Features
Are they two peas in a pod?
Economic policy and foreign policy:
By Neville Ladduwahetty
The general practice of governments of most nation states is to treat Economic policies and Foreign policy as two separate components of their national interest. Consequently, while the field of economics is littered with economic specialists, the field of foreign relations is confined to a relatively few. Perhaps, the tendency to do so is because of the popular understanding that economics is driven by market forces, while foreign policy is driven by a different paradigm, that being how nations conduct their relations with other nation states, even in matters that could include economics. This has resulted in the two subjects being handled by most governments as separate branches.
For instance, the financial crisis that Sri Lanka is currently facing is due to a combination of misguided economic policies, one of which was the lowering of taxes, causing the internal economy to be seriously impacted to a degree that caused budget deficits, and inflation to skyrocket, as a result of printing money, and the other being indulging in indiscriminately excessive dollar borrowings, from readily available sources, to develop infrastructure projects, where the returns were mostly in local Rupees. These lending sources took advantage of their bilateral relations to tempt Sri Lanka, because the significance of the island’s strategic location was critical to further their geopolitical interests. What Sri Lanka is experiencing currently is primarily due to these factors.
BLURRING of ECONOMIC and FOREIGN POLICIES
The nexus between Economic Policies and Foreign Policy is manifesting itself most prominently with neighbouring India. In April 2022, Sri Lanka’s debt to India was USD 1.041 billion. Today, it is nearly USD 5 Billion. While the need for India to engage in Sri Lanka’s internal and external affairs is motivated by self-interest, the fact that it would impact on Sri Lanka’s economic dependence is indisputable. Furthermore, it would also be a fetter to Sri Lanka’s sovereignty and independence to further relations with other countries with the view to furthering Sri Lanka’s own interests.
Sri Lanka is currently seriously campaigning for the importance of “economic integration between Sri Lanka and India”. Whether such a policy has been approved by the President and the Cabinet of Ministers, who, incidentally, are Constitutionally “charged with the direction and control of the Government”, is not known. As an extension of this policy, “India’s Prime Minister Narendra Modi’s administration, since July 2022, has been exploring the possibility of bringing countries that are short of dollars into the Rupee settlement mechanism. Designating the INR as a legal currency in Sri Lanka has provided Sri Lanka much needed liquidity support to tide over its economic crisis amid inadequate availability of US dollars …” (Sunday Observer, May 7, 2023).
While designating the INR as the legal currency in Sri Lanka would be favourable to India, it would amount to Sri Lanka piling up stacks of Indian currency, through trade and tourism, not knowing what to do with it all, because the Indian rupee is not only a non-convertible currency but also because the distortion between exports from India being five times the exports from Sri Lanka to India, as stated herein. would seriously disadvantage Sri Lanka. For instance, “During the last 26 years the exports of India to Sri Lanka have increased at an annualized rate of 10.1%, from $397M, in 1995, to $4.87B, in 2021. In 2021, India did not export any services to Sri Lanka. In 2021, Sri Lanka exported $1B to India (https://oec.world › bilateral-country › ind › partner › lka)
The experience between India and Russia, in respect of oil exports from Russia, was no different. Russia realizing that they would be stuck with Billions of Indian Rupees, for bilateral trade with India, suspended negotiations “after months of negotiations failed to convince Moscow to keep Indian Rupees in its coffers. This will be a major setback for Indian importers of cheap oil and coal from Russia who were awaiting a permanent rupee payment mechanism to help lower currency conversion costs …. Russia is not comfortable holding rupees and wants to be paid in Chinese yuan.” (The Island, May 5, 2023).
“Since Russia’s invasion of Ukraine, on February 21, last year, India’s imports from Russia have risen to $51.3 billion, until April 5, from $10.6 billion in the same period in the previous year, according to another Indian government official” (Ibid). The fact that Russia is prepared to accept such a large outstanding debt, to be settled in Chinese yuan ,reflects the strength of the bilateral relationship between Russia and China, at the expense of India. This underscores the power of bilateral relationships that could at times influence economic issues and vis-a-versa.
