examinations required for overseas training even before being officially recruited into the Navy.

The court was also told that though Sri Lanka previously received scholarships from the UK the Rajapaksa government funded Yoshitha to the tune of Rs 6.2 mn.

Opp. attacks CIABOC

The Opposition has repeatedly attacked the CIABOC with its Director General Ranga Dissanayake being the primary target. Accusing Dissanayake of being a JVPer, the Opposition has repeatedly questioned the conduct of the High Court judge demanding that the CIABOC inquired into the top official’s conduct, especially with regard to the alleged suicide of former Sri Lankan CEO Kapila Chandrasena who had been under investigation pertaining to the receiving of USD 2 mn bribe to facilitate procurement aircraft from Airbus Industrie during Mahinda Rajapaksa’s second term.

Former Foreign Minister Prof. G. L. Peiris, a regular speaker at Flower Road media briefings, alleged that the CIABOC was a political tool in the NPP’s hands.

A section of the Opposition to question the circumstances one-time JVP heavyweight Nandana Gunatilleke died in January this year at the Ragama Teaching Hospital after accusing Dissanayake of pursuing an agenda beneficial to the JVP, a charge denied by the High Court judge. When the writer raised the allegations with Dissanayake, he emphatically denied any wrongdoing on his part https://island.lk/ciaboc-dg-denies-jvp-link/.

The CIABOC has simply ignored accusations directed at its DG who proved through his actions that he really meant high profile public pronouncements against corruption.

Former Deputy Minister and ex-MP Sarana Gunawardena was sentenced to a total of 16 years rigorous imprisonment by the Colombo High Court on June 8, 2026.

During the Yahapalana administration many cases, filed by the CIABOC as well as the Attorney General, were either dismissed or dropped due to lapses on their part. The accused in such cases were ex-MP Sajin Vass Gunawardena, ex-EP Chief Minister Sivanesathurei Chandrakanthan alias Pilleyan, ex-Ministers Johnston Fernando, Rohitha Abeygunawardena, Basil Rajapaksha, Mahindananda Aluthgamage and Janaka Bandara Tennakoon and former AG and CJ Mohan Peiris.

Regardless of Opposition protests, the public appreciate tangible action against corruption. However, the NPP has not been free from serious allegations against it since the last general elections. The release of suspicious 323 containers, plus two containers filled with ice, in January, 2025, followed by the massive coal scam perpetrated in September 2025, loss of over USD 2.5 mn from the Treasury and controversial Aswesuma payments, as well as wealth, accumulated by NPP Ministers as revealed by declarations made to CIABOC, shocked the electorate.

The NPP has failed to counter allegations. The circumstances under which Energy Minister Kumara Jayakody resigned, along with Energy Secretary Udayanga Hemapala, on 17 April, just a week after the NPP defeated the no-confidence motion moved by the Opposition against the Energy Minister. dealt a devastating blow to the NPP’s much touted integrity. The NPP couldn’t explain as to why a person under investigation by the CIABOC for an alleged fraud perpetrated during the Yahapalana government was accommodated in President Dissanayake’s first Cabinet. Indicted before the Colombo High Court, Jayakody’s case commenced last week.

Asset declarations of some NPP Ministers have shocked the country. The SJB has called for CIABOC to investigate them without delay and prove that CIABOC was not only going after the Opposition. Ministers Lal Kantha and Wasantha Samarasinghe are two of the top JVPers who have attracted attention as the Opposition hits back at the government.

SJB MP Mujibur Rahuman said that the JVP/NPP owed an explanation as to how their members amassed so much wealth since 2024 as they repeatedly claimed their inability to meet even their basic needs. But, their asset declarations exposed their blatant lies.

Midweek Review

Geopolitics of the Indian Ocean

Published

17 hours ago

2026/06/24

Sahan Weerasooriya

Listening to the Winds, Reading the Waves:

Prof. Gamini Keerawella’s latest publication, Winds and Waves: Geopolitical Currents in the Indian Ocean since 1945 will be launched on 5 August at the Auditorium of the Bandaranaike Centre for International Studies (BCIS). The keynote address will be delivered by Prof. T. V. Paul, James, McGill Professor of Political Science at McGill University, Canada and the former President of the International Studies Association (ISA).

