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Sri Lanka’s new govt., Indo-Pacific debt trap, and struggle for 21st Century – Part 1

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By Shiran Illanperuma

Positioned at the geographic and political heart of the Indian Ocean, Sri Lanka is the epicentre of the 21st century struggle for regional influence.

  • U.S. Department of State, Integrated Country Strategy – Sri Lanka, 2022

Anura Kumara Disanayake (AKD) is the first President of Sri Lanka not affiliated with the political duopoly of the nationalist Sri Lanka Freedom Party (SLFP) and comprador United National Party (UNP), and their offshoots which have ruled the country in turns since the 1950s.

In the first elections held since the collapse of the Sri Lankan economy in 2022 and its default on external debt, AKD secured 42.31% of the popular vote, while his right-wing rivals Sajith Premadasa and Ranil Wickremesinghe secured 32.76% and 17.27% respectively. A month later, on 15 October 2024, AKD’s party National People’s Power (NPP) won a thumping 61.56% of the popular vote in the general elections.

In contrast to his fiery pre-election speeches, which lashed out at the corruption of establishment politicians, AKD struck a measured tone in his first speech as President. Acknowledging the significant challenges that his government inherits, AKD said that the ‘profound crisis’ facing the country could not be resolved by a single government, political party, or individual. ‘I am not a magician. I am simply an ordinary citizen of this country, with both strengths and limitations, knowledge and gaps,’ AKD said. Now in power, AKD must temper messianic expectations and govern under conditions given to him. All this while commanding a party with little experience in holding the reins of government, let alone withstanding the daily harangues that can be expected from the local and foreign agents of imperialism.

Following these elections, mainstream media outlets moved rather recklessly to label AKD and the NPP government as, ‘Marxist’, ‘Marxist-leaning’ or ‘Neo-Marxist’. It is true that the core constituent party of the NPP is the Marxist-Leninist Janatha Vimukthi Peramuna (People’s Liberation Front – JVP), of which AKD is also the leader. However, the main representatives of this force have been far more cautious in how they label themselves. In 2023, AKD compared the NPP to a national liberation movement. On the eve of elections this was moderated to the more neutral sounding ‘national renaissance’. Some intellectuals close to the party have described the NPP as ‘Left-populist’. More recently, JVP General Secretary Tilvin Silva has said that, ‘Ours is not a leftist government, but one of leftists, democratic, and progressive forces’.

The NPP’s caution to label itself gives an indication of the delicate balance of political forces, both within the party and in the country at large. The fledgling government has already shown its inclinations and limitations. On foreign policy, the government has formally applied for BRICS membership, although neither President Dissanayake nor Prime Minister Harini Amarasuriya nor Foreign Minister Vijitha Herath attended the BRICS summit in Kazan, Russia. In his first speech to the diplomatic community, the NPP Foreign Minister Herath reiterated Sri Lanka’s call for an immediate ceasefire in Gaza, alongside support for the establishment of an independent State of Palestine. On the domestic front, one of AKD’s first acts was to instruct the Treasury to provide subsidies for farmers and fisherfolk. The government has also scrapped plans to privatise national carrier SriLankan Airlines and the public electricity provider Ceylon Electricity Board.

However, the risk of lapsing into neoliberal immobility remains ever present. While there may be a new President and a slew of new faces in Parliament, the officials in charge of the Treasury and the Central Bank of Sri Lanka remain the same. The government has chosen to continue with an ongoing IMF programme and its path of fiscal consolidation. It has also continued with a debt restructuring agreement negotiated by the preceding government. According to IMF Director Kristalina Georgieva, “The Sri Lankan authorities have reaffirmed their determination to persevere with their reform agenda and put the economy on a path of sustained and high growth.’’

To understand Sri Lanka’s present conjuncture, and the dilemma’s facing the new government, a concrete analysis of the preceding years is required. The main factors for analysis are the interplay between Sri Lanka’s geopolitical significance in the US Indo-Pacific Strategy, as well as the country’s legacy of colonial underdevelopment and indebtedness.