Drawing a lesson from this Russian/Indian experience, Sri Lanka should test the strength of its relationships and explore settling its outstanding debts to China, India and Japan, in their respective currencies, instead of settling them in US Dollars.
THE SRI LANKAN EXPERIENCE
Although Sri Lanka, then Ceylon, started out with Foreign affairs being linked with Defence, Foreign relations came under the jurisdiction of an independent Ministry, with the passage of time, thereby causing economic policies and foreign policy to function under two separate Cabinet ministers. However, during the early stages of this separation, bilateral relations had a significant influence on the determination of economic priorities.
For instance, the impetus to manufacturing was initiated with the introduction of the steel and tyre factories, from Russia. The flour mill from Russia contributed to meet the food needs. Another was the textile mill, at Athurugiriya, from The German Democratic Republic (GDR). It was the strength of bilateral relationships that contributed to further the economic development of Sri Lanka. Likewise, the urgent power needs of Sri Lanka, in the late 1970s and 1980s, compelled the then government to initiate the Accelerated Mahaweli Programme. The Implementation of the programme depended on harnessing the needed funds.
To secure the funds, the late Gamini Dissanayake invited all the Ambassadors ,and local heads of aid missions in Colombo, to a detailed discussion because “the raising of foreign funds for the construction of the Projects and the implementation of the downstream development programmes”, presented themselves as the most formidable task. It was the bilateral relations with countries such as “the USA, the UK, Canada, the Federal Republic of Germany, Sweden, the Netherlands, Belgium, Kuwait, Saudi Arabia, Japan, and from international funding agencies, like the World Bank, through outright grants, such as from the UK, and soft loans that became the key for Sri Lanka to find the needed financial resources to implement the Accelerated Mahaweli programme.
These infrastructure projects did not impose financial strains on the economy, not only because the cost of funding was low but also the return on the investment, which was in the form of Dollar savings for power generation, was almost immediate. However, the more recently implemented projects were funded with high cost short term loans, where the return on investment was over too long a period to justify their viability. For instance, there are several grounds on which the network of expressways constructed can be justified, but not the funding through Dollar loans at high interest rates. Instead, they should have been funded through a gasoline tax, as was done in the U.S.A. following WWII, because at the end of the day, it is the user that foots the bill, similar to any Value Added Tax.
What was the motivation for the strategy adopted? Was it corruption, or was Sri Lanka tempted by the creditors into taking advantage of bilateral relations with a view to seeking a foothold in order to exploit its strategic location to pursue their own geopolitical interests? Whatever the reason, or reasons, the fact remains that the current crisis is because Sri Lanka was not astute enough to be aware of “Greeks bearing gifts.”
CONCLUSION
It is evident from the foregoing that Economic Policies and Foreign Policy do not work in isolation of each other. Instead, the material cited above demonstrate that Foreign Relations and Foreign Policy have a significant influence over Economic Policies even to the point of outwitting Economic Policies that have negative consequences. For instance, the offer of three 100 MW Nuclear Reactors, by Russia, is motivated by bilateral relations and certainly not by economic considerations, because it would amount to importing uranium instead of oil. The Light Rail Project, at a reported cost of USD 2.0 Billion from Japan, that has soured Sri Lanka/Japan relations, is similar in vein, because the loan is in Dollars and the benefits are in Rupees.
The clear reason for this is because Sri Lanka does not have an Economic Plan. If it had, Sri Lanka would be in sounder position to politely say NO to bilateral unsolicited offers, without an impact on Foreign Relations.
One guiding principle of such an Economic Plan should be that if the funding for a project is in International convertible currency, the return on the investment should be in the same currency, or, the equivalent reduction in imports should be in a convertible currency.
Not only does Sri Lanka NOT have an Economic Plan, she does not have a clear Foreign Policy either. There is no more talk of being Non-Aligned. There is not much talk of being Neutral, either. This vacuum is tempting all the major powers to seek a foothold in Sri Lanka because of its relevance to Indo-Pacific confrontations; a trend that would make Sri Lanka’s sovereignty and territorial integrity vulnerable. The lack of a clear Foreign Policy gives the opportunity for the Government to respond to each situation and to every offer, individually. Such an individualized approach not only allocates too much power to the President, and a few others close to him, but also could change with a change of Government. This approach is not in the best interests of Sri Lanka, particularly because of global uncertainties in terms of currency related economic issues, as well as the other maneuverings going on around Sri Lanka, arising from Indo-Pacific tensions.