Prof. Keerawella, Professor Emeritus of History at the University of Peradeniya, has dedicated hisbook to the memory of Dr. Newton Gunasinghe, the eminent sociologist and Marxist theoretician who encouraged him to venture beyond disciplinary frontiers. In many respects, this work represents a successful realization of that intellectual endeavour. In her testimonial to back cover of the book, Dr. Radhika Coomaraswamy observes that “Gamini Keerawella offers a nuanced and layered account of the Indian Ocean region’s strategic evolution from the era of decolonization to the contemporary phase of intensifying great-power rivalry. Its distinctive analytical perspective makes it an important contribution to the study of international relations, maritime geopolitics, and regional strategic dynamics.” This assessment accurately captures the significance of the work, and I fully endorse her judgement.

This volume constitutes the final publication of a trilogy that explores the evolving dynamics of international relations from a distinctly Sri Lankan perspective. The first study examined the trajectory of Sri Lanka’s defence and foreign policy, while the second revisited the origins, evolution, and principal constituent elements of international relations as an academic discipline from a Global South perspective. The present work broadens the analytical canvas by tracing the shifting geopolitical contours of the Indian Ocean since 1945 and examining the evolving interplay between great-power competition and regional agency.

Indian Ocean not merely maritime transit space

At the heart of Prof. Keerawella’s analysis is the argument that the Indian Ocean is not merely a maritime space of transit but a living archive whose language is inscribed in tides, trade, and collective memory. To uncover the deeper structures that have shaped the region, he draws on Michel Foucault’s concept of the archaeology of knowledge, probing beneath the visible layers of historical experience to reveal successive strata of thought, exchange, and power. This approach enables him to trace the multiple origins of the Indian Ocean’s geopolitical significance through the sedimented traces of how the ocean has been known, governed, and imagined across time. Complementing this perspective is Fernand Braudel’s concept of the longue durée, which provides the framework for understanding the long-term evolution of Indian Ocean geopolitics. As Keerawella notes, for Braudel, history unfolds not as a single linear sequence but as a layered field of continuity and change, revealing the deeper architecture of the past—the slow yet powerful currents that shape political and economic developments beneath the surface of events (Keerawella 2026: xxiii).Prof. Keerawella further notes that later historians such as K. N. Chaudhuri and M. N. Pearson drew on Braudel’s insights and adapted them to understand the Indian Ocean as a polycentric world.

Prof. Keerawella argues that the terms employed in the title of this work—Winds, Waves, and Currents—evoke the ocean’s dual language of surface movement and underlying structure. In his reading, winds and waves signify motion: the visible and often turbulent forces that carry ships, peoples, commodities, and ideas across shifting maritime frontiers. Currents, by contrast, refer to the deeper and less visible forces that shape historical trajectories and connect coasts and continents through enduring patterns of interaction. As he observes, while winds and waves represent the restless dynamics of the ocean’s surface, currents embody the slower yet more consequential energies that operate beneath it, binding disparate regions into a larger maritime system (2026: xx).

Metaphors and Conceptual Foundation

Building on this conceptual foundation, the author employs winds, waves, and currents not merely as metaphors but also as analytical categories. Winds represent changing strategic directions and geopolitical realignments; waves denote recurring cycles of commerce, conflict, and interaction; and currents symbolize the deep structural forces that connect societies across space and time. Viewed from a distinctly Sri Lankan perspective, the volume demonstrates how a strategically located small state at the centre of the Indian Ocean perceives and navigates this maritime space through its own strategic lens. The book opens by situating Sri Lanka within the intersecting forces of history, geography, and power that have shaped the Indian Ocean world. It advances the notion of a dual strategic consciousness that has informed Sri Lanka’s external engagements: a persistent sense of vulnerability, rooted in colonial experience and geographical exposure, coexisting with a cosmopolitan outlook forged through centuries of maritime exchange. Prof. Keerawella contends that this dual consciousness constitutes the underlying framework through which Sri Lanka has historically interpreted and responded to developments in its external environment.