Sri Lanka as epicentre of Indo-Pacific Strategy

Shortly after the conclusion of Sri Lanka’s Civil War in 2009, the US Senate Committee on Foreign Relations, then led by senator John Kerry, published a report, titled Sri Lanka: Recharting U.S. Strategy After the War. The report argued that policymakers in Washington tended to ‘underestimate Sri Lanka’s geostrategic importance’, insisting that, ‘the United States cannot afford to lose Sri Lanka’. These statements were partly in reference to the Western criticism of Colombo’s handling of the war against the separatist group Liberation Tigers of Tamil Eelam (LTTE). Amid Western pressure to pursue peace talks, including a US arms embargo, Colombo forged closer ties with China, Russia, Iran, and Libya, which provided the arms and financing needed to clinch victory against the LTTE. During the final years of the war, the JVP insisted that peaceful negotiations were impossible with the LTTE. Given a history of repeated failed peace talks and ceasefires, this was a persuasive argument to many war-fatigued Sri Lankans. Thus, Washington’s fear of ‘losing Sri Lanka’ needs to be understood in the context of Sri Lanka’s domestic nationalist upsurge against separatism, as well as the country’s foreign policy swing towards forces in the Global South.

Sri Lanka’s economic and foreign policy shifted to the right after the 2015 elections, as the nationalist SLFP split and one faction formed a coalition with the UNP, whose leader Ranil Wickremesinghe became Prime Minister. Despite criticising Sri Lanka’s human rights record in diplomatic forums, the US began a concerted effort to improve military engagement with Sri Lanka’s armed forces, specifically with the Navy. This entailed training and joint military exercises, and the donation of Navy vessels. The US also sought to pressure the government in Colombo into signing a trifecta of agreements, which Sri Lankan diplomat Tamara Kunanayakam warned were ‘part and parcel’ of the US Indo-Pacific strategy, and, if signed, would violate Sri Lanka’s sovereignty and drag the country into ‘a war not of its own making’. These agreements were:

* The Millennium Challenge

Corporation (MCC). Political economist W.D. Lakshman (who served as Governor of the Central Bank of Sri Lanka from 2019 to 2021) warned that the MCC’s provisions for the privatisation of publicly owned land would pave the way for a land grab by multinational companies. A government committee appointed to review the MCC agreement recommended rejecting it unconditionally, noting that certain stipulations would be in violation of the Constitution.

* The Acquisition and Cross Servicing Agreement (ACSA)

ACSA, which provides the US military with logistical support and refuelling services in Sri Lanka was first signed in 2007. The agreement was never tabled in Parliament despite pressure from the Left. ACSA was renewed under hasty and similarly opaque circumstances in 2017. The new agreement was said to be open-ended and over 10 times as long as the previous one.

* The Status of Forces Agreement (SOFA)

SOFA was first signed by the Sri Lankan government in 1995, and a new draft was sent to the government in 2018. A leaked version of the draft revealed that US security forces and contractors, as well as personnel of Department of Defence, would enjoy legal immunities equivalent to diplomatic staff.

The JVP constituted part of the popular opposition to these agreements. For example, in an interview in 2020, AKD said that his position on the MCC was ‘a big no’, citing concerns over land privatisation. However, the political formation that most effectively drove and capitalised upon popular opposition to these neocolonial proposals was the Sri Lanka Podujana Peramuna (SLPP), a big-tent party founded by former President Mahinda Rajapaksa, which included Sinhala nationalists and elements of the Old Left (namely the Lanka Sama Samaja Party, founded in 1935, and the Communist Party of Sri Lanka, founded in 1943). In the 2019 presidential elections, the SLPP candidate Gotabaya Rajapaksa scored a comfortable victory in a campaign that was inflected with a combination of economic grievances and concerns over the erosion of the country’s sovereignty.

