Business

Unprecedented geo-politics & geo – economics at play: History, strategem and positioning of Sri Lanka

Published

3 months ago

2026/03/17

Prof. A. Saj U. Mendis

Just a year ago, probably nobody in the world would have believed that a military or crisis in Middle-East could have such a cataclysmic impact on the global economy. Of course, understandably, even to this day Oil remains a potent geo-political and geo-economic tool or weapon, decades after the energy crisis of the 1970s. Interestingly, both the energy and oil crises of 1973 and 1979, Iran did play a pivotal role. In 1973, even though Iran was only a non-Arab member of OPEC, it did not pro-actively participate in the crisis but under the Shah, Mohommed Reza Pahlavi, played a seminal role in massively increasing the price of oil leading to a full-blown crisis.

Oil crisis of 1970s and thereafter:

The genesis of the 1973 oil crisis was the surprise military attack on Israel by a coalition of Arab States led by Egypt and Syria on 6th October 1973, the holiest day of the Jewish calendar known as Yom Kippur. Precisely, 50 years later on 7th October, 2023, the day of Yom Kippar, Palestinian militant group, Hamas, attacked Israel leading to the still unresolved Gaza War. At that time many political thinkers and pundits thought that the global attention would, seismically, shift from Ukraine invasion by Russia to Israel-Palestine conflict. Yes, it did but yet the Ukraine conflict still continue as certain Western countries were assisting Ukraine militarily, despite completion of the fourth year of invasion on 22 February 2026. It might be ironical as well as fortuitous for any discerning geo-political observer that Oct. 7 happens to be the birthday of Valdimir Putin of Russia. The oil crisis of 1979 was of course the Iranian Revolution followed by Iran-Iraq conflict. The price of oil did surge significantly leading major economies including US to a recession.

The world witnessed oil spikes in July 2008, at the height of the economic and financial crisis precipitating the Brent Crude to reach all time high of USD 147. Then followed “Arab Springs” in 2012 as well as Iran exploiting the situation. In this context, Iran was both a “victim” of sanctions and “contributor” to the crisis with threats to close the Strait of Harmuz leading to creation of an “Iran Premium” on Oil by an additional USD 15 per barrel. This led oil to reach over USD 125 by April 2012. Then, of course, Ukraine-Russia conflict experienced oil reaching USD 120 in June 2022, when the world, mostly developing countries such as Sri Lanka, were recuperating from annihilatory COVID. Amongst others, it was of no surprise that Sri Lanka experienced one of the worst political upheavals leading to defaulting of sovereign debt. This episode of 2022 in Sri Lanka was only a “spark” of decades of dereliction and negligence of much needed political & economic reforms by successive Governments and political apparatuses. As noted Nobel Laureat in Economics, Edward Prescott, stated quote “You need a real crisis before you to have reforms” unquote.

Today, the Brent Crude and West Texas Intermediate (WTI) Oil are hovering around USD 110 and if the crisis continues, it would surge to well over USD 150 to 200. The 12 member and 11 plus member OPEC produce approximately 65 million barrels per day (bpd), according to Energy Information Administration (EIA). Even after over five decades, still oil rich or endowed nations/nation could weaponize oil, particularly, in the region of Middle East. The Straits of Hormuz is widely considered as most pivotal maritime oil chokepoint as the primary artery of around 20% of global energy.

Seminal nature of oil and gas to the global economy:

The strategic geographic location of Iran is most unique, to say the least, as it borders three continents i.e. Asia, Africa and Europe, thus reflecting the global volatility of the aforesaid conflict on a global basis. In 1970s during the oil crisis, the world used and consumed over 60% of total energy consisting of oil & gas. Today, as a percentage, it has declined to about 30%, yet the consumption quantity is approximately twice as in 1970s. For record, the total oil production is around 100 million bpd plus or minus and US consumes 20% or 21 million and China 16 million bpd, India 5.5 million bpd and followed by Japan, Saudi Arabia, Brazil, Russia and South Korea respectively. Sri Lanka, supposedly, consumes around 100,000 bpd. In simple math, USD 10 movement means a difference of USD 30 million a month or USD 360 million a year.

It is quite baffling and obfuscating to any perspicacious mind or political analyst that since energy or oil & gas is often been described as, the lubricant which makes the world move, could be effortlessly and deftly weaponized, thus making the energy reliant and depended nations, such as Sri Lanka, strangulate or suffocate not only economically but politically as well. Many developed nations wished and also executed processes to minimize the dependency on Oil and Gas in 1980s but yet the negative impingement reverberate across the world from Sydney, Stockholm to Santiago. The fact of the matter was most countries, literally and metaphorically, depended on oil and gas, primarily other than seeking other energy alternatives. If nation states extract from solar & wind, they could be economically independent as no nation or region could weaponize the Sun or Wind.