Winds and Waves is a comprehensive study comprising eleven chapters and an extensive introduction that establishes the analytical foundations of the work by treating the ocean simultaneously as text and method. The opening chapter situates Sri Lanka within the wider Indian Ocean system, tracing the island’s navigation through shifting configurations of power while emphasising the agency of small states. The Indian Ocean is presented not merely as a strategic arena but also as a moral and political space, linking Sri Lanka’s historical experience to the broader aspirations and consciousness of the Global South.

Revisiting British withdrawal

The book revisits Britain’s withdrawal from the Indian Ocean, arguing that it was not simply a consequence of post-war decline but the culmination of deeper structural transformations in the international system. Decolonisation, Afro-Asian nationalism, and the emergence of bipolarity fundamentally altered the regional order and created the conditions for Britain’s retreat. In turn, this withdrawal opened the way for superpower competition, particularly between the United States and the Soviet Union, transforming the Indian Ocean into major theatre of Cold War geopolitics.

A substantial portion of the volume is devoted to examining the policies and strategic trajectories of the major powers. The author traces American engagement from Cold War containment through post-Cold War maritime predominance to contemporary Indo-Pacific formulations, demonstrating that U.S. strategy has evolved through the interaction of structural imperatives and changing strategic discourses. Particular attention is paid to the 2026 U.S.–Iran War, which is interpreted as a transformative event that exposed the limits of military hegemony and accelerated patterns of strategic hedging and multi-alignment among regional actors. The book also explores the Soviet Union’s entry into the Indian Ocean in 1968 and the subsequent re-emergence of Russia under Vladimir Putin through selective naval deployments, arms transfers, and strategic partnerships, illustrating what the author characterises as the recurrent rhythms of great-power engagement in the region.

The rise of China receives extensive treatment as one of the most significant structural developments of the twenty-first century. Through the Belt and Road Initiative, port development projects, and naval modernisation, China has translated growing economic power into expanding strategic influence. The author contrasts Beijing’s assertive posture in the South China Sea with its relatively restrained approach in the Indian Ocean, where economic diplomacy and cooperative security initiatives have assumed greater prominence. Equally significant is the discussion of India’s transformation from a regional power into an emerging global strategic actor. The evolution of Indian maritime strategy—from Nehruvian custodianship to contemporary blue-water ambitions—demonstrates how a rising power navigates structural constraints while expanding its strategic reach. Initiatives such as SAGAR, naval modernization, and deepening partnerships with the United States, Japan, and Australia have positioned India as a central actor in the evolving Indo-Pacific order.

Roles of Japan and EU examined

The volume also examines the roles of Japan and the European Union in shaping the contemporary maritime order. Japan’s transition from post-war restraint to proactive strategic engagement, embodied in the Free and Open Indo-Pacific (FOIP) vision, illustrates how middle powers adapt to changing geopolitical realities through coalition-building and maritime capacity enhancement. The European Union’s engagement is portrayed through less visible but nevertheless significant mechanisms, including trade, development cooperation, maritime governance, and norm diffusion, contributing to what the author terms a form of “quiet-making multipolarity” that encourages restraint, stability, and pragmatic cooperation.

Moving beyond conventional geopolitics, the book broadens the analytical framework to address a range of non-traditional security challenges confronting South Asia in general and Sri Lanka in particular. Climate change, piracy, illegal fishing, maritime terrorism, public health vulnerabilities, and digital insecurity are examined as transnational challenges that transcend the capabilities of individual states. The author argues that these issues reveal the limits of unilateral action and underscore the growing importance of cooperation, collective action, institutional innovation, and middle-power leadership in maritime governance.

