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Tuesday July 23rd, 2024

Explainer: Sri Lanka’s key political risks ahead of presidential election

ECONOMYNEXT – Sri Lanka will go for the island nation’s 8th presidential poll to elect a new leader for the next five years later this year between September 17 and October 16.
The election comes two years after President Ranil Wickremesinghe was elected as the 8th leader of the country through the parliament in an unprecedented manner after his predecessor Gotabaya Rajapaksa fled the country fearing for his life in July 2022 amid mass protests across the country following an economic crisis.
Wickremesinghe, since then, had to implement a raft of hard economic reforms committed to the International Monetary Fund (IMF) including tax hikes, and new laws to ensure the economic recovery under an IMF programme.
Wickremesinghe’s policies have started to help the economic recovery at the expense of his popularity in a nation where there is already confusion and division about right or wrong economic policies. They elect leaders based on unproven campaign promises for short term benefits, where the longer term effects are not initially evident.
Here are five key political risks the island nation is facing ahead of the upcoming presidential polls:
Economic Stability:
Sri Lanka still faces significant economic challenges despite Wickremesinghe government’s gains through IMF-led policy reforms. It has returned to positive economic growth, lower single digit inflation, primary surplus in current account, and higher tax revenue due to tough policies under IMF.

The central bank going against the usual ‘overvalued currency’ claims of the IMF has allowed the rupee to appreciate, bringing some benefits of stability to the people.