Positioning and efficacious posturing of the Government of Sri Lanka:

The Government of Sri Lanka, addressing, extending, balancing and managing the situation particularly given the sinking of a vessel of Iran and extending humanitarian assistance with great efficacy and commendation from the international community. Needless to state the US is the largest economy with 25% of global GDP and the largest export market of Sri Lanka, amongst other economic, political, diplomatic and military endowments. The Middle Eastern countries too are indispensable given over 1.2 million Sri Lankan migrants are employed, It is imperative for Sri Lanka not to align, explicitly, or make any statement other than an immediate resolution of hostilities or conduct diplomatic discussions and negotiations leading to cessation of violence, amongst others. Sri Lanka has established and earned this status since 1956 during the Suez crisis and 1962 India-China dispute, amongst others.

In conclusion, it is encouraging that the Government and Central Bank have lucidly articulated that the foreign reserves were over USD 7 billion and enunciated the length of time that the current stock of oil and gas would be sufficient for the economy and populace for the foreseeable future. These factual sentiments are central and requisite to educate and enlighten the populace of the country in the midst of an imminent crisis. As 16th US President, Abraham Lincoln stated during the height of the Civil War in 1860s, quote “I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts”. Unquote.

Writer is a former career Ambassador, Professor and Examiner of International Economics with specialization on Geo-economics and Geo-politics, Board Member, and Strategic Advisor. He earned the MBA from San Francisco State/University of California, PhD from Indian Institute of Technology (IIT) Delhi and is a Senior Fellow at Harvard. He could be reached on mendissaj24@gmail.com

By Prof. A. Saj U. Mendis

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Business

Sri Lanka educates women but keeps many out of work, ADB warns

Published

20 hours ago

2026/06/5

Thilina Walpola

Shannon Cowlin - ADB Country Director for Sri Lanka

Sri Lanka has one of the most educated female populations in South Asia, yet only about one in three women participates in the labour force, making female workforce participation among the lowest in the region and leaving a significant source of economic growth untapped.

That paradox took centre stage at a knowledge forum organised by the Asian Development Bank (ADB) in Colombo on June 3, where government officials, labour authorities, academics and private-sector leaders examined the deep-rooted barriers preventing women from fully participating in the economy and explored reforms needed to unlock their economic potential.

Opening the event, ADB Country Director for Sri Lanka Shannon Cowlin said the issue extends beyond gender equality and has become a critical economic challenge for a country seeking sustained growth and inclusive development.

“Empowering women to participate fully in the labour force is not only a matter of equality; it is essential for inclusive economic growth and poverty reduction in Sri Lanka,” she said.

The forum, held under ADB’s Serendipity Knowledge Programme (SKOP), focused on findings from a recent ADB-supported study exploring the factors behind Sri Lanka’s persistently low female labour force participation.

Cowlin noted that despite notable progress in education and human development, Sri Lanka continues to lag behind on measures of gender equality and women’s economic participation. She said multiple studies have shown that the factors shaping women’s labour force participation are layered, interconnected and multidimensional.

According to the study, many women remain concentrated in informal, low-paid and insecure employment with limited access to social protection and few opportunities for career advancement. Social and cultural expectations continue to place primary caregiving responsibilities on women, often restricting their ability to pursue careers or remain in full-time employment.

The lack of affordable childcare services, unequal access to digital skills and technology, concerns over workplace safety, sexual harassment and inadequate transport options were identified as major obstacles preventing women from entering or remaining in the workforce.

“These are complex challenges that require action from all stakeholders – government, development partners, the private sector, civil society and academia,” Cowlin said.

She stressed that improving women’s labour force participation would require more than isolated policy interventions, calling instead for structural transformation, stronger infrastructure and care services, progressive workplace practices and broader societal changes that improve women’s mobility, safety and economic agency.

The event featured a presentation by Professor Dileni Gunawardena of the University of Peradeniya, who shared findings from ADB’s study on female labour force participation, followed by a panel discussion involving representatives from the International Labour Organisation, the Department of Labour, MAS Holdings and John Keells Holdings.

Panelists discussed measures to improve the enabling environment for women, including greater investment in the care economy, expanded childcare facilities, enhanced skills development, creating safe, supportive workplaces and career pathways for upward mobility.

Participants agreed that increasing women’s participation in the workforce is not merely ‘a nice to have’ but an economic necessity, particularly as Sri Lanka seeks to accelerate recovery, boost productivity and achieve more inclusive growth.

The ADB said Sri Lanka’s economic recovery presents a unique opportunity to address long-standing structural barriers facing women and to build a more inclusive labour market that fully utilises the country’s human capital.