The President has repeatedly commented on these tensions. The most recent being at the BMICH when he stated that Sri Lanka “doesn’t want to get caught between escalating US-China tensions…. We are now being asked to choose sides”. However, he had stated that Sri Lanka would not succumb to the pressures (Daily Mirror, May 11, 2023). If Sri Lanka is not to take sides and/or succumb to pressures, the policy to pursue vigorously the policy of “integrating” with India would be a contradiction.
The President’s recommendation has been to rely on a strengthened ASEAN in the coming decades. Reliance on a future strengthened ASEAN misses the most critical point that the strategic location of Sri Lanka is unique in comparison to that of other ASEAN countries. Consequently, the pressures on them would be significantly less and different to that of Sri Lanka. This fact alone requires Sri Lanka to develop its own policy as to how it handles these escalating tensions.
Therefore, it is imperative that clear bipartisan policies be developed in respect of the link between economic and foreign policy issues. In addition, because of this inevitable interplay between economic policy and foreign policy, the separate institutional arrangements that currently exist should be reformed and reorganized to include an overarching arrangement in order to foster greater integration between economic and foreign policies, when making decisions that impact on both sectors, and eventually, the country.
Features
Rebuilding the country requires consultation
A positive feature of the government that is emerging is its responsiveness to public opinion. The manner in which it has been responding to the furore over the Grade 6 English Reader, in which a weblink to a gay dating site was inserted, has been constructive. Government leaders have taken pains to explain the mishap and reassure everyone concerned that it was not meant to be there and would be removed. They have been meeting religious prelates, educationists and community leaders. In a context where public trust in institutions has been badly eroded over many years, such responsiveness matters. It signals that the government sees itself as accountable to society, including to parents, teachers, and those concerned about the values transmitted through the school system.
This incident also appears to have strengthened unity within the government. The attempt by some opposition politicians and gender misogynists to pin responsibility for this lapse on Prime Minister Dr Harini Amarasuriya, who is also the Minister of Education, has prompted other senior members of the government to come to her defence. This is contrary to speculation that the powerful JVP component of the government is unhappy with the prime minister. More importantly, it demonstrates an understanding within the government that individual ministers should not be scapegoated for systemic shortcomings. Effective governance depends on collective responsibility and solidarity within the leadership, especially during moments of public controversy.
The continuing important role of the prime minister in the government is evident in her meetings with international dignitaries and also in addressing the general public. Last week she chaired the inaugural meeting of the Presidential Task Force to Rebuild Sri Lanka in the aftermath of Cyclone Ditwah. The composition of the task force once again reflects the responsiveness of the government to public opinion. Unlike previous mechanisms set up by governments, which were either all male or without ethnic minority representation, this one includes both, and also includes civil society representation. Decision-making bodies in which there is diversity are more likely to command public legitimacy.
Task Force
The Presidential Task Force to Rebuild Sri Lanka overlooks eight committees to manage different aspects of the recovery, each headed by a sector minister. These committees will focus on Needs Assessment, Restoration of Public Infrastructure, Housing, Local Economies and Livelihoods, Social Infrastructure, Finance and Funding, Data and Information Systems, and Public Communication. This structure appears comprehensive and well designed. However, experience from post-disaster reconstruction in countries such as Indonesia and Sri Lanka after the 2004 tsunami suggests that institutional design alone does not guarantee success. What matters equally is how far these committees engage with those on the ground and remain open to feedback that may complicate, slow down, or even challenge initial plans.