But the island nation has yet to complete external debt restructuring formally with both bilateral and private commercial creditors/sovereign bond holders.
Sri Lanka has a bad reputation of policy inconsistency from one government to another and sometimes within the same government in the past mainly to sustain electoral wins.
Still the island nation’s political leaders are struggling to agree on key policies. Opposition parties have publicly said they want to amend commitments Wickremesinghe’s government has agreed with the IMF while there are contradictions over the current government policies within the coalition partners of the government. Such undecided policies could impact external creditors and new investors. Wickremesinghe is trying ensure policy stability through parliament approvals such as the proposed Economic Transformation Act.
Inconsistent policies could hit economic stability as well as the ability to seek external funding as well as investments for future economic development.
Another economic crisis could lead to more social unrest and political instability.
Geopolitical Influences:
Sri Lanka’s strategic location in the Indian Ocean makes it a focal point in regional geopolitics, with competing influences from major powers like India and China. That could impact domestic political stability.
Under Wickremesinghe, China has been maintaining a lower profile though it has won crucial deals like Sinopec fuel distributor stations and a the rights to build a massive refinery in the deep Southern port district of Hambantota with their own funds.
India, on the other hand, has been very active in the island nation’s politics and economic recovery. India helped with large loans without an IMF program while other countries halted loans after default.
However, many political analysts and legislators who see unprecedented Indian influence in a number of Sri Lanka’s strategic policies including defence, energy, and economy fear the re-kindling of dormant anti-Indian sentiment. LL
Some political analysts see India as a key strategic partner on one hand and a spoiler on the other hand for its role in intervening in some crucial domestic policies.
The current government leaders have acknowledged the Indian concerns over the regional security against high Chinese influence in the past.
However, they say, India’s hard push for some projects has left the government in difficulties while others have also has unclear terms. These projects include Adani’s renewable energy projects, unique identity card deal funded by India, and key connectivity projects like electricity grids, along with gas and oil pipelines between the two neighbours. India is also pushing to take control of one of the world’s most strategic natural ports in the Eastern port district of Trincomalee on a long term lease similar to China got the Hambantota port in 2017.
These projects, which could be beneficial for the country, are likely to face delays because of the hard push by India and protests by Sri Lankans, government officials say.  India, however, has denied claims of intervention and its hard push for projects.
On the other hand, senior government officials say, Beijing has been irritating India through sending its research ships to Sri Lanka time to time for port calls. On repeated strong Indian protests, Sri Lanka banned Chinese research vessels coming to Colombo  for research purposes in 2023 for one year. India argues such ships could compromise its and the India Ocean’s security. Some Sri Lanka cabinet ministers say Sri Lanka can’t stop Chinese research ships if they come for port calls.
Recovering from the unprecedented economic crisis, Sri Lanka cannot antagonise either India or China along with other strategic international partners like the United States, Japan, Russia, the United Kingdom, European Union countries, and Iran.
Any future government will be compelled to navigate through the concerns of these international partners when dealing with strategic investment policies. The island nation’s current simple non-aligned foreign policy may not be adequate for such navigations, they say.
Wickremesinghe’s administration has handled such concerns with compromises and political instability could arise if a future government deviate from the current stance, analysts say.
Governance and Corruption:
Concerns persist about governance issues, corruption, and lack of transparency, which erode public trust in institutions and could lead to protests or political instability. One of the key demands of millions of 2022 protestors who forced former leader Gotabaya Rajapaksa to flee the country was to deal with corruption.
They have articulated that past corruption led to the economic crisis in 2022. They have demanded strong actions against those corrupt leaders and bureaucrats and to recover stolen assets owned by them both within and outside Sri Lanka.
Wickremesinghe’s government has come up with Anti-Corruption Act and proposed a strong Proceeds of Crime bill. However, the public perception on the deep rooted corruption has not changed. If Sri Lankan policy makers delay the implementation of corruption-busting policies and punish those involved in past corrupt deals further, it could contribute to instability and public disenchantment of ruling governments.
Concerns over Human Rights/Economic Crimes:
The country’s human rights record, particularly concerning allegations of war crimes and accountability issues related to the civil war, remains a contentious issue both domestically and internationally.
Sri Lanka has taken baby steps to address the past allegations of human rights abuses. These steps include setting up offices to deal with missing people and reparation.  However, victims and immediate family members say the government is not doing enough.
Many political leaders still believe demand for accountability on the human rights could disappear with time. Instead, the island nation’s political leaders, military officials, and  bureaucrats are still facing sanctions like travel bans from third countries.
Already a new report from the Office of the United Nations High Commissioner for Human Rights (OHCHR) has recommended targeted sanctions on officials responsible for disappearances in Sri Lanka since 1970 and has called for justice outside the country for the families of victims.
A limited number of Western nations have already imposed targeted sanctions, including travel bans for some Sri Lankan political and military leaders, after finding credible information about human rights violations. The United States has imposed a travel ban on former Army Chief Shavendra Silva and his immediate family members, former Navy chief Wasantha Karannagoda, and some others citing human rights violations. Canada last year announced financial sanctions to freeze the assets of former Sri Lankan presidents Mahinda Rajapaksa and Gotabaya Rajapaksa citing rights abuses. This list is expected to expand with Sri Lanka’s denial of addressing the past rights allegations.
The OHCHR has urged the international community to engage with Sri Lanka due to an accountability gap at the domestic level with victims urging prosecution in a third State due to “widespread impunity in Sri Lanka.” With the alleged economic crimes, some new actions including asset freezing are expected in the near future, global analysts say.
The 2022 economic crisis also has also renewed interest Sri Lanka’s international partners on whether assets were bought from money siphoned off through corrupt deals. International analysts say Sri Lankans who are alleged to have misappropriated public funds and properties may also face questioning on the assets owned by them in other countries in future.
The key concern has been most of the alleged human rights violators and economic criminals are yet to face any local investigation or law suit. President Wickremesinghe has been accused of protecting miscreants though he has pledged that he will act according to the law and is strengthening an anti-corruption body including through an IMF program. Those involved in corruption could become a liability for any government in the future unless they are cleared by an independent judiciary. Having such accused could bring some elements of political instability and public unrest.
Political uncertainty: 
Sri Lanka is facing uncertainty due to risks involved with possible policy changes after the presidential poll.
President Wickremesinghe has been constrained by a lack of a people’s mandate though his election as the president in the parliament is constitutional. He became the president while his party had only one seat in the 225-member legislature. He is being backed by former President Rajapaksa-led nationalist Sri Lanka Podujana Peramuna (SLPP) which people wanted to oust for its wrong economic policies.
Opposition parties are divided and polarised while political analysts predict no clear winner in the upcoming presidential poll as of now.
Anura Kumara Dissanayaka, the leader of Marxist Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) has gained popularity according to some surveys followed by the main opposition leader Sajith Premadasa.
Analysts say Dissanayaka’s popularity comes mainly from his eloquent critique of corruption under successive governments and promises to act on wrong doers. But there are some concerns over the Marxist leader running an effective government if he wins the poll as he and his party have zero experience in formulating and delivering policies.
Premadasa has been trying to win people by impressing them with his Japanese language and sports skills among many others. Analysts say Premadasa is benefiting form father former leader Ranasinghe Premadasa and anti-incumbency stance by the public. Premadasa, analysts say, also has little experience in handling a crisis-hit economy. Premadasa was the deputy party leader Wickremesinghe’s UNP until he broke away from it and started Samagi Jana Balawegaya (SJB) as an alternative.  Moves to iron out differences between Wickremasinghe and Premadasa have yet to see success.
Wickremesinghe, whose party has only one member in the parliament, is planning to contest under a broader independent coalition, according to some insiders in the expectation that it could allow most current and the past legislators to back him despite ideological differences their parties have.
There is no clear survey or polls to suggest who will be the likely winner at the moment. Wickremesinghe’s popularity has been on the rise  among the public in the last two months, but Dissanayaka and Premadasa are ahead of him, analysts say.
These factors collectively contribute to a complex political landscape in Sri Lanka, influencing both domestic governance and international relations. (Colombo/June 16/2024)