Following the 2019 elections, US pressure on Sri Lanka intensified. A government-appointed commission recommended that the country refrain from signing the proposed MCC agreement with the US. In 2022, the US sanctioned Sri Lanka’s Chief of Army Staff Lt. Gen Shavendra Silva. The same year, US Secretary of State Mike Pompeo visited Sri Lanka for a 12-hour trip, during which he told the media that the ‘Chinese Community Party is a predator’. This blunt and aggressive posturing by Pompeo made perfectly clear that the US viewed Sri Lanka as key part of its Indo-Pacific Strategy and New Cold War against China. Indeed, the US State Department notes ‘more than 60,000 ships – including two- thirds of the world’s seaborne crude oil, half of its container ships, and all U.S. Navy vessels passing between the 5th and 7th Fleets – annually transit Sri Lankan waters’.

In March 2022, on the eve of the protests that would go on to oust President Rajapaksa, US Under Secretary of State for Political Affairs Victoria Nuland visited the country to meet with civil society. Rajapaksa’s ouster bore some similarities to the protests that overthrew Sheikh Hasina in Bangladesh, constituting a combination of internal factors and genuine grievances over governance failures and economic conditions, as well as hybrid war tactics by the US and its network of soft power agencies to gain advantage through the crisis. As is the case in many of these situations, external interests capitalised on internal contradictions. Following Rajapaksa’s ouster, right-wing leader Ranil Wickremesinghe was appointed interim President. Under his leadership, the US had donated more Navy cutters to the Sri Lankan military. Months later, Sri Lanka appeared further subordinated to US imperialism after it sent one of its own Navy vessels to the Red Sea in order to help the US fight the Ansarullah government in Yemen.

(To be continued….)

(This essay was produced by Tricontinental: Institute for Social Research as part of its monthly series Tricontinental Interventions: Conjunctural Analysis from Asia.)



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The challenge of being positive about SAARC

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The RCSS forum addressed by SAARC Secretary General Ambassador Md. Golam Sarwar in progress. (Pic courtesy RCSS)

It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.

Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.

However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?

There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.

The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.

Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.

Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.

The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.

On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.

In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.

Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.

Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.

The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.

These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.

Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.

There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.

However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.

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OPA seminar examines Sri Lanka’s economic recovery, resilience and growth pathways

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(L to R) Dr Achinthya Koswatte, Anushan Kapilan, Dr Harsha Aturupane, Bhanu Wijeyaratne, Vice President, OPA and moderator of the discussion, and Eng Chamil Edirimuny, General Secretary, OPA, at the head table.

A seminar, “Sri Lanka’s Economic Crossroads: Navigating Recovery, Resilience and Growth” was recently held by the Organisation of Professional Associations of Sri Lanka (OPA) at the OPA Auditorium, bringing together economists, OPA members, and professionals from diverse fields for an insightful discussion on Sri Lanka’s economic recovery and future growth prospects.

The event was held under the patronage of Jayantha Gallehewa, President of the OPA, and was jointly organised by the National Issues Committee (NIC) and the Seminars, Workshops and Programmes Committee of the OPA. The event reaffirmed the organisation’s commitment to advancing professional excellence, fostering insightful intellectual engagement, facilitating interdisciplinary knowledge exchange and creating a constructive platform for informed dialogue on issues of national importance.

The panel of speakers comprised Dr. Harsha Aturupane, Lead Economist and Programme Leader for Human Development at the World Bank for Sri Lanka and the Maldives; Dr. Achinthya Koswatta, Senior Lecturer in Economics at the Open University of Sri Lanka, and Anushan Kapilan, Lead Economist at Verité Research.

In his welcome address, the President of the OPA emphasised that Sri Lanka was at a critical juncture in its economic recovery journey where sustained reforms, effective implementation, and collective national commitment are essential to achieving long-term stability, resilience and inclusive growth. He noted that the country had experienced one of the most severe economic crises in its history with the economy contracting by 7.8 percent in 2022 and a further 11.5 percent in 2023, resulting in significant economic and social challenges.

Delivering his introductory remarks Bhanu Wijeyaratne, Vice President of the OPA and Chairman of the National Issues Committee, underscored the need to move beyond short-term economic stabilisation towards a comprehensive agenda of structural transformation. He observed that the economic crisis had revealed deep-rooted weaknesses within the economy, including persistent fiscal pressures, rising public debt, foreign exchange limitations, and insufficient diversification of the export base. He stressed that addressing these challenges through strategic reforms, institutional strengthening and long-term economic planning would be essential to establishing a more resilient and competitive economy.