An option that the task force might wish to consider is to develop a linkage with civil society groups with expertise in the areas that the task force is expected to work. The CSO Collective for Emergency Relief has set up several committees that could be linked to the committees supervised by the task force. Such linkages would not weaken the government’s authority but strengthen it by grounding policy in lived realities. Recent findings emphasise the idea of “co-production”, where state and society jointly shape solutions in which sustainable outcomes often emerge when communities are treated not as passive beneficiaries but as partners in problem-solving.
Cyclone Ditwah destroyed more than physical infrastructure. It also destroyed communities. Some were swallowed by landslides and floods, while many others will need to be moved from their homes as they live in areas vulnerable to future disasters. The trauma of displacement is not merely material but social and psychological. Moving communities to new locations requires careful planning. It is not simply a matter of providing people with houses. They need to be relocated to locations and in a manner that permits communities to live together and to have livelihoods. This will require consultation with those who are displaced. Post-disaster evaluations have acknowledged that relocation schemes imposed without community consent often fail, leading to abandonment of new settlements or the emergence of new forms of marginalisation. Even today, abandoned tsunami housing is to be seen in various places that were affected by the 2004 tsunami.
Malaiyaha Tamils
The large-scale reconstruction that needs to take place in parts of the country most severely affected by Cyclone Ditwah also brings an opportunity to deal with the special problems of the Malaiyaha Tamil population. These are people of recent Indian origin who were unjustly treated at the time of Independence and denied rights of citizenship such as land ownership and the vote. This has been a festering problem and a blot on the conscience of the country. The need to resettle people living in those parts of the hill country which are vulnerable to landslides is an opportunity to do justice by the Malaiyaha Tamil community. Technocratic solutions such as high-rise apartments or English-style townhouses that have or are being contemplated may be cost-effective, but may also be culturally inappropriate and socially disruptive. The task is not simply to build houses but to rebuild communities.
The resettlement of people who have lost their homes and communities requires consultation with them. In the same manner, the education reform programme, of which the textbook controversy is only a small part, too needs to be discussed with concerned stakeholders including school teachers and university faculty. Opening up for discussion does not mean giving up one’s own position or values. Rather, it means recognising that better solutions emerge when different perspectives are heard and negotiated. Consultation takes time and can be frustrating, particularly in contexts of crisis where pressure for quick results is intense. However, solutions developed with stakeholder participation are more resilient and less costly in the long run.
Rebuilding after Cyclone Ditwah, addressing historical injustices faced by the Malaiyaha Tamil community, advancing education reform, changing the electoral system to hold provincial elections without further delay and other challenges facing the government, including national reconciliation, all require dialogue across differences and patience with disagreement. Opening up for discussion is not to give up on one’s own position or values, but to listen, to learn, and to arrive at solutions that have wider acceptance. Consultation needs to be treated as an investment in sustainability and legitimacy and not as an obstacle to rapid decisionmaking. Addressing the problems together, especially engagement with affected parties and those who work with them, offers the best chance of rebuilding not only physical infrastructure but also trust between the government and people in the year ahead.
by Jehan Perera
Features
PSTA: Terrorism without terror continues
When the government appointed a committee, led by Rienzie Arsekularatne, Senior President’s Counsel, to draft a new law to replace the Prevention of Terrorism Act (PTA), as promised by the ruling NPP, the writer, in an article published in this journal in July 2025, expressed optimism that, given Arsekularatne’s experience in criminal justice, he would be able to address issues from the perspectives of the State, criminal justice, human rights, suspects, accused, activists, and victims. The draft Protection of the State from Terrorism Act (PSTA), produced by the Committee, has been sharply criticised by individuals and organisations who expected a better outcome that aligns with modern criminal justice and human rights principles.
This article is limited to a discussion of the definition of terrorism. As the writer explained previously, the dangers of an overly broad definition go beyond conviction and increased punishment. Special laws on terrorism allow deviations from standard laws in areas such as preventive detention, arrest, administrative detention, restrictions on judicial decisions regarding bail, lengthy pre-trial detention, the use of confessions, superadded punishments, such as confiscation of property and cancellation of professional licences, banning organisations, and restrictions on publications, among others. The misuse of such laws is not uncommon. Drastic legislation, such as the PTA and emergency regulations, although intended to be used to curb intense violence and deal with emergencies, has been exploited to suppress political opposition.