By Sanath Nanayakkare

Business

ComBank offers exclusive financial solutions to the ‘Guardians of the Skies’

Published

20 hours ago

2026/06/5

Thilina Walpola

Hasrath Munasinghe, Chief Operating Officer of Commercial Bank and Air Vice Marshal Rajinth Jayawardena, Director General Welfare of the SLAF exchange the agreement in the presence of representatives of the two organisations.

Reinforcing its commitment to those who serve the nation, the Commercial Bank of Ceylon has entered into a Memorandum of Understanding with the Sri Lanka Air Force (SLAF) to introduce a comprehensive suite of concessionary financial facilities for its officers and other ranks.

The partnership, unveiled in a year that marks the 75th anniversary of the Air Force, which was founded in March 1951 as the Royal Ceylon Air Force, reflects a shared recognition of the critical role played by the SLAF as the steadfast ‘Guardians of the skies,’ entrusted with safeguarding the country’s security and sovereignty.

Under the terms of the agreement, Commercial Bank will extend a range of specially tailored financial products to SLAF personnel, including personal loans, leasing facilities, housing loans and credit cards. These facilities will be offered at concessionary interest rates, alongside concessions on documentation charges, enabling Air Force personnel to access financial support on more favourable terms.

The Bank said the initiative is part of its continuing efforts to deliver best-in-class lending solutions that are both accessible and responsive to the diverse needs of its customers. By offering attractive and affordable repayment structures, the scheme is designed to empower SLAF officers and other ranks to meet their personal financial requirements with greater ease and flexibility.

A key feature of the programme is the ability for beneficiaries to align repayments with their income patterns, ensuring that the facilities remain practical and sustainable over the long term. This flexibility, combined with preferential pricing, is expected to make a meaningful difference to the financial wellbeing of Air Force personnel and their families.

Business

Treasury Bill rate hike compounds stock market volatility

Published

20 hours ago

2026/06/5

Thilina Walpola

The CSE was extremely volatile yesterday mainly due to external and internal negative factors.

‘The escalation of the war situation in West Asia and the proposed tariff hike on Sri Lanka’s exports to the US by the Trump administration are worsening Sri Lanka’s economic woes. Further, the government’s decision to increase the Treasury Bill rate has also created some uncertainty in the market, stock analysts said.

The All Share Price Index was up by 249.83 points, while the S and P SL20 rose by 67.61 points. Turnover stood at Rs 2.79 billion with 11 crossings.

Companies that mainly contributed to the turnover by way of crossings were: Chevron Lubricants 1.5 million shares crossed to the tune of Rs 294 million and its shares traded at Rs 196, TJ Lanka 2.9 million shares crossed for Rs 90.8 million; its shares traded at Rs 31, Citizens Development Business Finance 2.5 million shares crossed to the tune of Rs 80.2 million; its shares traded at Rs 32.50.

ACL Cables 634,248 shares crossed for Rs 60.9 million; its shares traded at Rs 96, CCS 438,000 shares crossed to the tune of Rs 57.4 million; its shares traded at Rs 131, Overseas Realties 991,500 shares crossed for Rs 49.6 million; its shares traded at Rs 50 and Access Engineering 653,000 shares crossed to the tune of Rs 49.3 million; its shares sold at Rs 75.50.

In the retail market companies that mainly contributed to the turnover were; Dialog Rs 133 million (3.2 million shares traded), Seylan Bank (Non-Voting) Rs 110 million (1.7 million shares traded), Colombo Dockyard Rs 96.8 million (751,548 shares traded), Ceylinco Holdings (Non-Voting) Rs 77.5 million (516,000 shares traded), Sampath Bank Rs 74.2 million (530,000 shares traded), JKH Rs 74 million (3.7 million shares traded) and LMF Rs 65 million (781,000 shares traded). During the day 123 million share volumes changed hands in 26272 transactions.

It is said that the manufacturing sector, especially Chevron Lubricants and several other firms performed well, while the banking and financial sector performed too.

Yesterday the rupee was quoted flat at Rs 334.50/335.50 to the US dollar in the spot market on, unchanged from the previous day’s close, dealers said, while bond yields were broadly steady.

The telegraphic transfer rate for Sri Lanka’s rupee against the US dollar was Rs 330.50 buying, Rs 339.50 selling; euro was Rs 381.1884 selling, Rs 395.1054 buying; and the pound Rs 442.6620 buying Rs 456.7076 selling.

A bond maturing on 01.08.2030 was quoted at 12.12/20 percent, down from 12.15.25 percent.

A bond maturing on 15.06.2034 was quoted at 13.12/20 percent, down from 13.15/25 percent.

A bond maturing on 15.03.2035 was quoted flat at 13.15/25 percent.

By Hiran H Senewiratne