While acknowledging recent positive developments, including improved inflation management, tourism recovery and signs of economic stabilisation, Wijeyaratne stressed the need to advance reforms aimed at strengthening fiscal discipline, enhancing productivity, improving competitiveness, developing human capital and reinforcing governance and institutional effectiveness.

He further highlighted the important role of professionals, businesses, academia and other stakeholders in contributing to evidence-based dialogue and supporting Sri Lanka’s journey towards a resilient, inclusive and sustainable economic future.

Delivering the keynote presentation, Dr. Harsha Aturupane provided a comprehensive assessment of Sri Lanka’s economic prospects within the broader context of global economic transformation. He argued that Sri Lanka functioned as a small open economy whose performance is significantly influenced by developments in the global marketplace. External factors could not be controlled, and the country must strengthen its domestic capacity and resilience to respond effectively to international economic shifts, he noted.

Tracing the evolution of global economic systems, Dr. Aturupane highlighted the transition from ideological divisions between state-controlled and market-oriented economies towards increasingly pragmatic approaches focused on growth, competitiveness and development. He noted that Sri Lanka’s own economic journey reflects a similar evolution, with contemporary policy debates now centred on practical solutions for sustainable economic progress.

The presentation also examined the transformative impact of globalisation. Dr. Aturupane observed that global economic integration had enabled several East Asian economies, including South Korea, Singapore, Taiwan and Hong Kong, to achieve remarkable economic advancement through export-led growth strategies. Sri Lanka similarly benefited from this process through the expansion of its apparel industry and increased integration into global value chains.

Turning to Sri Lanka’s recovery programme, Dr. Aturupane emphasised that the ongoing stabilisation process should be viewed as a national programme supported by the International Monetary Fund rather than solely as an IMF initiative. He observed that strong worker remittances, improved tourism earnings, enhanced government revenue mobilisation and prudent import management have contributed significantly to economic stabilisation.

Despite this progress, he cautioned that rebuilding foreign exchange reserves and meeting future debt obligations remain major challenges. He underscored the need to strengthen export performance, attract investment and generate sustainable foreign exchange earnings to ensure long-term economic resilience.

The discussion also focused on monetary stability, inflation management and exchange-rate policy. Dr. Aturupane stressed that maintaining price stability was fundamental to sustainable growth and household welfare, while sound monetary policy remains essential for preserving economic confidence.

Looking beyond stabilisation, he argued that Sri Lanka must transition towards a broader economic transformation agenda. Sustainable growth, he noted, will depend on expanding productive capacity through investment, technological advancement, innovation, skills development and structural reforms.

Among the key constraints identified was the high cost of energy, which continues to affect competitiveness and investment attractiveness. Dr. Aturupane emphasised the importance of improving efficiency and affordability within the energy sector to enhance Sri Lanka’s business environment.

He further highlighted the social dimensions of the crisis, noting the rise in poverty and economic vulnerability among households. Strengthening social protection systems and ensuring inclusive growth, he argued, must remain central components of the national development agenda.

Another critical challenge identified was Sri Lanka’s demographic transition. With an ageing population, outward migration and evolving labour market dynamics, the country is increasingly confronting labour shortages in several sectors. Dr. Aturupane suggested that greater automation, increased labour-force participation and strategic workforce planning would be necessary to address these emerging realities.

Concluding his presentation, he emphasised the need to improve governance, strengthen institutions, enhance competitiveness and create an enabling environment for private sector investment. Sri Lanka’s future success, he noted, will depend on its ability to move decisively beyond crisis management towards a development model founded on resilience, innovation, productivity and inclusive growth.

Dr. Achinthya Koswatta reiterated the importance of policy consistency and predictability in fostering investment and industrial development. She observed that frequent policy changes create uncertainty and discourage long-term investment decisions, whereas stable and coherent policy frameworks build confidence and support sustainable economic transformation.