Prof. Keerawella further situates the Indian Ocean within the wider context of the emerging Asian Century. Asia’s resurgence—driven principally by China and India and reinforced by the dynamism of Southeast Asia—is presented as a major reconfiguration of global power. In this transformation, the Indian Ocean functions as a vital maritime artery connecting energy resources, manufacturing centres, and consumer markets. At the same time, the author cautions against deterministic interpretations, emphasising that the realisation of the Asian Century remains contingent upon how the region responds to persistent inequalities, environmental challenges, governance deficits, and intensifying strategic competition.

Assessing how SL has navigated shifts

The book concludes by returning to Sri Lanka and assessing how the country has navigated contemporary shifts in the regional and global balance of power under the National People’s Power (NPP) government that emerged in the aftermath of the Aragalaya of 2022. The author demonstrates how economic crisis, demands for accountability, and aspirations for a new political culture have reshaped the domestic context within which foreign policy is conducted. Under President Anura Kumara Dissanayake, Sri Lanka is portrayed as pursuing a carefully calibrated strategy that combines engagement with international financial institutions, enhanced cooperation with India in defence and energy sectors, continued economic engagement with China, and functional security relations with the United States. The government’s response to the 2026 U.S.–Iran War—rejecting military access requests from all parties while extending humanitarian assistance—serves as an illustration of the author’s broader argument that strategic flexibility, principled neutrality, and diplomatic agility remain essential for small states navigating an increasingly complex Indian Ocean order.

Taken together, the book advances several interconnected propositions. First, the Indian Ocean is entering an increasingly multipolar era in which power is exercised through complex networks of cooperation, competition, and interdependence rather than rigid alliance structures. Second, small states are neither passive spectators nor mere proxies of great powers; they possess strategic agency and navigate competing pressures through hedging, diversification, and calibrated diplomacy. Third, Sri Lanka’s strategic behaviour—characterised by navigating asymmetry through flexibility and ambiguity—reflects a historically rooted dual consciousness that combines vulnerability with cosmopolitan engagement. Fourth, non-traditional security challenges and environmental governance are no longer peripheral concerns but central components of the evolving regional order.

Need for adaptive navigation

Prof. Keerawella argues that contemporary statecraft in the Indian Ocean requires adaptive navigation rather than rigid alignment. In a fluid and contested maritime environment, survival and influence depend less on resisting structural change than on understanding and responding to it with prudence, flexibility, and strategic clarity. The book therefore offers important insights into how small states can transform structural vulnerability into strategic agency and convert exposure into opportunities for engagement within a changing regional order.

Combining historical depth with contemporary analysis, it provides a nuanced understanding of the interaction between great-power competition, regional transformation, and the strategic choices of smaller states. The book will be of considerable value to students and scholars of international relations, political science, strategic studies, and maritime affairs, while also offering useful perspectives to policymakers, diplomats, and practitioners. Equally important, it opens several promising avenues for future research on the Indian Ocean and the emerging Indo-Pacific order.

Hermeneutic approachs

Methodologically, the study draws upon hermeneutic approaches to examine the geopolitical and maritime environments that shape relationships among states, societies, and historical processes. The result is a work that is both analytically rigorous and intellectually engaging. This review has sought less to evaluate the book in a conventional sense than to introduce its central themes and encourage a wider readership to engage with its arguments. Having highlighted the many merits of the volume, it is worth noting one technical shortcoming: the absence of an index. Given the book’s wide thematic scope and rich empirical content, the inclusion of an index would have significantly enhanced its value as a reference tool for researchers and students alike.

In sum, Prof. Keerawella listens attentively to the winds, reads the waves with analytical precision, and traces the deeper currents that shape the Indian Ocean world. The outcome is Winds and Waves: Geopolitical Currents in the Indian Ocean since 1945, a timely and thought-provoking contribution published by the Bandaranaike Centre for International Studies.

Reviewed by
Dr. Ramesh Ramasamy
Department of Political Science, University
of Peradeniya