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Sri Lanka to introduce digital program for foreign workers facing problems

ECONOMYNEXT – Sri Lanka will introduce a digital program via smart phones for migrant workers to report any concerns while employed abroad, Minister of Labor and Foreign Employment Manusha Nanayakkara said.

“We will have a digital program that is accessible from their smart mobile phones where domestic workers can notify us if they have not got their salary or if they have fallen into some trouble,” Nanayakkara said in parliament on Tuesday.

Sri Lanka has sent 301,000 domestic workers and 360,000 skilled workers abroad, Nanayakkara said.

Several workers, especially domestic workers, face abuse at the hands of foreign employers.

Nanayakkara said that the government only receives 0.001 percent of complaints with regard to abuse.

“We can only act on complaints received from people who go through legal channels. We are educating those who go through the Foreign Employment Bureau on how to escalate complaints.” (Colombo/Jul23/2024)

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Sri Lanka cabinet approves apology from Muslims for COVID-19 cremation ahead of election

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved a proposal to tender apology for the grievance caused for ethnic minority Muslims due to the cremation of bodies during the Covid-19 pandemic, Foreign Minister Ali Sabry said.

The move comes ahead of the upcoming presidential poll in which Muslim votes are likely to become crucial for all candidates.

The government of former President Gotabaya Rajapaksa led by current ruling party Sri Lanka Podujana Peremuna (SLPP) forced Muslims and Christians to cremate the dead bodies of those who died of Covid-19 in 2020.

The   Organisation of Islamic Cooperation (OIC) which includes Islamic states globally raised the forced cremations issue at the 46th United Nations Human Rights Council (UNHRC) in February 2021 after the SLPP government rejected repeated requests by local and global Islamic bodies.

The policy was later reversed, but the move hit diplomatic ties with Middle Eastern and OIC nations which is the highest source of employment for Sri Lankan expatriates.

Former President Gotabaya Rajapaksa later said the decision was based on expert advice. Rajapaksa who was seen as an anti-Muslim leader was heavily criticized for his decision ahead of 2020 parliamentary polls while his elder brother and then Prime Minister Mahinda Rajapaksa declined to discuss the issue with Muslim parties which asked to reverse the decision.

Hundreds of Muslims were cremated during the Covid-19 period before Rajapaksa government allowed a separate burial ground for Muslim Covid-19 victims in the Eastern town of Oddamavadi.

“A joint Cabinet Paper presented by Ministers Ali Sabry, Wijeyadasa Rajapakshe & Jeevan Thondaman apologising for the grievance caused to the Sri Lankan Muslim community due to the cremation of bodies during the Covid-19 pandemic, approved by the Cabinet,” Minister Sabry  tweeted quoting Cabinet Spokesman.

Already President Ranil Wickremesinghe and Estate Infrastructure Minister Jeevan Thondaman had tendered an apology in the parliament. The latest cabinet move is a formal and official apology.


Along with the apology, the Cabinet approved proposed law on burial or cremation of dead bodies on religious discretion.

“As stipulated in the guidelines published by the Ministry of Health on the Clinical Management of COVID19, cremation was made compulsory in removal of the dead bodies of the persons who died due to the COVID-19 virus. The decision created displeasure among the various religious groups and human right activists especially Muslim religious persons,” a government document on the cabinet decision showed.

“The studies made in this respect have been confirmed that the faeces and the urine are the primary source of transmission the virus but not with the safe burial. Therefore, in order to prevent arisen of such condition in future, attention has been drawn to introduce a law, a certain person or relations to be selected the burial or cremation of the dead person at their discretion.”

“Further, it has been seemed that introduction of new laws is appropriate to donate the dead bodies to the Medical Faculty, if necessary.”

“Accordingly, Cabinet of Ministers has approved the joint proposal presented by the Minister of Justice, Prison affairs and Constitution Reforms, Minister of Foreign affairs to instruct legal Draftsman in order to prepare a draft for the introduction of new law.”

Rajapaksa’s arrogant policy led the OIC and Middle East nations to reject Sri Lanka’s repeated requests for credit lines and loans to buy oil before the country collapsed following an unprecedented economic crisis in 2022.