Meanwhile, Anushan Kapilan highlighted the substantial progress achieved in restoring macroeconomic stability following the recent crisis. He noted significant improvements in fiscal performance, including increased government revenue, reduced reliance on debt financing and a historically low fiscal deficit.

He further observed that public debt levels are declining faster than anticipated, economic growth has exceeded expectations and inflation has been brought under control more rapidly than forecast. Nevertheless, he cautioned that the recovery remains uneven, particularly within the industrial sector and that many households have yet to experience a meaningful improvement in living standards.

The seminar was expertly coordinated by Eng. Chamil Edirimuni, Vice President of the OPA and Chairman of the Seminars, Workshops and Programmes Committee, while the technical moderation and interactive discussion session were facilitated by Bhanu Wijeyaratne, Vice President of the OPA and Chairman of the National Issues Committee.

The event was attended by Tisara De Silva, President-Elect of the OPA, Eng. Ravi Rupasinghe, General Secretary, Past Presidents, members of the Executive Council, representatives of the General Forum and professionals representing a wide range of disciplines.

The seminar concluded with a vibrant exchange of ideas and perspectives, reaffirming the importance of evidence-based policy dialogue, institutional collaboration and collective national commitment in advancing Sri Lanka’s economic recovery, resilience and sustainable growth.

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Her roots run deep in Sri Lanka

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Samantha Kay: Now based in the UK Samantha’s biggest passion is helping people, especially women, build confidence and believe in themselves Today, her focus is on radio, podcasting and coaching women Whenever she visits Sri Lanka, she says she loves spending time on the beautiful south coast, especially Hikkaduwa and Mirissa She released a song with 90s music icon Angie Brown, which reached No. 9 in the UK Club Charts

Yes, for UK-based presenter and artiste Samantha Kay, home is where the heart – and the roots – are. And her roots run deep in Sri Lanka.

In an exclusive interview with The Island, Samantha says “I’m proud to be Sri Lankan. My mum is from Kandy and my dad is from Colombo, so Sri Lanka has always held a very special place in my heart.

“Whenever I visit Sri Lanka, I love spending time on the beautiful south coast, especially Hikkaduwa and Mirissa. It’s somewhere I always feel connected to my roots and completely at peace.”

Now living in Bournemouth, on the south coast of England, where, she says, she is lucky to be close to some of the UK’s most beautiful beaches, including the iconic Sandbanks, Samantha has built a career that refuses to fit into one box.

She is a radio presenter, podcast host, singer-songwriter, personal trainer and life coach.

“I genuinely love the variety because every role allows me to connect with people and, hopefully, make a positive difference in someone’s day.”

Of course, music has taken her far.

One of her proudest achievements, she says, was releasing a song with 90s music icon Angie Brown, which reached No. 9 in the UK Club Charts.

She also reached the final stages of The X Factor and performed at Wembley Stadium in front of thousands.

Beyond music, Samantha competed in bikini bodybuilding across the UK, winning several titles. “It taught me discipline, resilience and self-belief,” she recalls.

Today, her focus is on radio, podcasting and coaching women. Her podcast encourages people to live life on their own terms rather than feeling pressured to follow society’s expectations.

Says Samantha: “Whether someone is single, changing careers, travelling solo or simply trying to find their purpose, I want them to know that it’s never too late to create a life that feels authentic. If you’ve ever felt like you don’t fit into the box, maybe you were never meant to.”

Samantha Kay also spent a year in Dubai, performing at five-star hotels, including FIVE, and coaching at the iconic outdoor gym on Palm Jumeirah.

“I taught strength and conditioning classes, and hosted wellness retreats, combining my passion for music, health and inspiring others.”

However, with family matters calling her back to the UK, she made the choice to return. “Family comes first,” she says.

Looking ahead, Samantha plans to grow her radio and podcast work, release more music, and expand her wellness retreats.

“My biggest passion is helping people, especially women, build confidence and believe in themselves,” she says.

“Wherever my career takes me, I hope to continue inspiring others to live with courage, kindness and authenticity, while never forgetting my Sri Lankan roots.”

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