International Standards
The writer’s basic premise is that, for an act to come within the definition of terrorism, it must either involve “terror” or a “state of intense or overwhelming fear” or be committed to achieve an objective of an individual or organisation that uses “terror” or a “state of intense or overwhelming fear” to realise its aims. The UN General Assembly has accepted that the threshold for a possible general offence of terrorism is the provocation of “a state of terror” (Resolution 60/43). The Parliamentary Assembly of the Council of Europe has taken a similar view, using the phrase “to create a climate of terror.”
In his 2023 report on the implementation of the UN Global Counter-Terrorism Strategy, the Secretary-General warned that vague and overly broad definitions of terrorism in domestic law, often lacking adequate safeguards, violate the principle of legality under international human rights law. He noted that such laws lead to heavy-handed, ineffective, and counterproductive counter-terrorism practices and are frequently misused to target civil society actors and human rights defenders by labelling them as terrorists to obstruct their work.
The United Nations Office on Drugs and Crime (UNODC) has stressed in its Handbook on Criminal Justice Responses to Terrorism that definitions of terrorist acts must use precise and unambiguous language, narrowly define punishable conduct and clearly distinguish it from non-punishable behaviour or offences subject to other penalties. The handbook was developed over several months by a team of international experts, including the writer, and was finalised at a workshop in Vienna.
Anti-Terrorism Bill, 2023
A five-member Bench of the Supreme Court that examined the Anti-Terrorism Bill, 2023, agreed with the petitioners that the definition of terrorism in the Bill was too broad and infringed Article 12(1) of the Constitution, and recommended that an exemption (“carve out”) similar to that used in New Zealand under which “the fact that a person engages in any protest, advocacy, or dissent, or engages in any strike, lockout, or other industrial action, is not, by itself, a sufficient basis for inferring that the person” committed the wrongful acts that would otherwise constitute terrorism.
While recognising the Court’s finding that the definition was too broad, the writer argued, in his previous article, that the political, administrative, and law enforcement cultures of the country concerned are crucial factors to consider. Countries such as New Zealand are well ahead of developing nations, where the risk of misuse is higher, and, therefore, definitions should be narrower, with broader and more precise exemptions. How such a “carve out” would play out in practice is uncertain.
In the Supreme Court, it was submitted that for an act to constitute an offence, under a special law on terrorism, there must be terror unleashed in the commission of the act, or it must be carried out in pursuance of the object of an organisation that uses terror to achieve its objectives. In general, only acts that aim at creating “terror” or a “state of intense or overwhelming fear” should come under the definition of terrorism. There can be terrorism-related acts without violence, for example, when a member of an extremist organisation remotely sabotages an electronic, automated or computerised system in pursuance of the organisation’s goal. But when the same act is committed by, say, a whizz-kid without such a connection, that would be illegal and should be punished, but not under a special law on terrorism. In its determination of the Bill, the Court did not address this submission.
PSTA Proposal
Proposed section 3(1) of the PSTA reads:
Any person who, intentionally or knowingly, commits any act which causes a consequence specified in subsection (2), for the purpose of-
(a) provoking a state of terror;
(b) intimidating the public or any section of the public;
(c) compelling the Government of Sri Lanka, or any other Government, or an international organisation, to do or to abstain from doing any act; or
(d) propagating war, or violating territorial integrity or infringing the sovereignty of Sri Lanka or any other sovereign country, commits the offence of terrorism.
The consequences listed in sub-section (2) include: death; hurt; hostage-taking; abduction or kidnapping; serious damage to any place of public use, any public property, any public or private transportation system or any infrastructure facility or environment; robbery, extortion or theft of public or private property; serious risk to the health and safety of the public or a section of the public; serious obstruction or damage to, or interference with, any electronic or automated or computerised system or network or cyber environment of domains assigned to, or websites registered with such domains assigned to Sri Lanka; destruction of, or serious damage to, religious or cultural property; serious obstruction or damage to, or interference with any electronic, analogue, digital or other wire-linked or wireless transmission system, including signal transmission and any other frequency-based transmission system; without lawful authority, importing, exporting, manufacturing, collecting, obtaining, supplying, trafficking, possessing or using firearms, offensive weapons, ammunition, explosives, articles or things used in the manufacture of explosives or combustible or corrosive substances and biological, chemical, electric, electronic or nuclear weapons, other nuclear explosive devices, nuclear material, radioactive substances, or radiation-emitting devices.