Minister Sabry faced harsh criticism from human rights defenders and from members of the Muslim community for what they claimed was his silence in the face of the inhumane, unscientific decision by the Rajapaksa government.

The Rajapaksa government’s stubborn insistence on cremating Muslim and Christian victims of the Covid-19 virus was against the communities’ religious beliefs and drew widespread condemnation and concern of Muslim countries and leaders.

Rajapaksa, after the economic crisis hit the country, was forced to flee in the face of massive protests against him in July 2022. (Colombo/July 23/2024)

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Fireworks erupt in parliament over Sri Lanka’s VFS Global controversy

ECONOMYNEXT – Sri Lanka’s parliament erupted in heated debate after government legislators raised a privilege issue against Committee on Public Finance Chair Harsha de Silva, who last week tabled report on a controversial visa deal with the IVS-GBSVFS Global, consortium.

Justice Minister Wijedasa Rajapaksa questioned the propriety of raising a privilege issue against a Committee chairman, who was acting under powers derived from the Constitution, saying it amounted to challenging the Speaker himself.

Related Sri Lanka visa deal with IVS-VFS be cancelled or revised, forensic audited: COPF Chief

Sri Lanka’s Department of Immigration had awarded a visa issuing monopoly to IVS-GBS-VFS Global without tender which was charging 25 dollars per visa compared to an earlier 1 dollar by Mobitel, and it should be terminated or revised, de Silva said presenting a report earlier this month.

Privilege Over VFS Report

State Minister Shehan Semasinghe said de Silva had presented a defective and false report misleading parliament saying among other things that the report was unanimously approved by the COPF membership.

As a result, privileges of 16 members had been broken, and misleading a parliamentary committee was a punishable offence and de Silva should be referred to the privileges committee.

De Silva said he severally and individually rejected the charges and all views of the members were attached to the final report and he would stand down as COPF chair until the matter was decided.

“This was not done secretly. There were three weeks for members to respond,” de Silva said.

“There was a debate about the tourism arrival numbers, which was included. If I am to be imprisoned, do it. I am not afraid. Give me an opportunity and I will show how each word is true.

Semasinghe said there was no desire on the part of government members to remove de Silva from the COPF.

Government member Nimal Lanza said that he was under the impression that tourist arrivals had fallen due to the VFS deal but there was an increase this year. There was no desire to imprison de Silva, he said.

Verbal Exchange

Public Security Minister Tiran Alles said five years of data was given, and there was an increase in tourism arrivals. And after April there were 53,000 tourists under new categories, which brought revenues of 1.4 billion rupees.

The report was also attached as an addendum, de Silva said.

Minister Alles questioned why the Deputy Speaker was allowing a debate over the VFS deal which would now attract media headlines.

“If you are allowed, all our members must be allowed to speak,” he said.

Opposition leader Sajith Premadasa said if competitive tenders were called, there would not have been a charge of 25 dollars per visa as Mobitel was charging only one dollar.

Premadasa said he was responding due to charges made against de Silva and claims that he had committed a punishable offence. The opposition leader questioned how his microphone was muted.

Justice Minister Wijedasa Rajapaksa said while it was fair to allow de Silva to respond to the initial charge, a long debate should not have been allowed on the matter and also the contents of the report.

“The second bad precedent is this. It is not important whether it is Harsha de Silva or not. There are many committees. Can the Chairman of a Committee be called over a privileges issue?

“Under the Constitution there are powers to make standing orders. It is implemented through the 1953 Privileges Act. The Chairmen have certain powers. The Chairman has acted under the limits of his powers.

Parliament Undermined

Minister Rajapakshe said while there may be errors in a report, the Parliament’s powers were diminished if privilege questions were raised against Chairmen of a committee who carried out there duties.

“There may be errors in the report. We have seen that. But I am raising a question on the constitution.

“In this way, in whatever Committee, if he did his official duties, if he is made an accused in another committee of the same parliament and there is an investigation, it is the parliament’s power that is degraded.

“So it is the confidence people have in the parliament that is reduced. There is a legal question here. The Chair should consider whether it is possible to raise a question like this

“Ultimately the final responsibility of all these Committees rests with the Speaker. It is the Speaker’s powers that are delegated to the Chairman of a Committee.

“So, this challenge is made against the Speaker. How is the Speaker doing this?

“If the next day, the COPE, or COPA issues a report, someone asks to put him in the punishment log (dandu kanda) or to do whatever and calls him to the privileges committee.

“What are you going to ask at the Privileges committee? What punishment are you going to give? (Colombo/July23/2024)

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