Under section 3(5), “any person who commits an act which constitutes an offence under the nine international treaties on terrorism, ratified by Sri Lanka, also commits the offence of terrorism.” No one would contest that.
The New Zealand “carve-out” is found in sub-section (4): “The fact that a person engages in any protest, advocacy or dissent or engages in any strike, lockout or other industrial action, is not by itself a sufficient basis for inferring that such person (a) commits or attempts, abets, conspires, or prepares to commit the act with the intention or knowledge specified in subsection (1); or (b) is intending to cause or knowingly causes an outcome specified in subsection (2).”
While the Arsekularatne Committee has proposed, including the New Zealand “carve out”, it has ignored a crucial qualification in section 5(2) of that country’s Terrorism Suppression Act, that for an act to be considered a terrorist act, it must be carried out for one or more purposes that are or include advancing “an ideological, political, or religious cause”, with the intention of either intimidating a population or coercing or forcing a government or an international organisation to do or abstain from doing any act.
When the Committee was appointed, the Human Rights Commission of Sri Lanka opined that any new offence with respect to “terrorism” should contain a specific and narrow definition of terrorism, such as the following: “Any person who by the use of force or violence unlawfully targets the civilian population or a segment of the civilian population with the intent to spread fear among such population or segment thereof in furtherance of a political, ideological, or religious cause commits the offence of terrorism”.
The writer submits that, rather than bringing in the requirement of “a political, ideological, or religious cause”, it would be prudent to qualify proposed section 3(1) by the requirement that only acts that aim at creating “terror” or a “state of intense or overwhelming fear” or are carried out to achieve a goal of an individual or organisation that employs “terror” or a “state of intense or overwhelming fear” to attain its objectives should come under the definition of terrorism. Such a threshold is recognised internationally; no “carve out” is then needed, and the concerns of the Human Rights Commission would also be addressed.
by Dr. Jayampathy Wickramaratne
President’s Counsel
Features
ROCK meets REGGAE 2026
We generally have in our midst the famous JAYASRI twins, Rohitha and Rohan, who are based in Austria but make it a point to entertain their fans in Sri Lanka on a regular basis.
Well, rock and reggae fans get ready for a major happening on 28th February (Oops, a special day where I’m concerned!) as the much-awaited ROCK meets REGGAE event booms into action at the Nelum Pokuna outdoor theatre.
It was seven years ago, in 2019, that the last ROCK meets REGGAE concert was held in Colombo, and then the Covid scene cropped up.

Chitral Somapala with BLACK MAJESTY
This year’s event will feature our rock star Chitral Somapala with the Australian Rock+Metal band BLACK MAJESTY, and the reggae twins Rohitha and Rohan Jayalath with the original JAYASRI – the full band, with seven members from Vienna, Austria.
According to Rohitha, the JAYASRI outfit is enthusiastically looking forward to entertaining music lovers here with their brand of music.
Their playlist for 28th February will consist of the songs they do at festivals in Europe, as well as originals, and also English and Sinhala hits, and selected covers.
Says Rohitha: “We have put up a great team, here in Sri Lanka, to give this event an international setting and maintain high standards, and this will be a great experience for our Sri Lankan music lovers … not only for Rock and Reggae fans. Yes, there will be some opening acts, and many surprises, as well.”

Rohitha, Chitral and Rohan: Big scene at ROCK meets REGGAE
Rohitha and Rohan also conveyed their love and festive blessings to everyone in Sri Lanka, stating “This Christmas was different as our country faced a catastrophic situation and, indeed, it’s a great time to help and share the real love of Jesus Christ by helping the poor, the needy and the homeless people. Let’s RISE UP as a great nation in 2026.”
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